Reports: DRAFT RECOMMENDATIONS FOR PRODUCTIVITY IMPROVEMENT

DRAFT RECOMMENDATIONS FOR PRODUCTIVITY IMPROVEMENT

INDEX

SUBJECT | PAGE NO

MANUFACTURING & ENGINEERING — 1
MANUFACTURING SERVICES — 19
INFRASTRUCTURE — 34
MARKETING — 52
FINANCE — 62
MATERIALS & ANCILLARY — 79
HUMAN RESOURCES — 100
GOOD PRACTICES FOR IMPROVING PRODUCTIVITY — 121
ANNEXURES — 160

DRAFT RECOMMENDATIONS
ON
MANUFACTURING & ENGINEERING

MANUFACTURING & ENGINEERING
INDEX

Sl. No. | Title | Page No.

1.01 — Know-how Acquisition — 2
1.02 — Modernisation – TDF — 3
1.03 — Low Cost Automation — 4
1.04 — R&D Thrust — 5
1.05 — R&D Incentive — 7
1.06 — Industry Orientation – R&D — 8
1.07 — Location Flexibility — 9
1.08 — MRTP Exemption — 10
1.09 — CNC Retrofits — 11
1.10 — Ancillarisation Thrust — 13
1.11 — Standardization — 14
1.12 — Standardization of QC Norms — 16
1.13 — Export incentives – CCS — 17
1.14 — Energy from Municipal Wastes — 18

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985	KNOW-HOW ACQUISITION	Ref. No. 1.01

Present situation:
Despite the Government’s liberalisation of import of know-how through Collaboration, there is considerable delay, by way of obtaining clearances through Governmental Agencies like Foreign Investment Board, Projects Approval Board, etc. Moreover, many know-how imports may involve only a one-time payment.

Change/Action desired:
Import of know-how (drawings, designs, specifications, process-sheets, software, etc.) upto a value of Rs. 50 lakhs per annum per undertaking as one-time payment must be put under OGL.

Action by:
Ministry of Industry, GOI Ministry of Finance, GOI

Advantages expected:
(a) Reducing delays in acquiring technology. (b) Faster adaptation of technology.

PROPOSAL	is related to: Technology
	in respect of: Govt. policy, Availability

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

MODERNISATION – TDF

OCT. 1985	MODERNISATION – TDF	Ref. No. 1.02

Present situation:
Import of capital equipment under the TDF scheme for modernisation attracts customs duties ranging from 65% to 180% whereas same category of capital goods under Project Imports attracts much lesser custom duties. This in turn increases the input costs of modernisation, thereby lowering the overall productivity.

Change/Action desired:
Limit the customs duty on all imports of capital equipment against TDF to 45% as in case of Project Imports.

Action by:
Ministry of Finance & Ministry of Industry, GOI

Advantages expected:
Boost to modernisation scheme since input costs will be lowered.

PROPOSAL	is related to: Plant & Machinery
	in respect of: Government Policy

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

LOW COST AUTOMATION

OCT. 1985	LOW COST AUTOMATION	Ref. No. 1.03

Present situation:
Low cost automation in industry is a cost effective approach for improving productivity. It entails lower level of automation involving pneumatic circuits, small tools, pneumatic screw drivers, high frequency screw drivers, auto-feed devices for machine tools, etc. There is a need for increasing the industry-level and Government-level thrusts in this direction.

Change/Action desired:
1. Some of the selected National Centres like NPC, Central Tool Rooms, should develop programmes and Consultancy Services in the area of Low Cost Automation primarily aimed at small and medium scale industries. 2. There is a need to promote the manufacture of such Low Cost automation devices within the country in a massive way. GOI and Industries should plan imaginative programmes on this subject for broadcasting on the TV network. 3. The Government to announce package of measures to promote manufacture of such productivity devices within the country and in the interim period liberalise imports of the same.

Change/Action desired:

1. Some of the selected National Centres like NPC, Central Tool Rooms, should develop programmes and Consultancy Services in the area of Low Cost Automation primarily aimed at small and medium scale industries. 2. There is a need to promote the manufacture of such Low Cost automation devices within the country in a massive way. GOI and Industries should plan imaginative programmes on this subject for broadcasting on the TV network. 3. The Government to announce package of measures to promote manufacture of such productivity devices within the country and in the interim period liberalise imports of the same.

Action by:
NPC Ministry of Industry, GOI & Industries

Advantages expected:
Higher productivity through Low Cost Automation.

PROPOSAL	is related to: Technology
	in respect of: Availability, Awareness and Motivation

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

R&D THRUST

OCT. 1985	R&D THRUST	Ref. No. 1.04

Present situation:
Today, the Dept. of Science & Industrial Research (DSIR) gives recognition to Inhouse R&D setups and such units get the following benefits: 1. OGL import of equipment, raw materials, samples, instruments, etc. for the purpose of R&D. 2. 100% Tax deduction on capital cash flow incurred for R&D purposes. Despite this, there is a lack of desired thrust towards Inhouse R&D efforts from the industries as a whole, as brought out in the Taskforce survey. In some of the workshops of PBIM, recommendations have been made to levy an R&D cess from the industries with a view to promoting Inhouse R&D.

Present situation:

Today, the Dept. of Science & Industrial Research (DSIR) gives recognition to Inhouse R&D setups and such units get the following benefits:

1. OGL import of equipment, raw materials, samples, instruments, etc. for the purpose of R&D.

2. 100% Tax deduction on capital cash flow incurred for R&D purposes.

Despite this, there is a lack of desired thrust towards Inhouse R&D efforts from the industries as a whole, as brought out in the Taskforce survey. In some of the workshops of PBIM, recommendations have been made to levy an R&D cess from the industries with a view to promoting Inhouse R&D.

Change/Action desired:
1. R&D recognition to be given to manufacturing units only if the preceding 3 years’ average expenditure on R&D (capital + revenue) is equal to/or in excess of 2% of the annual sales turnover. 2. Manufacturing houses having a recognised Inhouse R&D setup should be given benefits as under: (a) R&D capital expenditure should be allowed 100% tax deduction as it exists today. (b) If R&D expenditure (revenue) exceeds 2% of the sales turnover, for a fiscal year, the quantum in excess of 2% should be allowed a weighted tax deduction at 135%. (c) All DGTD registered units having a sales turnover exceeding Rs. 50 crores, should be subject to an R&D cess as per the following policy: If a manufacturing unit spends less than 2% of the sales turnover on R&D, that quantum by which it falls short of 2% should be treated as income and taxed. Section 35.1 and 35.2 of Income-tax Act to be amended.

Change/Action desired:

1. R&D recognition to be given to manufacturing units only if the preceding 3 years’ average expenditure on R&D (capital + revenue) is equal to/or in excess of 2% of the annual sales turnover.

2. Manufacturing houses having a recognised Inhouse R&D setup should be given benefits as under:

(a) R&D capital expenditure should be allowed 100% tax deduction as it exists today.

(b) If R&D expenditure (revenue) exceeds 2% of the sales turnover, for a fiscal year, the quantum in excess of 2% should be allowed a weighted tax deduction at 135%.

(c) All DGTD registered units having a sales turnover exceeding Rs. 50 crores, should be subject to an R&D cess as per the following policy:

If a manufacturing unit spends less than 2% of the sales turnover on R&D, that quantum by which it falls short of 2% should be treated as income and taxed.

Section 35.1 and 35.2 of Income-tax Act to be amended.

Action by:
DSIR and Ministry of Finance, GOI

Advantages expected:
Studies have revealed that increased expenditure on R&D always results in increase in overall productivity of the manufacturing sector in the long run. With the above policy there will be increased spending in R&D (both process and product related) with consequent improvement in the overall productivity of the industry.

PROPOSAL	is related to: Technology
	in respect of: Govt. policy, Company policy, Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

R&D INCENTIVE

OCT. 1985	R&D INCENTIVE	Ref. No. 1.05

Present situation:
Section 35(2A) and 35(2B) of the Income-tax Act used to permit weighted tax deduction (135%) of the expenditure incurred on sponsored research conducted through approved Scientific Research Bodies with prior approval of DSIR. However, this has been withdrawn in the current Finance Act.

Change/Action desired:
The policy of weighted tax deduction on expenditure incurred in connection with sponsored research in approved Scientific Research Institutions should continue. Section 35(2A) and 35(2B) of the Income-tax Act to be amended suitably.

Action by:
DSIR and Ministry of Finance, GOI

Advantages expected:
1. A fillip and boost to R&D efforts in the industry and better utilisation of the potential in many of the centrally established research institutions. 2. Involvement of Govt. Research Institutions in tackling problems connected with industries.

PROPOSAL	is related to: Technology
	in respect of: Govt. policy & Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

INDUSTRY ORIENTATION – R&D

OCT. 1985	INDUSTRY ORIENTATION – R&D	Ref. No. 1.06

Present situation:
Despite the formation of several advanced technology research centres under the Government, e.g. NPL, NCL, CLRI, CERI, etc., it is noticed that there is a lack of industry orientation in many of the research projects undertaken by these bodies. It is the general impression that most of the research is towards publication of “papers”. Though some part of the research may be fundamental in nature, with no immediate industry application, at least some part of the research has to have industry application orientation. There is also need to co-ordinate “application” more effectively.

Present situation:

Despite the formation of several advanced technology research centres under the Government, e.g. NPL, NCL, CLRI, CERI, etc., it is noticed that there is a lack of industry orientation in many of the research projects undertaken by these bodies. It is the general impression that most of the research is towards publication of “papers”. Though some part of the research may be fundamental in nature, with no immediate industry application, at least some part of the research has to have industry application orientation. There is also need to co-ordinate “application” more effectively.

Change/Action desired:
In order to give an application/industry orientation for R&D Projects, it is suggested that representatives from industry are nominated to the governing bodies of central industrial research organisations and these bodies be made autonomous.

Action by:
AIEI, DSIR, DST, GOI and Industries

Advantages expected:
Better industry orientation of research projects undertaken by DSIR laboratories and possible better patronage of ongoing research in these bodies by industries.

PROPOSAL	is related to: Technology
	in respect of: Govt. policy & Awareness

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

LOCATIONAL FLEXIBILITY

OCT. 1985	LOCATIONAL FLEXIBILITY	Ref. No. 1.07

Present situation:
Due to fluctuations in market demand, in most multi-product/multi-location companies, a situation arises wherein some of the plants are overloaded whereas other plants are starved of orders. However, the present industrial licensing which grants licence to manufacture a product in a given location, prohibits the same being manufactured at another location, though facilities needed may be common. This results in gross underutilisation of capacity. Broad-banding of products under industrial license may partly solve the problem but not fully.

Present situation:

Due to fluctuations in market demand, in most multi-product/multi-location companies, a situation arises wherein some of the plants are overloaded whereas other plants are starved of orders. However, the present industrial licensing which grants licence to manufacture a product in a given location, prohibits the same being manufactured at another location, though facilities needed may be common. This results in gross underutilisation of capacity. Broad-banding of products under industrial license may partly solve the problem but not fully.

Change/Action desired:
A multi-product/multi-plant manufacturing company should be allowed to produce its licensed products in any of its plant locations as indicated in the industrial license.

Action by:
Ministry of Industry, GOI

Advantages expected:
Better utilisation of installed capacity.

PROPOSAL	is related to: Plant & Machinery
	in respect of: Govt. policy/procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

MRTP EXEMPTION

OCT. 1985	MRTP EXEMPTION	Ref. No. 1.08

Present situation:
At present, MRTP companies are exempted from MRTP clearance only for a few specific items of Industrial Machinery Sector such as Pollution Control Equipment, Process Equipment for utilisation of recycling of wastes, Dairy equipment like Homogenisers, etc.

Change/Action desired:
MRTP companies should be exempted from seeking MRTP clearance for manufacture of ALL items of Industrial Machinery appearing in Appendix I, or better still, MRTP commission should concern with only restrictive trade practices and not come up in the way of licensing.

Action by:
Ministry of Industry, GOI

Advantages expected:
Rapid advancements abroad in products and manufacturing processes can be quickly acquired and assimilated by Indian industries with consequent benefits of productivity, costs, quality, etc.

PROPOSAL	is related to: Marketing
	in respect of: Govt. policy/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

CNC RETROFITS

OCT. 1985	CNC RETROFITS	Ref. No. 1.09

Present situation:
The use of CNC systems can have a dramatic impact on productivity in machining operations. The prices of CNC machine tools, however, are prohibitive and only a few companies can afford such investment as replacement of existing machines.

Change/Action desired:

Retrofitting of existing machine tools with CNC systems can be a method of reaping the benefits of CNC without the heavy investment in new machine tools.

1. The Government has allowed import of CNC systems, thyristor controls and servo-systems, etc. under OGL only for machine tool industries (Refer Appendix 6, List 8, Part I of Import and Export Policy – April 1985/March 1988). In order to encourage retrofitting of these systems, this provision should be made applicable to Actual Users and not restricted to machine tool industries.

2. The current customs tariff on CNC systems for machine tools is Basic Duty 25%, and Auxiliary Duty 10%, totalling to 35%.

As against this, the Govt. has exempted Auxiliary Duty on specified components used in computers and peripherals. In case of these components the total duty is 25%.

It is proposed that CNC systems should also be exempted from Auxiliary Duty.

3. Although import of servomotors and drive components needed for retrofitting of CNC system is allowed under OGL, the duty on these is of the order of 185%. Since these components are necessary for maximising the use of CNC systems, the duty applicable should be on par with that proposed above for CNC systems.

Action by:
Ministries of Industry & Finance, GOI

Advantages expected:
The changes specified above will encourage Indian manufacturers to go in a big way towards modernising existing machine tools with minimal investments.

PROPOSAL	is related to: Technology
	in respect of: Govt. policy/procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

ANCILLARISATION THRUST

OCT. 1985	ANCILLARISATION THRUST	Ref. No. 1.10

Present situation:

At present, tooling (Press tools, Die casting dies, special jigs & fixtures, etc.) manufactured inhouse are subjected to excise duty ranging from 12% to 15% when they are sent out to vendors even if on loan. This is a retrograde step as far as vendor development and promotion of ancillaries are concerned. The logic of loaning tools to vendors/ancillaries is to help them in a technology sense. In addition, the procedure involves considerable amount of paper work and record keeping.

Change/Action desired:
The excise duty leviable on tools (press tools, moulding dies, die casting dies, special jigs & fixtures, etc.) manufactured inhouse and loaned to vendors be exempted from excise duty. Rule 51A and 68 of Central Excise Rules to be amended.

Action by:
Ministry of Finance, GOI

Advantages expected:
1. Boost to ancillarisation. 2. Reduction of paper work.

PROPOSAL	is related to: Materials
	in respect of: Govt. policy/procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

STANDARDIZATION

OCT. 1985	STANDARDIZATION	Ref. No. 1.11

Present situation:
Manufacture of components covered by Indian Boiler Regulations (IBR) faces a number of hurdles due to: (a) Outdated requirements of IBR. (b) Non-uniformity in implementation of IBR, between States. Examples: See attached sheet.

Change/Action desired:

1. Short term: IBR should be revised to permit established international specifications viz. ASME, BS, AD-MERKBLATTER, DIN and JIS for boilers.

Sub-regulation (6) of Regulation 3 of IBR 1950 should be amended suitably.

2. Long term: The Indian Boiler Regulation (1950) covers the design, materials, manufacture, installation, operation, maintenance and safety aspects of steam boilers in India. To obtain enhanced standardization and operational efficiency, it is recommended that while the operation, maintenance and safety be covered under the scope of IBR, the design, materials and manufacture be covered by an appropriate ISI code in conformity with international norms.

3. On the lines of ASME a committee of the Boiler Board, ISI and the industry should be formed for periodical updating of standards and operation.

Action by:
ISI Industry Groups, Ministry of Industry, GOI

Advantages expected:
Standardization, reduction of manufacturing cycle time and hence increase in productivity.

PROPOSAL	is related to: Materials
	in respect of: Awareness

EXAMPLES (Attached to Standardization Section)

Examples:

1. The IBR, including the latest notifications, do not cover even such commonly used materials like stainless steels. There is an urgent need to update the regulations in this respect.

2. Although the Indian Boiler Act was initiated by the Central Govt., the implementation has been delegated to various states through respective Inspectors. The co-ordination at the Central level is minimal. This results in widely differing levels of implementation and interpretation. Drawings and other documents which meet the approval of one state do not get approved by other states. This leads to considerable duplication of effort and paper work.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

STANDARDIZATION OF QUALITY NORMS

OCT. 1985	STANDARDIZATION OF QUALITY NORMS	Ref. No. 1.12

Present situation:

Manufacture of Industrial Machinery has to cater to widely varying requirements of different inspection and quality surveillance agencies. This leads to cumbersome and non-standardized quality control procedures which are counter-productive. For e.g. in M/s. Larsen & Toubro alone, in the manufacture of industrial machinery we have to contend with as many as 23 external inspection agencies whose requirements are many times at variance.

Also, there is a multiplicity of standards being followed by the Industrial Machinery Manufacturing Sector – e.g. API, ANSI, DIN, ISI, ISO, JIS, etc. These are in terms of various codes of design being followed for threads, flanges, motor ratings, etc., causing lack of standardization.

Change/Action desired:

A uniform QC code should be established applicable to various items covered under Industrial Machinery. Various inspection/surveillance agencies should be asked to follow the common code. This could be formulated in tune with well-known International codes such as ASME, DIN, JIS, etc.

NPC should initiate a dialogue with ISI and various industries and come up with a time-bound programme for this purpose. The existing IS code 2825 should be completely modified and its scope enlarged.

Action by:
PBIM / NPC, Industry

Advantages expected:
Streamlining of manufacturing and inspection methods will significantly help improvement in productivity.

PROPOSAL	is related to: Manufacturing Services
	in respect of: Awareness

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

EXPORT INCENTIVE – CCS

OCT. 1985	EXPORT INCENTIVE – CCS	Ref. No. 1.13

Present situation:
At present cash compensatory support (CCS) is granted for export of various goods and present CCS varies from 5% to 20%. This is supposed to be an offset for the unrebated indirect taxes that enter the export production. However, CCS is considered as income today and hence taxable.

Change/Action desired:
The whole of CCS must be exempted from income tax.

Action by:
Ministry of Commerce, GOI Ministry of Finance, GOI

Advantages expected:
The above will give a fillip to export and also encourage the industry to go in for manufacture of more exportable products resulting in increase in foreign exchange earnings. This could also result in better utilisation of capacities.

PROPOSAL	is related to: Marketing
	in respect of: Govt. policy/procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

ENERGY FROM MUNICIPAL WASTES

OCT. 1985	ENERGY FROM MUNICIPAL WASTES	Ref. No. 1.14

Present situation:

Treatment and disposal of domestic effluents and solid wastes (garbage) is the responsibility of municipal bodies. In India, as of now, the treatments given to the liquid and solid wastes are elementary causing environmental pollution, e.g. liquid domestic wastes are given primary treatment and let out into the sea or rivers. In some cases even this is not done. The solid wastes are dumped in dumping grounds.

Due to lack of resources (financial and technical) in the hands of municipalities, no attempt is being made to convert these inexhaustible and uninterrupted supply of wastes into energy (through process of incineration), compost, recycling of metal scrap or converting them to safe land-fills. This concept has gained wide popularity in the U.S., Western Europe and Japan and is emerging to be a multi-million dollar business.

Change/Action desired:
1. Private industry should be encouraged to set up energy utilities and compost making plants by guaranteeing them free supply of municipal wastes. To begin with some Govt. compulsion/thrust may be required to make such schemes viable till such time the idea catches on. 2. Income accruing out of investment in this area should be entirely exempted from income tax for a period of 10 years.

Action by:
Dept. of Environment, GOI Dept. of Industry, GOI Dept. of Energy, GOI

Advantages expected:
1. National level savings by recycling. 2. New avenues for industries. 3. Financial relief to local municipal bodies. 4. Cleaner environment.

PROPOSAL	is related to: Technology, Infrastructure
	in respect of: Govt. policy/procedure, Motivation

DRAFT RECOMMENDATIONS ON MANUFACTURING SERVICES

MANUFACTURING SERVICES – INDEX

Sr. No.	Title	Page No.
2.01	Total Quality Control	20
2.02	Inspection – Requirements	21
2.03	Inspection – External Agencies	22
2.04	Standardization	23
2.05	Maintenance – Obsolete Equipments	24
2.06	Industrial Safety	25
2.07	Computers – Duty on Spares	26
2.08	Imported Computers – Maintenance	27
2.09	Legislations – Industrial Development	28
2.10	Industrial Licensing – Rationalisation	29
2.11	Licensing – No Industry Districts	30
2.12	Submissions to Government – Annual Technical Report	31
2.13	Information – Productivity Improvements	32
2.14	Productivity Monitoring – Norms	33

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

TOTAL QUALITY CONTROL

OCT. 1985	TOTAL QUALITY CONTROL	Ref. No. 2.01

Present situation:

1. Strong motivation for profits and harsh competition compel manufacturers to over-ride quality considerations in favour of production, which has detrimental effect on growth and marketability, in the long run.

2. Quality assurance is mainly oriented to carry out inspection activity and is looked upon as the responsibility of a section of people in QA Dept. instead of being a total concept in the company.

Change/Action desired:
Total Quality Control concept changes the emphasis from quality of product to quality of work performed by people. It calls for revolution rather than evolution involving different disciplines in the organisation. – Comprehensive and massive quality related training programmes for different levels in the organisation. – Support to Quality function by the top management of companies.

Action by:
PBIM / NPC / AIEI, Industry Associations

Advantages expected:
1. This will improve quality of products so as to enhance their marketability and thereby ensuring higher capacity utilisation and growth rate. 2. Change in attitude in manufacturing will reduce rework and delays.

PROPOSAL	is related to: Quality Control
	in respect of: Awareness / Motivation

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Inspection Requirements

Date: Oct. 1985
Ref. No.: 2.02

🔹 Table Representation

Section	Details
Present Situation	The customer usually involves third party inspection at the manufacturers works to gain confidence of quality of product being supplied. Lack of clear and measurable technical specifications and workmanship leads to disagreements and disputes at various stages of manufacturing, causing delays and generating un-productive efforts.
Change / Action Desired	Industry Associations to immediately work together along with users, consultancy organisations and inspection agencies of repute to formulate "Code of practice/specifications".
Action By	Industry Associations
Advantages Expected	The execution of orders will be smooth without any unnecessary holdups on account of lack of understanding of the requirements of quality. This will result in reducing cycle time and will eliminate unproductive efforts.
Proposal	Is related to: Quality Control In respect of: Awareness

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Inspection: External Agencies

Date: Oct. 1985
Ref. No.: 2.03

🔹 Table Representation

Section	Details
Present Situation	When customers stipulate third party inspection agency in addition to statutory inspection agencies such as IBR or DGS & D, it leads to: 1. Duplication of efforts in materials identified, demonstrations and witnessing of various tests at several stages of manufacture. 2. Conflicting interpretation of specifications. 3. Delays and loss of productive resources.
Change / Action Desired	In case of Government projects, if there are more than one agency involved for inspection of a job, it is suggested that only one of the agencies should be nominated for all the quality requirements including statutory requirements. (For example, if Engineers India Ltd. and IBR are involved in the same job, EIL should take care of IBR requirements on similar lines as practised by Nuclear Power Board Inspection which takes care of inspection requirements of Steam Components from IBR point of view.)
Action By	Project authorities concerned for GOI projects
Advantages Expected	• Improvements in lead time, as delays are reduced. • Duplication of inspection efforts is eliminated.
Proposal	Is related to: Quality Control In respect of: Govt. Policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Standardization

Date: Oct. 1985
Ref. No.: 2.04

🔹 Table Representation

Section	Details
Present Situation	Industry Machinery Manufacturing sector lacks sufficient standardization at the national level. This sector invariably depends on codes/standards from other countries and practices followed by their overseas collaborators. This results in wide variety of manufacturing and inspection requirements, which are not always adapted to Indian conditions. Indian Standards Institution has developed some IS specifications which are not updated to take care of present state of technology and various other changes.
Change / Action Desired	• Conscious efforts by industry with its customers and suppliers to bring about standardization at national level. • Industrial groups to work out code of practice for standardization, practise for 2 to 3 years and then convert to ISI requirements. • Evolution and updating of national standards (ISI) to incorporate latest technological developments on a continuing basis. ISI to update/revise present specifications every 5 years. • Policy decision by user groups (especially large houses) to adopt ISI, followed by purchasing & manufacturing preference for ISI marked/certified products and time-bound programme for effective implementation.
Action By	Individual Units, Industry Associations, ISI
Advantages Expected	• Standardization in the long run will lead to better quality, lower cost and ease of maintenance. • ISI relates to Indian environment and hence will be effective and easy to comply with.
Proposal	Is related to: Quality Control In respect of: Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.05 — MAINTENANCE – OBSOLETE EQUIPMENT (OCT. 1985)

Section	Details
Present Situation	Maintenance requirements for plant and machinery is growing since the manufacturers of industrial machinery are saddled with old & low productive plant & machinery due to:a. Reluctance to discard old and worn out machinery by manufacturers since cost of capital is a major constituent of product cost. Thus old written down assets help in profitability.b. Incentives provided by government for installing plant & machinery for new undertakings and/or new projects are greater in comparison to replacement in the existing units.
Change / Action Desired	Industrial machinery manufacturers should be encouraged to scrap old & low productive machines and replace them with modern technology machines in the existing plants.The rates of customs duties as well as other incentives as applicable to new projects should be made applicable to replacement of plant and machinery.
Action By	Ministry of Finance, CCIE
Advantages Expected	1. Lower maintenance costs.2. Availability of productive modern plant and machinery and improved utilisation.
Proposal	Related to: Plant & MachineryIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.06 — INDUSTRIAL SAFETY (OCT. 1985)

Section	Details
Present Situation	1. Generally low safety consciousness in industry resulting in loss of production resources.2. Factory Act and State factory rules need updating with respect to compatibility in present technology and industrial environments.
Change / Action Desired	• NPC / National Safety Council (NSC) should draft safety policy and make compulsory to all industrial units on finalisation.• Factories Act and applicable rules should be amended with respect to present state of technology and industrial environment. A provision should be made for simplified dismissal and misconduct proceedings for defaults on account of safety measures by workmen.• A separate unit should be established within NSC to advise industrial units on safety matters and equipments.
Action By	1. National Safety Council / NPC2. Govt. of India / State Governments
Advantages Expected	1. Improved capacity utilisation2. Boost in the morale of the working class
Proposal	Related to: Human ResourcesIn respect of: Awareness

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.07 — COMPUTERS – DUTY ON SPARES (OCT. 1985)

Section	Details
Present Situation	High cost of Maintenance for computers due to high Customs duty (280.8%) on spares imported by actual users/local computer manufacturers.Recent Notifications 208/85-Cust. & 209/85-Cust. in July 1985 have enabled Computer Maintenance Corp. (CMC) to import non-electronic parts/sub-assemblies at a reduced duty of 5%.This facility is not applicable to actual users.
Change / Action Desired	Amend Notifications 208/85-CUST & 209/85-CUST to include:1. Electronic parts and subassemblies2. Actual users, Computer manufacturers and other designated agencies apart from CMC.
Action By	Department of Electronics / Ministry of Finance
Advantages Expected	1. Improved utilisation of computers2. Reduced cost of Maintenance
Proposal	Related to: ComputersIn respect of: Govt. Policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.08 — IMPORTED COMPUTERS – MAINTENANCE (OCT. 1985)

Section	Details
Present Situation	Computer Maintenance Corporation (CMC) is the only organisation authorised to maintain imported computer systems. The users of imported computers are not assured of putting back the computers in action in committed time.
Change / Action Desired	• It is the look out of the users how to up keep their imported computer systems as it has for all other plant & machinery acquired by them. The companies should be free to select any agency, either CMC, original manufacturer or their representatives or any other organisation to carry out the maintenance and servicing of computer systems.• Department of Electronics should encourage more agencies to come forward to give quality service and healthy competition. DOE may further act as catalyst by providing licensing facilities and easier import of spares.
Action By	Department of Electronics, Govt. of India
Advantages Expected	1. Reduction in down-time of imported computers2. Reduction in cost of maintenance and servicing
Proposal	Related to: Information TechnologiesIn respect of: Govt. Policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.09 — LEGISLATIONS – INDUSTRIAL DEVELOPMENT (OCT. 1985)

Section	Details
Present Situation	The role of Private sector in industrial development is restricted due to present legislations (such as Industrial Development and Regulation Act, MRTP Act, Essential Commodities Act) which are more regulatory in nature.
Change / Action Desired	Complete overhaul of these legislations from being merely regulatory to actively aid the industrialisation and economic development of the country with greater emphasis on promotion rather than control of industrial activity by the following actions: 1. To raise the industrial licensing limit to Rs.10 crores of investment and defining Small Scale as investment upto Rs.100 lakhs. 2. To draft and/or enact new simplified legislation to replace the present Acts alongwith their major provisions. Industry Associations and Chambers of Commerce to take active roles in the same.
Action By	Ministry of Law & Industry, Govt. of India Industry Associations
Advantages Expected	Accelerated industrial growth and economic progress; abundant opportunities, faster technological advancement, higher employment, improved standards of living.
Proposal	Related to: Industrial Licensing In respect of: Govt. policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.10 — INDUSTRIAL LICENSING – RATIONALISATION (OCT. 1985)

Section	Details
Present Situation	1. Requirement of Industrial Licences for 27 priority industries despite their exemption from MRTP leads to undue procedural delays.2. Exclusion of other equally important priority industries such as Boilers & Steam generating Plants, Steam Turbines, Telecommunication Equipment, All Industrial Machinery, Machine Tools, Agricultural & Earth-moving machinery, Industrial & Scientific Instruments etc.
Change / Action Desired	The rationalisation and exemption from MRTP clearances and licensing requirements should be effected by issue of the following notifications:1. Dept. of Company Affairs, Ministry of Industry adding more priority industries (stated above) to the existing 27 industries exempted from MRTP.2. Dept. of Industrial Development of the same Ministry delicensing these industries from Industries (D&R) Act.
Action By	Ministry of Industry, Govt. of India
Advantages Expected	Reduced lead time for project implementation; better utilisation of existing capacity, expansion of capacity at lower cost, certainty and clarity in industrial sector.
Proposal	Related to: Industrial Licensing In respect of: Govt. Policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.11 — LICENSING – NO INDUSTRY DISTRICTS (OCT. 1985)

Section	Details
Present Situation	Entrepreneurs are required to select ‘No Industry District’ for locating their new plants. Financial benefits offered to move to NID are not commensurate with the enormous problems of creating infrastructure in the area and resultant delays.
Change / Action Desired	1. Underdeveloped TALUKAS (Tehsils), part of districts, should be the focus of development instead of ‘Districts’.2. New investment should be encouraged in the ‘No Industry Talukas’ (Tehsils) – NITs – which are also widespread in the country.3. Attractive financial benefits should be provided to entrepreneurs going to No Industry Talukas (NITs).
Action By	Ministry of Industry, Govt. of India
Advantages Expected	• Wider selection of prospective locations• Availing infrastructure in the adjoining areas• Can be administered better by Govt. agencies as some districts are as large as some states
Proposal	Related to: Industrial LicensingIn respect of: Govt. Policy / Procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.12 — SUBMISSIONS TO GOVERNMENT (ANNUAL TECHNICAL REPORT) (OCT. 1985)

Section	Details
Present Situation	Several questionnaires/forms need to be submitted to different governmental agencies calling for assorted information on production, idle time, utilisation etc such as:a) Production Returns to DGTDb) ASI Questionnairec) Annual collaboration Returnsd) Annual Reports – additions, notes.This multiple requirement leads to:• Duplication of efforts• Collection of non-relevant information• Impractical demands for schedules• Inconsistency in data and hence difficulty for aggregate analysis
Change / Action Desired	A comprehensive data in the form of “Annual Technical Report” to be sent to DGTD or any other single agency on an annual basis.Such Annual Technical Report to include details on items of manufacture, production facilities & their utilisations/modernisation, QC standards, development of ancillaries, R&D efforts, self-sufficiency in imported technology, and other production statistics.
Action By	PBIM, DGTD, NPC, Industry Associations
Advantages Expected	1. The progress of industry can be monitored with a common base of information in a streamlined way.2. Entire database can be computerized for productivity improvements.3. Simplified paper work for industrial units.
Proposal	Related to: InformationIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.13 — INFORMATION – PRODUCTIVITY IMPROVEMENTS (OCT. 1985)

Section	Details
Present Situation	Organised efforts to collect, assimilate and circulate productivity improvement ideas are lacking in the country.
Change / Action Desired	Information on new productivity ideas should be made available to all Industrial Machinery manufacturers.1. “Productivity Intelligence Centres” should be set up in the advanced countries (eg. USA, Japan) headed by a (non-resident) technocrat in the initial period.2. Productivity ideas to be propagated through periodicals, TV and other mass media preferably in regional languages.3. The role of National Productivity Council (NPC) should be thoroughly reviewed and its charter redefined to effectively accomplish this task.
Action By	NPC, Industry Associations
Advantages Expected	1. Tapping of ideas from various sources will give impetus to productivity.
Proposal	Related to: InformationIn respect of: Awareness

Section	Details
Present Situation	Organised efforts to collect, assimilate and circulate productivity improvement ideas are lacking in the country.
Change / Action Desired	Information on new productivity ideas should be made available to all Industrial Machinery manufacturers.1. “Productivity Intelligence Centres” should be set up in the advanced countries (eg. USA, Japan) headed by a (non-resident) technocrat in the initial period.2. Productivity ideas to be propagated through periodicals, TV and other mass media preferably in regional languages.3. The role of National Productivity Council (NPC) should be thoroughly reviewed and its charter redefined to effectively accomplish this task.
Action By	NPC, Industry Associations
Advantages Expected	1. Tapping of ideas from various sources will give impetus to productivity.
Proposal	Related to: InformationIn respect of: Awareness

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 2.14 — PRODUCTIVITY MONITORING NORMS (OCT. 1985)

Section	Details
Present Situation	1. Lack of awareness among the industrial machinery manufacturers that productivity needs to be improved through deliberate, conscious efforts if they have to compete in international market.2. Industry-wide data base is not available with any one agency who can analyse the productivity performance periodically and make it available to the manufacturing units on a regular basis.3. There are no established and accepted norms/indices for evaluating the productivity performance.
Change / Action Desired	NPC to take effective role in productivity monitoring by revising their charter, if required. NPC in consultation with Industry associations should:1. Establish productivity performance indices for the major factors, such as: a) Market standing b) Resource utilisation c) Profitability d) Financial effectiveness e) Social responsibility2. Establish system to create and update data base for the different industries on annual basis.3. Circulate analysis and evaluation of productivity performance with specific recommendations to all Mfg. units.
Action By	NPC, Industry Associations
Advantages Expected	Creation of awareness and development of competitive spirit in productivity improvement among the units.
Proposal	Related to: InformationIn respect of: Awareness

DRAFT RECOMMENDATIONS ON INFRASTRUCTURE

INFRASTRUCTURE — INDEX

Sl. No.	Title	Page No.
3.01	One Window approval & Provision of Infrastructural Facilities	35
3.02	Floor space Index Calculations	37
3.03	Land for infrastructure	38
3.04	Permission for use of EPABX	39
3.05	Non-availability of new telephones	40
3.06	Depreciation rate for captive generators	41
3.07	Interest on security deposits	42
3.08	Incentive for power consumption at night	43
3.09	Paralleling Generators with grid supply	44
3.10	Transport of over-dimensional consignments	45
3.11	High capacity wagons for over-dimensional consignment	46
3.12	Octroi duty	47
3.13	Quick parcel service by private sector	48
3.14	Land for institutes	49
3.15	Gap in education & industry requirement	50
3.16	Excise duty	51

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.01 — ONE WINDOW APPROVAL & PROVISION OF INFRASTRUCTURAL FACILITIES (OCT. 1985)

Section	Details
Present Situation	Infrastructural facilities such as land, factory sheds, water supply, drainage lines, residential accommodation, hospitals, schools, roads, railway lines, telephone, telexes, post offices, electricity, fuel etc. are provided by various departments of Central/State Govt. and/or local municipal authorities. There is lack of co-ordination between these departments and industries have to spend a lot of time in co-ordination with these agencies/departments for getting infrastructure and various NOCs & approvals.
Change / Action Desired	One authority having powers to grant permissions/approvals/NOCs etc. should be formed which should also have powers to form co-ordinating committee with representatives from concerned departments of State/Central Govt. and local bodies to provide necessary infrastructural facilities and NOCs & approvals.
Action By	Central / State Govt. and Municipality
Advantages Expected	1. Reduction in time and efforts in co-ordinating with various departments by individual organisations.2. Reducing of gestation period of new units.3. Expeditious implementation of construction projects.4. Reduced administrative expenses.
Proposal	Related to: InfrastructureIn respect of: Govt. Policy / Procedure

ANNEX TO PROPOSAL NO. 3.01

Departments involved in approvals

Category	Departments / Authorities
I. Municipality Departments	Building ProposalsTown PlanningHydraulic Engineer’s OfficeStorm WaterSewerageFire OfficerRoad & TrafficRevenue & Forest/Garden Dept.
II. State Govt. Departments	Industries, Energy & Labour Dept.Power SupplyPolicePrevention of Water & Air Pollution Dept./BoardSuptd. of Land Records & City SurveyChief Inspector of FactoriesCollector & Tahasildar’s OfficePublic Works Departments
III. Central Govt. Departments	Civil AviationChief Controller of ExplosivesRailwaysDept. of Communication (Post, Telegraph, Telephones)

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.02 — FLOOR SPACE INDEX (FSI) CALCULATIONS (OCT. 1985)

Section	Details
Present Situation	Very recently BMC has reduced the FSI to 0.5 which was earlier 1.0.While approving building plans of the proposed industrial building having height more than 7 metres, for the purpose of FSI calculation BMC considers the area which is equal to double the built-up area of proposed building.This has resulted into reduced usable area for construction.
Change / Action Desired	1. FSI should not be reduced to 0.5.2. BMC should amend the FSI rule.3. FSI should be calculated considering the actual built-up area of proposed building having height more than 7 metres for manufacturing of industrial machinery.
Action By	Bombay Municipal Corporation
Advantages Expected	1. Full utilisation of available area for construction.2. Increase in the deposit/tax amount will be eliminated.
Proposal	Related to: InfrastructureIn respect of: Municipal policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.03 — LAND FOR INFRASTRUCTURE (OCT. 1985)

Section	Details
Present Situation	After enactment of Urban Land Ceiling Regulation Act of 1976 the Govt. has acquired surplus land declared by owner/industries. This land is lying unused for many years while infrastructure facility are suffering for want of land.
Change / Action Desired	This acquired land which is lying unused should be given to genuine users for development of housing societies for industrial workers, hospitals, vocational training centres/institutes by amending the Urban Land Ceiling Act through separate corporation to be set up for this purpose.
Action By	Central and State Government
Advantages Expected	1. Needy institutes/organisations can set up hospitals/training centres without difficulty.2. Industrial workers will get plots for housing societies near their work place. This will reduce burden on transport system.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.04 — PERMISSION FOR USE OF EPABX (OCT. 1985)

Section	Details
Present Situation	For use of ELECTRONIC PRIVATE AUTOMATIC BRANCH EXCHANGE by subscriber, following conditions are required to be fulfilled:1. Approval for make, type, capacity of EPABX from telephone authorities.2. Permission from Directorate of Post & Telegraph.3. Approval from Department of Electronics for import of the equipment.These permissions take one to two months period and are given with conditions:1. Testing of equipment by telephone authorities.2. Right to take over maintenance by Bombay Telephones.3. Rental charges of Rs.200/- per extension to be paid to telephone authorities per annum.
Change / Action Desired	1. Use of EPABX be granted without any conditions as it is relieving the load on telephone authorities.2. P&T should terminate junction lines after inspection of EPABX.3. Maintenance of the equipment should be responsibility of the owner.4. License fee of Rs.200/- per extension per annum should not be charged.
Action By	Ministry of Communications, Central Govt.
Advantages Expected	1. Delay in getting permission from Local Authority will be avoided.2. Proper maintenance by private users will be efficient and will save cost and time.3. Substantial reduction in the repairing expenses.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.05 — NON-AVAILABILITY OF NEW TELEPHONES (OCT. 1985)

Section	Details
Present Situation	In some areas the release position for the new telephones is not improved for more than 10 years.
Change / Action Desired	1. Telephone Dept. should install satellite exchanges around the main exchange.2. Increase the capacity by going in for electronic exchange.3. Telephone Dept. should be separated from Post & Telegraph Dept. so that the profit earned by Telephone Dept. could be used for improvement of telephone services.4. If resources are constrained then telephone dept. should accept deposits at higher rates of interest and give tax benefits or income tax rebates to users of this investment.5. Allow private participation.
Action By	Ministry of Communications, Central Govt.
Advantages Expected	Improvement of telecommunication facilities.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.06 — DEPRECIATION RATE FOR CAPTIVE GENERATORS (OCT. 1985)

Section	Details
Present Situation	Power cut has become part of life in various states and industries are forced to install their own generating sets.Generators are treated as Plant & Equipment for which 15% depreciation is permitted. As against this, non-conventional Energy Saving Devices are permitted a depreciation of 33.3%.
Change / Action Desired	To make installation of captive generating sets attractive, Generating Sets should be also permitted to be depreciated at the rate of 33.3% by modification in finance bill.
Action By	Finance Ministry – Govt. of India
Advantages Expected	It will be incentive for various industries and they will be willing to install their own generating plants.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.07 — INTEREST ON SECURITY DEPOSIT (OCT. 1985)

Section	Details
Present Situation	Licensees and State Electricity Boards are permitted to frame conditions of supply under Indian Electricity Rules. Under these conditions, consumer is required to pay security deposit for the payment of his monthly bills for energy supply. Licensees pay 2½% or postal interest rates – whichever is greater – to the consumer at the end of financial year. At present Maharashtra State Electricity Board collects security deposit equivalent of average of 3 months bill and pays 5.5% interest rates.
Change / Action Desired	Central Electricity Board to amend the rules to modify the interest rates applicable to such deposits to minimum interest rates payable for one year’s fixed deposit in the bank i.e. 9%.
Action By	Central Electricity Board / Licensees / State Electricity Boards
Advantages Expected	Since all types of consumers including residential consumers pay security deposits, consumers will get fair rate of interest for their deposits.
Proposal	Related to: Infrastructure In respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.08 — INCENTIVE FOR POWER CONSUMPTION AT NIGHT (OCT. 1985)

Section	Details
Present Situation	Demand for power during night hours is considerably less (15%) as compared to the peak hour demand in the day time. This results into under utilisation of power stations. However, electricity charges for day and night are same.
Change / Action Desired	1. Electricity charges for night consumption should be metered separately and should be charged at concessional rates as incentive.2. State Govt. should exempt such consumption from payment of electricity duty.3. State Electricity Boards should give 30% concession in energy charges.
Action By	State Govt. and State Electricity Boards / Licensees
Advantages Expected	This will increase the night demand and reduce the shortage during peak hours in the day time.
Proposal	Related to: Infrastructure In respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.09 — PARALLELING GENERATORS WITH GRID SUPPLY (OCT. 1985)

Section	Details
Present Situation	To meet the power cut, various industries have installed captive generating plants. While allowing such installations, one of the conditions put by licensees (like BEST, BSES) and Electricity Boards is that the generating sets will not be run in parallel with the grid power supply. This results in independent running of captive generating sets, which in turn results in under-utilisation of the sets.
Change / Action Desired	1. It is desirable to increase utilisation for captive generating sets by paralleling the same with the grid supply. Licensees and State Electricity Boards should freely permit the paralleling by insisting that consumers provide suitable protective devices such as reverse power relay / under-frequency relay etc.
Action By	State Electricity Boards / Licensees
Advantages Expected	1. Increase utilisation and steady loading on generators will reduce wear and tear and running cost.2. Due to increased loading of the captive generators there will be saving in power units drawn from the grid, which can be diverted by the Electricity Boards to other consumers.
Proposal	Related to: InfrastructureIn respect of: State Elec. Board

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.10 — TRANSPORT OF OVER DIMENSIONAL CONSIGNMENTS (OCT. 1985)

Section	Details
Present Situation	Transport of Over Dimensional Consignments (ODC) by road is a very taxing task as surveys are to be conducted of all roads. Permissions are to be obtained from many State Governments and Central Authorities. A lot of time is wasted in these activities for smooth transport of consignments.
Change / Action Desired	1. Statewise directory be published for national highways, state highways, roads, bridges giving full details of capacity, sizes, crossings, over-head obstructions etc.2. Names & addresses of concerned authorities/agencies also be published whose permissions are to be obtained.3. Ministry of Transport should co-ordinate this activity with the help of various State Governments and update the directory every year.4. This directory can be sold at reasonable price.
Action By	Central Govt. / State Govts.
Advantages Expected	1. The task of route survey can be eliminated to a great extent.2. Delay in execution of project can be reduced considerably.3. Planning for ODC transportation becomes easier.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.11 — HIGH CAPACITY WAGONS FOR OVER DIMENSIONAL CONSIGNMENT (OCT. 1985)

Section	Details
Present Situation	Indian Railways possess wagons for transporting Over Dimensional Consignments (ODC) only upto 90 tonnes in BWH type and 130 tonnes in BWS type.Even here, the number available is not sufficient, creating a long requisition period.Equipment weights in India have gone much beyond this range, making it necessary to depend on private road carriers whose rates are exorbitant.
Change / Action Desired	Indian Railways to:1. Develop suitable design for wagons upto 300 tonnes with the help of Research Design & Standards Organisation.2. Procure sufficient number of wagons upto 300 tonnes.3. Resource constraints, if any, can be overcome by taking deposits from organisations interested in such wagons and in turn offering interest at existing bank rates and better services.
Action By	Indian Railways
Advantages Expected	Reduction in cost of transportation of major equipment for projects of national importance. These costs are presently high. There will be consequent reduction in project cost and improvement in delivery of equipment.
Proposal	Related to: Infrastructure In respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.12 — OCTROI DUTY (OCT. 1985)

Section	Details
Present Situation	For fixation, verification and payment of octroi duty, vehicles have to queue up at entry points (Nakas), resulting in wastage of time and causing traffic jams and safety hazards.
Change / Action Desired	1. Octroi duty to be abolished by notification from respective municipalities.2. Revenue loss to be compensated through another taxation procedure similar to sales tax.
Action By	State Govt. and Municipal Corporations
Advantages Expected	1. Better utilisation of vehicles.2. Elimination of administrative staff for recovery, record keeping, and dispute settlement.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.13 — QUICK PARCEL SERVICE BY PRIVATE SECTOR (OCT. 1985)

Section	Details
Present Situation	While organisations like DHL (USA) provide fast international parcel services, similar services within India are lacking.Some privately run services exist but lack legal sanctity and have limited coverage across cities.This causes inconvenience and additional costs to trade, industry, and business.
Change / Action Desired	Amend the Indian Post & Telegraph Act to permit Quick Parcel Services in India by the private sector.
Action By	Ministry of Communication, Govt. of India
Advantages Expected	1. Fast and efficient communication leading to improved business productivity.2. Greater employment potential.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.14 — LAND FOR INSTITUTES (OCT. 1985)

Section	Details
Present Situation	High cost of land, especially in urban areas, discourages industry from sponsoring technical institutes and vocational training centres. Land cost forms about 35% of total project cost.
Change / Action Desired	State Governments to allot land at concessional rates to industry for setting up technical institutes and vocational centres.
Action By	State Governments
Advantages Expected	Industries will be encouraged to establish institutes. Output manpower will be better trained in emerging technologies.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.15 — GAP IN EDUCATION & INDUSTRY REQUIREMENT (OCT. 1985)

Section	Details
Present Situation	1. Gap between technical education and industry requirements.2. Lack of emphasis on developing students’ ability to handle real engineering and industrial problems.
Change / Action Desired	1. Encourage industry–institute interaction.2. Industry participation in curriculum design, training, and monitoring.3. Representation of industry in governing councils of institutions.4. Inclusion of industry representatives in academic bodies by education authorities.5. Industry to adopt nearby technical institutes.
Action By	Universities / Technical Directorates / Industry (noted: Ministry of Education also implied)
Advantages Expected	1. Curriculum becomes need-based and aligned with industry.2. Students develop industrial culture and proper work ethics.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

Ref. No. 3.16 — EXCISE DUTY (OCT. 1985)

Section	Details
Present Situation	Excise duty is payable on machinery, plant, and equipment manufactured by a company for its own use at the same or other locations within India. However, components are exempt from excise duty under notification 118/75 and amendment 105/82.
Change / Action Desired	Machinery (whether used for manufacturing excisable goods or otherwise) should be fully exempt from excise duty when used internally by industries, especially for diversification.The amended notification 105/82 should be withdrawn, and exemption extended to machinery, plant, and equipment manufactured for own use.
Action By	Finance Ministry, Government of India
Advantages Expected	1. Encourages development of indigenous technical know-how.2. Reduces capital investment and overall product cost.3. Reduces dependence on imported technology, saving foreign exchange.
Proposal	Related to: InfrastructureIn respect of: Govt. policy / procedure

“Draft Recommendations on Marketing” (Oct. 1985)

MARKETING INDEX

Sl. No.	Title	Page No.
4.01	Market Orientation	53
4.02	Obsolete Policies	54
4.03	Marketing Data	55
4.04	After Sales Service	56
4.05	Attracting Foreign Collaborators and Investors	57
4.06	Bid Evaluation	58
4.07	Dumping by Overseas Suppliers	59
4.08	Licenced Capacity	60
4.09	Price / Purchase References	61

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY (Oct 1985)

MARKET ORIENTATION (Ref. No. 4.01)

Section	Content
Present Situation	Organisational responses to the requirements of the market need to be improved.
Change / Action Desired	1. Corporate business missions to be defined with emphasis on market’s needs.2. Organisation structures and operating policies/styles to be so designed as to cater to the needs of the market.
Action By	Industry
Advantages Expected	1. Better understanding of market’s needs culminating in optimal use of resources.2. Enhanced satisfaction of customers’ needs.3. Quicker alignment of resources with demand.
Proposal Related To	Marketing
In Respect Of	Company Policy

OBSOLETE PRODUCTS (Ref. No. 4.02)

Section	Content
Present Situation	Inefficient products based on obsolete technologies are in the market.
Change / Action Desired	1. Continuous assessment of developments in technology by individual organisations as well as by user industry association. 2. Formal and periodic in-company marketing audits covering technology, costs and benefits.
Action By	Industry
Advantages Expected	1. Higher value realisation per unit cost. 2. Improved marketability.
Proposal Related To	Marketing and Technology
In Respect Of	Company Policy

Document 3: MARKETING DATA (Ref. No. 4.03)

Section	Content
Present Situation	Data on demographic, economic and demand parameters is inadequate, not up-to-date and not easily accessible.
Change / Action Desired	1. Establishment of a central autonomous bureau to collect, collate and disseminate required data periodically. 2. Augmentation of professional organisations to conduct specialised studies and for assimilation of data related to specific areas.
Action By	Government and Industry
Advantages Expected	1. Accurate information for decision making.
Proposal Related To	Information Technologies
In Respect Of	Availability and Awareness

🔹 Document 4: AFTER SALES SERVICE (Ref. No. 4.04)

Section	Content
Present Situation	After sales services are not comprehensive and presently cover mainly warranty services.
Change / Action Desired	1. Maintenance/Service contracts may be offered by the supplier (made part of supply contract). 2. Performance improvement in terms of output/efficiency/life may be carried out in close co-operation between manufacturers and users.
Action By	Industry
Advantages Expected	1. Improved performance. 2. Optimal use of investments.
Proposal Related To	Marketing
In Respect Of	Company Policy

ATTRACTING FOREIGN COLLABORATORS AND INVESTORS (Ref. No. 4.05)

Section	Content
Present Situation	The best collaborators and investors are not attracted by opportunities in India.
Change / Action Desired	1. Abolish taxation on royalties, engineering fees and lumpsum fees. 2. Payments of royalties etc. to be made within 3 weeks from the due date on the basis of Company Auditor’s certificates without going through RBI procedures. 3. Reduce taxation on dividends to 30%. 4. Simplify procedures for collaborations and joint ventures. 5. Augment sales promotion of opportunities in India.
Action By	Government and Industry
Advantages Expected	1. Inflow of better technology and capital. 2. Improvement in export possibilities.
Proposal Related To	Marketing, Technology, Finance
In Respect Of	Government Policy

🔹 Document 6: BID EVALUATION (Ref. No. 4.06)

Section	Content
Present Situation	Acceptance of lowest price bids by Government and Public Sector organisations places organisations which provide high quality products/services at a disadvantage.
Change / Action Desired	1. Bid evaluation should be on total cost concepts. 2. Vendor rating and bid evaluation procedures to be suitably modified for specific applications.
Action By	Government and Public Sector Organisations
Advantages Expected	1. Promotion of high quality products and services. 2. Improvement in optimisation of investment.
Proposal Related To	Marketing
In Respect Of	Government Policy

DUMPING BY OVERSEAS SUPPLIERS (Ref. No. 4.07)

Section	Content
Present Situation	Overseas suppliers often resort to dumping. They are also in a position to offer short delivery periods which Indian suppliers are not able to.
Change / Action Desired	1. Decanalise purchase of items like steel and place them on OGL. 2. Grant import licences for components within 3 weeks. 3. Grant credit to local manufacturers on terms competitive to overseas supplier’s credits. 4. Duty rates on raw materials and components not to be higher than those on imported finished products. 5. Elimination of taxes on Royalties, Engineering Fees and Lumpsum Fees.
Action By	Government
Advantages Expected	1. Improved competitiveness of Indian industry. 2. Better capacity utilisation of Indian industry.
Proposal Related To	Marketing, Finance and Materials
In Respect Of	Government Policy

🔹LICENCED CAPACITY (Ref. No. 4.08)

Section	Content
Present Situation	Restrictions on production due to licenced capacity limits.
Change / Action Desired	1. Industrial licences should specify only the product line and no capacity limits.
Action By	Government
Advantages Expected	1. Greater optimisation of investments. 2. Increased output. 3. Freer play of market forces. 4. Elimination of use of Letters of Intent for pre-empting development of competition.
Proposal Related To	Marketing
In Respect Of	Government Policy

PRICE / PURCHASE PREFERENCES (Ref. No. 4.09)

Section	Content
Present Situation	Public Sector organisations receive price/purchase preferences which place Private Sector organisations at a disadvantage.
Change / Action Desired	1. Revoke circular of Bureau of Public Enterprises which permits price/purchase preferences.
Action By	Government
Advantages Expected	1. Freer competition. 2. Reduction in investment costs. 3. Greater stimulus to improvement of Public Sector efficiency.
Proposal Related To	Marketing
In Respect Of	Government Policy

DRAFT RECOMMENDATIONS ON FINANCE

FINANCE – INDEX

Sl. No. | Title | Page No.

5.01 T.D.S. – Contractors ............................................. 64
5.02 Investment Allowance ......................................... 65
5.03 Elimination of zero tax situation ....................... 66
5.04 Computation of tax benefit u/s. 80 I of the I.T. Act, 1961 ........ 67
5.05 Amortisation of know-how fee and preliminary expenses ........ 68
5.06 Expenditure on guest house ............................... 69
5.07 Accelerated depreciation ................................. 70
5.08 Expenditure on technical education ...................... 71
5.09 Bank charges ............................................. 72
5.10 Clearance of cheques and documents ..................... 73
5.11 Quarterly returns under Chore Committee ............... 74
5.12 Time Delays in processing CAS applications & Interim relief ..... 75
5.13 Credit ratios ........................................... 76
5.14 Companies Act, 1956 – Quantitative information ......... 77
5.15 Countervailing duty ..................................... 78

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.01

T.D.S. – CONTRACTORS

Present situation:

U/s. 194C. of the I.T. Act, 1961, the income-tax is required to be deducted at 2%/1% at source in respect of payments to contractors/sub-contractors, provided the value of the contract exceeds Rs. 10,000 per contract.

This involves enormous amount of administrative work.

Change/Action desired:

The limit be raised from Rs. 10,000 to Rs. 25,000.

Section 194C. of the I.T. Act, 1961, be amended raising the limit to Rs. 25,000.

Action by:

Ministry of Finance – Govt. of India.

Advantages expected:

The administrative work can be reduced.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.02

INVESTMENT ALLOWANCE

Present situation:

Deductions in respect of Investment Allowance u/s. 32A of the I.T. Act, 1961, is being allowed up to 31st March 1988.

The withdrawal of Investment Allowance will act as an impediment to rapid industrial growth.

Change/Action desired:

Investment Allowance be continued beyond 31st March, 1988, subject to a condition that the Investment Allowance Reserve be used for investment in indigenous machinery only.

Section 32A of the I.T. Act, 1961, be amended accordingly.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

The industrial machinery sector being capital intensive, continuation of Investment Allowance is desirable.
The creation of compulsory Investment Allowance Reserve and reinvestment in plant & machinery within a specified period will lead to industrial growth.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.03

ELIMINATION OF ZERO TAX SITUATION

Present situation:

Section 80VVA of the I.T. Act, 1961, restricts availing of various tax benefits to 70% of the taxable profits.

This results in –
a) discouragement to the tax planning efforts of efficient companies;
b) reduction in cash generation, in industrial sector.

Change/Action desired:

The limit placed on availing of various concessions provided under the Act be removed.

Section 80VVA be omitted from the I.T. Act, 1961.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

The industrial sector will be encouraged to make further growth-oriented investments and will be able to improve liquidity.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.04

COMPUTATION OF TAX BENEFITS U/S. 80 I OF I.T. ACT, 1961

Present situation:

25% of the profits from a new undertaking is exempted from income-tax for 8 years. When a new undertaking is established as a division of an existing undertaking, the common expenses like infrastructural services, head office expenses and financing charges, are allocated on an ad-hoc basis in computing the profits.

This involves considerable efforts in data collection, auditing and satisfying the I.T.O.

Change/Action desired:

The tax exemption be given as a percentage of VALUE ADDED viz. Sales value less Direct material cost, where only two sets of figures will be required to be computed.

Deduction @ 5% of Value Added be allowed while computing the taxable profits.

Section 80 I of the I.T. Act, 1961, be suitably amended to give effect to the above change.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

Simplification of procedure for computing ‘deduction’ in respect of profit attributable to new industrial undertaking.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.05

AMORTISATION OF KNOWHOW FEES AND PRELIMINARY EXPENSES

Present situation:

Under Section 35 AB of I.T. Act, 1961, the technical knowhow fees paid is allowed to be deducted while computing taxable profits over a period of six years.

Under Section 35 D of I.T. Act, 1961, the preliminary expenses are allowed to be amortised over a period of 10 years.

The amortisation periods specified are too long.

Change/Action desired:

The technical knowhow fees be allowed to be deducted while computing taxable profits in the year in which it is paid.

The entire preliminary expenses be allowed to be deducted while computing taxable profits in the year in which the taxable profits are available without the time limit.

Section 35 AB and Section 35 D of the Income-tax Act, 1961 be amended accordingly.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

The companies will be able to claim deductions in the earlier years than allowed resulting in improvement in their liquidity.

The administrative work for the assessees and the Income-tax Officers can be avoided.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.06

DISALLOWANCE OF EXPENDITURE ON GUEST HOUSES

Present situation:

All expenditure incurred on guest houses are disallowed in computing taxable profits u/s 37(4) of the I.T. Act, 1961. In view of high tariffs charged by the hotels, the stay in hotels has become very costly and prohibitive, for the companies which have to send their staff on outstation duty.

Change/Action desired:

The expenditure on guest houses be allowed while computing taxable income.

Section 37(4) of the I.T. Act be omitted.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

It will result in cost savings.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.07

ACCELERATED DEPRECIATION

Present situation:

a) Depreciation rates prescribed under the I.T. Rules, 1962, are too low for replacing the assets over the life span of the assets.

b) Proviso to sub-clause (ii) of clause 1 of Section 32 of the I.T. Act 1961 provides for 100% deduction of plant & machinery costing Rs. 5,000 and less.

While it is restricted to plant & machinery only, the value limit is also very low.

Change/Action desired:

a) Higher rates of depreciation be provided

The rates of depreciation in Appendix I to Part I of Rule 5 of the I.T. Rules, 1962, be amended to fully depreciate the assets as under:

Building in 10 years
Other assets in 5 years

b) The value limits be enhanced from Rs. 5,000 to Rs. 25,000 in respect of all categories of fixed assets.

Proviso to sub-clause (ii) of clause 1 of Section 32 of the I.T. Act 1961 be amended accordingly.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

The industry will generate sufficient funds for replacement of assets.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.08

EXPENDITURE ON TECHNICAL EDUCATION

Present situation:

Industry is experiencing difficulties in getting right type of technical staff due to the fact that job-oriented technical institutes are inadequate.

Non-availability of tax benefits is one of the major reasons for not inspiring the industries to promote technical institutes.

Change/Action desired:

Expenditure of capital as well as revenue nature in respect of technical institutes promoted by industries be allowed to be deducted from the taxable profits of the industries.

The I.T. Act, 1961, to provide for:

i) weighted deduction at 150% in respect of capital expenditure, and

ii) deduction at 100% in respect of revenue expenditure on technical institutes set up by industries.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

Availability of good technical people in the country.

PROPOSAL
is related to: Direct taxes
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.09

BANK CHARGES

Present situation:

Bank charges for transfer of funds and issue of demand drafts are on the basis of value of transaction instead of on transaction basis, thereby increasing the costs.

Change/Action desired:

Banks should charge service charges for transfer of funds and also for issue of demand drafts on a flat rate as follows:

i) Rs. 25 per demand draft/mail transfer.
ii) Rs. 50 per telegraphic transfer

RBI to issue directive to all banks to follow the above norm uniformly.

Action by:

Reserve Bank of India

Advantages expected:

i) Rationalisation of service charges.
ii) Reduction in expenses to the clients of the banks.

PROPOSAL
is related to: Finance
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.10

CLEARANCE OF CHEQUES & DOCUMENTS

Present situation:

Money gets blocked with banks due to –

Undue delays in clearing cheques and transfer of funds,
Undue delays in realisation of receipts against documents; and
Delays in intimation of non-acceptance by customers.

Change/Action desired:

Time limits be specified for:

Clearance of cheques and transfer of funds
Realisation of payments

RBI to specify the following time limits:

a) Realisation of up-country cheques – one week
b) Realisation of local cheques – the next working day
c) Transfer of funds – the next working day
d) Transfer of proceeds against documents – three days
e) Intimation in case of dishonour – three days

Action by:

Reserve Bank of India and commercial banks

Advantages expected:

Better utilisation of funds
Reduced interest charges
Early realisation of outstandings
Recall of materials in transit and documents – in case of dishonour

PROPOSAL
is related to: Finance
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.11

QUARTERLY RETURNS UNDER CHORE COMMITTEE

Present situation:

The formats suggested by Chore Committee which are intended for reviewing the performance of the borrowers, are very exhaustive and cumbersome. The banks themselves do not find time to carry out the review, thus resulting in avoidable administrative efforts.

Change/Action desired:

The latest audited Annual Accounts and the data furnished in the CAS application be used by the banks for carrying out the review.

RBI to issue instructions to banks to rely on audited Annual Accounts and CAS forms for review and not to insist on quarterly returns prescribed by Chore Committee.

Action by:

Reserve Bank of India

Advantages expected:

Unnecessary paper work is avoided.

PROPOSAL
is related to: Finance
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.12

TIME DELAYS IN PROCESSING CAS APPLICATIONS & INTERIM RELIEF

Present situation:

The CAS applications are being scrutinised by concerned branches of banks, then by banks central offices and then by RBI. Since too many agencies are involved, there are delays in processing the applications.

In view of the time delays experienced by industry in obtaining clearance on CAS applications, the Marathe Committee has recommended immediate release of funds subject to satisfying five specified conditions.

RBI has instructed the Banks in turn to release 50% of the funds immediately. However, the banks are hesitant to release the funds to borrowers till the clearance of CAS applications by RBI. This upsets the financial planning of the borrowers.

Change/Action desired:

The CAS application be received by the banks’ zonal offices through their branches without scrutiny by the branches.
The banks’ zonal office, RBI and the clients to sit together to sort out the problems.
The CAS application should be cleared by zonal office and RBI within 60 days.
RBI to issue strict instructions to banks to follow its directives based on Marathe Committee recommendations in respect of interim release of funds.

Action by:

Reserve Bank of India

Advantages expected:

Duplication of scrutiny can be avoided.
The correspondence amongst RBI, bank and client can be avoided.
Pending clearance of CAS application, the borrowers will have interim relief.

PROPOSAL
is related to: Finance
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.13

CREDIT RATIOS

Present situation:

In evaluating the credit limits of industrial machinery manufacturers, the credit ratios normally applied for all other industries are also being used, viz.,

Debt Equity ratio – 2 : 1
Current ratio – 1.5 : 1

Since the manufacturers of industrial machinery fall under capital intensive industry, the above norms are not relevant.

Change/Action desired:

The financial institutions and the banks to relax the credit ratios for industrial machinery sector.

The Ministry of Finance to stipulate the following credit ratios for industrial machinery sector:

Debt Equity ratio – 3 : 1
Current ratio – 1.2 : 1

Action by:

Ministry of Finance – Government of India

Advantages expected:

This will enable the industry to have a better capital gearing resulting in lower cost of capital.

PROPOSAL
is related to: Finance
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.14

COMPANIES ACT, 1956 – QUANTITATIVE INFORMATION

Present situation:

As per the Companies Act, 1956, all companies have to furnish information in respect of:

a) consumption of raw materials and components under local and imported category
b) CIF value of imports
c) information in respect of employees drawing more than Rs. 36,000 per annum
d) production particulars

Change/Action desired:

The information relating to imports, production particulars and salary particulars are already being furnished to various government agencies, and as such these can be dispensed with.

i) Changes be introduced in Schedule VI of the Companies Act, 1956, and
ii) Section 217(2A) of the Companies Act, 1956 be amended.

Action by:

Ministry of Industries – Company Law Board

Advantages expected:

Considerable efforts put in for data collection and auditing can be eliminated.

Cost of publishing bulky Annual Reports can be reduced.

PROPOSAL
is related to: Company law matters
in respect of: Govt. policies/procedures

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 | Ref. No. 5.15

COUNTERVAILING DUTY

Present situation:

Levy of countervailing duty on the components imported which are already being manufactured in India.

Change/Action desired:

Countervailing duty charged should be refunded if the item is used for manufacturing a product falling under the same Tariff Item.

Issue public notice to the above effect.

Action by:

Ministry of Finance – Govt. of India

Advantages expected:

Cost reduction
Avoidance of anomaly

PROPOSAL
is related to: Indirect taxes
in respect of: Govt. policies/procedures

DRAFT RECOMMENDATIONS ON MATERIAL & ANCILLARY

MATERIALS & ANCILLARY

INDEX

Sl.No. — Title — Page No.

6.01 — Sail Non-supply — 80
6.02 — Sheared Plates — 81
6.03 — Price Revisions — 82
6.04 — Plate Markings — 83
6.05 — Sail Delivery Promise — 84
6.06 — Import Protection — 85
6.07 — Forging Import — 86
6.08 — Stainless Steel Plates Import — 87
6.09 — Customs Bonding Period — 88
6.10 — Flexibility for App.3 Import — 89
6.11 — Disposal of Imported Material — 90
6.12 — Recommendations – Supplementary Licences — 91
6.13 — Last Date Supplementary Licence Application — 92
6.14 — Import of Steel Plates — 93
6.15 — List Attestation Procedure — 94
6.16 — Shipment of Imported Goods — 95
6.17 — Customs Clarification — 96
6.18 — Excise Rule 56-C — 97
6.19 — Excise Set-off — 98
6.20 — Testing Facility — 99

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.01

SAIL NON-SUPPLY

Present situation:

Actual Users (AUs) are required to register their demands for Iron & Steel raw materials with the local office of SAIL on a quarterly basis. Any demands not met are expected to be carried forward to the next registration on a perpetual basis.

In case the AUs desire to import the same, they must apply through the Iron & Steel Controller attaching replies from indigenous manufacturers. However, SAIL do not give any reply relating to the demands registered with them whether met or not.

With the result, separate correspondence is required again with producers to satisfy the Iron & Steel Controller in support of the import application. This creates rework and there is total uncertainty as to the availability of raw materials.

Change/Action desired:

On request, the local SAIL office should issue a “Certificate of Non Supply” against demands registered with them to every Actual User.

SAIL should be directed to issue non-supply certificates within 30 days of the end of quarter against demands registered with them.

Iron & Steel Controller should treat such certificates as evidence of indigenous non-availability to clear import applications.

Action by:

SAIL / Iron & Steel Controller
(Ministry of Steel & Mines), New Delhi

Advantages expected:

Reduction in correspondence / paper work
Some certainty about supply of Iron & Steel raw materials allowing AUs to plan production programme accordingly

PROPOSAL is related to: Materials
in respect of: Availability

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.02

SHEARED PLATES

Present situation:

Indian Steel Mills offer steel plates of thickness above 36 mm in unsheared condition without rectangular size.

This results in large wastage during manufacture.

Change/Action desired:

SAIL / TISCO must supply plates in rectangular sizes with straight edges only.

Action by:

SAIL / TISCO
Ministry of Steel & Mines, New Delhi

Advantages expected:

Reduction in material wastage.

PROPOSAL is related to: Materials
in respect of: Availability, Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.04

PLATE MARKINGS

Present situation:

Steel plates used in the manufacture of Industrial Machinery are subjected to identification/inspection by Third Party Agencies who insist on original Mill Markings.

Foreign Mills always mark individual plates whereas SAIL and TISCO generally mark the top plate of a stack (upto 40 plates) without the manufacturer’s symbol.

Unmarked plates are rejected by Third Party Inspection Agencies who insist on the industrial machinery manufacturer to repeat all necessary tests previously done by SAIL/TISCO on each and every plate prior to acceptance.

Change/Action desired:

Indian Steel Plants of SAIL/TISCO must install suitable machinery to automatically mark each plate with manufacturer’s symbol, specification, heat no., size, etc.

Action by:

SAIL and TISCO
Ministry of Steel & Mines

Advantages expected:

Material acceptance becomes more authentic.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.05

SAIL DELIVERY PROMISE

Present situation:

The delivery periods for alloy steel raw materials mentioned in SAIL offer letters are subject to the following clause:

"Time is not the essence of the contract. Time for delivery if any stipulated by you shall not be binding on us."

The above is typical of the actual delivery performance by SAIL. Due to uncertain delivery, machinery manufacturers have to carry higher inventory, find it difficult to plan production and commit deliveries of finished equipment.

Change/Action desired:

SAIL should be directed to mention firm delivery in their offer letter for alloy and steel materials.

Action by:

SAIL
Ministry of Steel & Mines

Advantages expected:

Reduction in inventory
Production planned more efficiently
More realistic deliveries can be committed for finished equipment

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.03

PRICE REVISIONS

Present situation:

Steel plates, steel structurals, pig iron, non-ferrous metals and coal are basic input materials in the Industry.

Frequent and unpredictable price increases of these items cause price instability of the finished products and also embarrassing situations in price fixation.

Change/Action desired:

SAIL to be allowed to review their prices only once a year – April.
MMTC to be allowed to review their prices only once a quarter.

Action by:

SAIL and MMTC
Ministry of Steel & Mines, Ministry of Commerce

Advantages expected:

Price stability, better forecasting.

PROPOSAL is related to: Materials
in respect of: Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.06

IMPORT PROTECTION

Present situation:

Import protection is being given to indigenous products irrespective of value added in the country. This results in high cost to the end user with no appreciable savings in foreign exchange.

e.g. Production of seamless stainless steel tubes from imported mother-tubes. The value added by the indigenous producer is hardly 10–15% at world prices. Corresponding cost addition by such manufacturers is more than 100%.

Change/Action desired:

Remove import protection to products where indigenous value added is less than 33% at world prices.

Action by:

DGTD
CCI&E

Advantages expected:

Reduction in cost to the end user
More productive utilisation of foreign exchange and other scarce resources

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced., Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.07

FORGING IMPORT

Present situation:

Steel forgings of all types, irrespective of specification and size have been included in Appendix 3-A of Import Policy Book (1985–88) as “Limited Permissible Items.”
Indigenous capability is limited to a single piece weight of:

3 MT for discs
1.5 MT for rings / flanges / nozzles

For higher weight forgings, Actual Users (AU) have to depend on imports, but have to apply for specific supplementary licences every time resulting in unnecessary paperwork and delay in imports.

Change/Action desired:

The existing description under Sl.No. 579 of Appendix 3-A of Import Policy Book 1985–88 should be amended to read as follows:

“Steel Forgings – Excluding the following:”

a) Discs having single piece weight exceeding 3 MT or diameter exceeding 1800 mm
b) Rings having single piece weight exceeding 1.5 MT or diameter exceeding 2000 mm or thickness exceeding 450 mm
c) Flanges / Nozzles having single piece weight exceeding 1.5 MT

Action by:

Import Policy Cell, DGTD
CCI&E

Advantages expected:

Reduction in time required to import forgings which are frequently required by equipment manufacturers
Reduction in paperwork

PROPOSAL is related to: Materials
in respect of: Govt. Policy, Availability, Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.08

STAINLESS STEEL PLATES IMPORT

Present situation:

Stainless steel (SS) plates having thickness above 12 mm are not produced indigenously and can be imported directly by Actual Users (AU) if the width is more than 1.25 mtrs.

However, if width is less than 1.25 mtrs, the import is canalised through MMTC. SS plates are generally used in the manufacture of tailor-made equipment and are required in an assortment of widths in each thickness.

Rolling mills also generally prefer to group all widths in a thickness for economy. The present policy forces AUs to split the quantity in every thickness for procurement partly through MMTC and partly directly.

This results in doubling the paperwork and also possibly higher prices which foreign suppliers may charge due to small quantities.

Change/Action desired:

Stainless steel plates above 12 mm in thickness and having width below 1.25 mtrs should also be decanalised.

App. 5, Part A, Sl.No. 52(v) of the Import Policy 1985–88 should be amended to read as follows:

“Stainless Steel Plates of thickness above 12 mm”

Action by:

Import Policy Cell, DGTD
CCI&E

Advantages expected:

Reduction in paperwork
Improved material utilisation
Better import prices with saving in foreign exchange

PROPOSAL is related to: Materials
in respect of: Govt. Policy, Availability, Expenses

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.09

CUSTOMS BONDING PERIOD

Present situation:

Section 58 of the Customs Act 1962 provides for licensing of private warehouses where imported goods can be stored without payment of duty.

Although initially the period of warehousing, allowed under Section 61, was 3 years, this was progressively reduced. Since May ’83, warehousing period has been fixed as 3 months.

The above affects viability of operating a bonded warehouse.

Change/Action desired:

The bond period should be at least up to 12 months.

In Section 61 of Customs Act 1962, the words “3 months” should be substituted by words “12 months”.

Action by:

Central Board of Excise & Customs (Department of Revenue), Ministry of Finance

Advantages expected:

Operation of private bonded warehouse will be economically feasible
Increased period of storing items in the bonded warehouse will ensure uninterrupted supply of materials to the production process
Reduced cost of bonded warehouse will encourage storage of vital spares & other material increasing service levels to critical machinery & equipment thereby improving industry-wide productivity

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.10

FLEXIBILITY FOR APP. 3 IMPORT

Present situation:

Until 1984–85, a licence holder could utilise 10% value of his automatic licence for importing Limited Permissible items. Under the current Policy, there is no provision for import of such items as automatic licensing procedure has been abolished.
Due to change in the Policy, an Actual User now has to specifically apply for a Supplementary Licence if he needs the material covered by Appendix-3 irrespective of its value. Considerable delays in the grant of Supplementary Licence affect industrial production.

Change/Action desired:

It is, therefore, suggested that the Actual Users may be given some flexibility for getting their small value requirements of Appendix-3 items to achieve their targets of industrial production.

Some of the suggestions are as under:

a) An Automatic Supplementary Licence for import of App. 3 items equivalent to 1% of the production of the unit should be permitted (as is presently being done in case of spare parts for after-sales service – see para 110(1), Chapter VI of Import Policy).

b) An Automatic Supplementary Licence based on consumption.

Action by:

Import Policy Cell, DGTD
CCI&E (Ministry of Commerce)

Advantages expected:

If the above suggestion is accepted, the industrial units will get flexibility to procure their small value requirements of Appendix-3 items.

This will further reduce the large number of supplementary applications as industrial units would submit an application only if their requirements cannot be met under the facility of Automatic Supplementary Licence.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.11

DISPOSAL OF IMPORTED MATERIAL

Present situation:

Under Para 104 to 107 of the Handbook of Import Export Procedures, 1985–88, an elaborate procedure for sale or transfer of imported material has been laid down in the Import Policy for such imported items which become obsolete over a period of time.
However, in case of sale or transfer of capital goods a simple procedure has been laid down vide Para 114(1) of Handbook of Import-Export Procedures, 1985–88, whereby the Actual User does not need prior permission of the Government for disposal of Capital Goods if a period of 10 years has elapsed from the date of import of such Capital Goods.

Change/Action desired:

It is suggested that in case of obsolete imported components and raw materials also, the procedure presently being followed in respect of Capital Goods (Para 114(1)) should be made applicable with the exception that the period in the case of Raw Materials/Components should be reduced to 5 years.

Action by:

Import Policy Cell, DGTD
CCI&E (Ministry of Commerce)

Advantages expected:

If the above suggestion is accepted, the industrial units who have obsolete stocks of imported components and raw material will be able to dispose of such components/raw materials after 5 years without resorting to the lengthy procedure as laid down in the current Policy, which makes the disposal of obsolete material almost impossible.

PROPOSAL is related to: Import Policy Cell, DGTD
in respect of: CCI&E (Ministry of Commerce)

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.12

RECOMMENDATIONS – SUPPLEMENTARY LICENCES

Present situation:

According to para 10(1) of the current Policy, the last date for filing Supplementary Licence Application is 15th December. The last date for receipt of such applications duly recommended by the Sponsoring Authority is 31st January of the following year.
It has been experienced that even applications for supplementary licences filed before 15th December with the Sponsoring Authority are delayed in processing and consequently such applications do not reach the Licensing Authority by 31st January of the following year.

It has been reported that in such cases, the Licensing Authority does not issue the Import Licence if they are received after the prescribed date.

Change/Action desired:

The CCI&E may issue instructions to the Regional Licensing Authority to apply the provisions of para 37 of the Import Policy in cases where recommendations of Sponsoring Authority are delayed beyond 31st January.

Action by:

Import Policy Cell, DGTD
CCI&E (Ministry of Commerce)

Advantages expected:

If the above suggestion is accepted, this will lead to timely availability of imported inputs to industrial units as the import licences would be issued during the current licensing period.
This will also lead to reduction in unnecessary paperwork for submission of new applications and the consequent delays involved therein.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.13

LAST DATE SUPPL. LICENCE APPLICATION

Present situation:

According to para 10(1) of the 1985–88 Import Policy, the last date for filing Supplementary Licence application is 15th December 1985.
If any orders are received during the beginning of December, it would not be possible to finalise the list of imports by 15th December 1985.

As per the 1985–88 policy, the industrial unit will have to wait and submit the application only during April 1986. This leads to non-submission of applications for a period of 4 months from the date of receipt of order.

Since most of the requirements of Industrial Machinery Manufacturers are tailor-made, this 4 months gap is too long to keep up with the delivery schedule.

Change/Action desired:

The CCI&E may change the last date for submission of application under para 10(1) to 31st March or alternatively, they may issue suitable instructions to the Regional Licensing Authority to apply the provisions of para 37 of the Import Policy in such cases.

Action by:

Import Policy Cell, DGTD
CCI&E (Ministry of Commerce)

Advantages expected:

If the above suggestion is accepted, this will reduce the lead time for procurement of imported inputs for timely execution of orders where the requirements of imported inputs are tailor-made and are not of repetitive nature.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.14

IMPORT OF STEEL PLATES

Present situation:

Boiler/Pressure Vessel quality Plates/Coils and Alloy Steel Plates – Hot Rolled and Cold Rolled in all grades fall under Entry No. 12, 22(b) and 23 respectively of Appendix 3, Part B and are therefore categorised as limited permissible items and as such a Supplementary Licence Application has to be submitted.
Since a very limited range of above Plates/Sheets is manufactured indigenously and most of which is allocated to priority sectors like Defence and Exports, the industrial units hardly get any allocation of indigenous material.

Change/Action desired:

Steel Plates covered by Sr. No. 12, 22(b) and 23 should be shifted to Open General Licence (OGL) by issue of a Public Notice by the Office of the Chief Controller of Imports & Exports, New Delhi.

Action by:

Import Policy Cell, DGTD (Ministry of Commerce)
CCI&E (Ministry of Commerce)

Advantages expected:

With the availability of above raw material under OGL, the industrial units in the industrial machinery segments will be able to import their requirements as and when they arise on the basis of orders received by them.

This will reduce the procurement time of above material by 3 to 4 months.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.15

LIST ATTESTATION PROCEDURE

Present situation:

Under Para 94(11) of Import & Export Policy 1985–88, DGTD Units covered under the Phased Manufacturing Programme (PMP) are required to get their Lists attested from DGTD even for OGL items before import.

Under these provisions, DGTD units are required to go through the List Attestation Procedure even though they are out of the stipulated Phased Manufacturing period.

Change/Action desired:

It is suggested that those manufacturing units, who have already completed their Phased Manufacturing Programme during the required period, should not be asked to go through the List Attestation Procedure as it causes unnecessary paperwork and delays in the procurement of the material.

Para 94(11) of Import Policy 1985–88 may be deleted.

Action by:

Import Policy Cell, CCI&E
(Ministry of Commerce)

Advantages expected:

Since most of the manufacturing units in the Industrial Machinery segment have tailor-made requirements, this will enable them to procure their imported inputs as and when requirements occur.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.16

SHIPMENT OF IMPORTED GOODS

Present situation:

The import policy 1985–88 requires that import shipments take place only after the date of issue of the relevant import licence.

The minimum time required for issue of a licence after submission of the application is about 2–3 months. Procurement must therefore be deferred by the time required to obtain the licence, even though suppliers are willing to ship immediately.

This delays the delivery of the finished equipment by 2/3 months and it is difficult to book export orders, where short deliveries are generally required.

Change/Action desired:

Following provision should be introduced in Import Export Procedures 1985–88:

“In cases where goods are shipped before the date of issue of an Import Licence, but after the date on which the connected application has been submitted, the Customs will allow clearance provided that:

a) the goods have been shipped on or after the date of application, and
b) by the time of arrival of consignment at the Indian Port, the applicant importer has been granted a valid import licence.”

Action by:

Import & Export Policy Cell, CCI&E
Customs Department (Dept. of Revenue)

Advantages expected:

Equipment deliveries can be shortened by 2/3 months.

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.17

CUSTOMS CLARIFICATION

Present situation:

The Customs House at the port of importation are the final deciding authority on the validity of import and duty leviable after arrival of a consignment.

In case of difference in interpretation with Customs on the import policy or tariff classification, the importer has to contact the CCI&E / DGTD / Dept. of Steel / Ministry of Finance for a clarification which typically takes from 3 to 12 months.

Meanwhile the consignment besides incurring demurrage is also liable to loss/theft at the port. Sometimes, the importers who may also face fines/penalties are forced to seek legal redress.

Importers who want to avoid this situation find it difficult to get an advance clarification from Customs who give their ruling only after the actual import has taken place.

Change/Action desired:

The Ministry of Finance should direct Customs Authorities to issue firm clarifications on import tariff/policy within a maximum of 30 days of an enquiry, being made by an intending importer.

Such clarifications should continue to remain valid subject to there being no amendment in the Policy.

Action by:

Ministry of Finance
Customs Houses

Advantages expected:

Fewer disputes with Customs resulting in faster clearance at Ports
Importers could get an opportunity to confirm and plan for their duty liability in advance

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.19

EXCISE SET-OFF

Present situation:

The GOI collects excise duty on TI68 and then allows set-off of duty paid on raw materials/components/intermediate goods against the duty liability on finished goods in which such goods are used.

It involves only cumbersome paperwork, waste of time resulting in hindrance in smooth production without any revenue gain to the exchequer as far as intermediate goods are concerned.

Change/Action desired:

Exempt from whole of payment of duty such goods that are not final goods in themselves but are exclusively used in further production of excisable goods on which duty is payable.

User of such intermediate goods can make a declaration to this effect on the basis of which manufacturer of such intermediate goods can be allowed to clear them without paying excise duty.

Action by:

Central Board of Excise & Customs
Dept. of Revenue, Ministry of Finance

Advantages expected:

Small scale sector will have more funds on hand for productive purpose instead of locking them up in excise payment
Smooth and simplified record keeping
The Central Excise staff engaged in implementation of set-off rule can be employed for more productive work
No loss to the exchequer

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proced.

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.20

TESTING FACILITY

Present situation:

Small Scale and Ancillary Units cannot afford to have expensive testing facilities individually.

It is not convenient and feasible to always approach parent units for testing.

Change/Action desired:

Either ISI or any other central body should set up such testing facilities in industrial estate areas on no profit no loss basis.

Fast and commercial service should be given by National Test Houses.

Action by:

ISI (Ministry of Food & Civil Supplies)
Development Commissioner, Small Scale Industries
Ministry of Industry & Company Affairs

Advantages expected:

Quick feedback on the quality of goods produced by the units
Control can be exercised by them on incoming raw materials

PROPOSAL is related to: Infrastructure, Materials
in respect of: Availability

PRODUCTIVITY BOARD FOR INDUSTRIAL MACHINERY

OCT. 1985 Ref.No. 6.18

EXCISE RULE 56-C

Present situation:

When the goods are to be sent by primary manufacturer to the secondary manufacturer for processing, the latter has to obtain L4 Excise Licence and follow rigorous excise procedure even if he is in small scale sector and turnover does not exceed Rs. 16.0 lakhs, which is the exemption limit under Excise.

Primary manufacturers have to submit monthly returns to excise authorities.

In the entire process, Government does not gain or lose any revenue.

Change/Action desired:

Deletion of Rule 56-C
Amendment to Rule 56-B to accept manufacturers’ internal records in lieu of excise forms/registers

Action by:

Central Board of Excise & Customs
Dept. of Revenue, Ministry of Finance

Advantages expected:

Record keeping will be simplified
No need of L4 Licence for Secondary Manufacturer
No loss to small scale manufacturers

PROPOSAL is related to: Materials
in respect of: Govt. Policy / Proceed.

GOOD PRACTISE FOR IMPROVING PRODUCTIVITY

FOREWORD

During discussions amongst the members of the Central Task Force, it was felt that some of the good practices followed by professionally managed companies should be given wide publicity for possible emulation by others, in the interest of spreading the productivity culture.

The members felt that such a compilation of actual practices followed in Larsen & Toubro Limited be incorporated in their report on productivity improvement recommendations.

The following pages contain some of these proven good practices and systems.

1. MANUFACTURING AND ENGINEERING

1.1 INTRODUCTION

To improve manufacturing productivity, it is not enough if manufacturing methods alone are made productive. The engineering must also be continuously updated and improved upon.

Before a product is released for manufacture (i.e. a product of our own design or a product with foreign know-how), structured meetings are held to discuss the manufacturability, marketability, cost aspect etc. The concerned personnel take part in the discussions and any changes necessary to suit manufacturability and aid productivity are incorporated.

A continuous interaction between product designers and process engineers is maintained right from the conceptual stage of the product.

1.2 PRODUCTIVITY INDICATORS

All efforts to improve productivity will be meaningless if there are no means of measuring productivity. Some of the important productivity indicators are:

1.2.1 Labour Productivity Index

This is measured in terms of performance index which is a ratio of output in terms of Standard hours to clocked time.

This index is calculated for every production workman on a daily basis and weekly or monthly summaries are made for various production shops.

This system will necessarily call for good work measurement system and fixing of standard time for every job.

1.2.2 Indirect Labour

For indirect workmen like those in stores, maintenance etc., there are indirect indicators of productivity in terms of value of goods despatched, number of cases packed, etc.

1.2.3 Down-time

Considerable amount of useful production hours could be lost due to machine break-down, tool settings, non-availability of materials, etc.

These factors are, by and large, controllable by the staff and certainly not controllable by direct production workmen.

We measure these in terms of what is known as “Coverage factor”.

This is the ratio of man-hours covered by production jobs to actual clocked man-hours.

This index is calculated for each production centre on a weekly/monthly basis.

1.2.4 Utilisation of expensive capital equipment

Utilisation of expensive capital equipment is an important aspect of productivity.

This is measured in terms of the number of hours a machine is utilised to the number of operating hours available on the machine.

The machine utilisation statement is prepared every month.

1.3 FIXING OF TARGETS

The targeted figures for all the above performance indicators are fixed a priori for the budget year.

These figures generally have at least 5% improvement factor built upon the previous year’s performance.

Most of the data are computerised and made available to the operating personnel on a continual basis.

For example, the labour productivity figures for the day are made available to the shop foreman on the following day.

1.4 LOW COST AUTOMATION

Another important method by which productivity can be improved is through the adoption of ‘Low Cost Automation’.

Low Cost Automation in an engineering industry includes adoption of such automation/simplification methods as:

Pneumatic circuits
Automatic feeding/loading and unloading devices for machine tools
On-line conveyors in the assembly line, etc.

Some of the productivity measurement ratios are given in Annexure-I.

2. MANUFACTURING SERVICES

2.1 QUALITY ASSURANCE

Quality Assurance programme is established to ensure the desired product quality and reliability at every stage of manufacture from concept to commissioning.

It also provides assurance that quality functions are continuously and effectively performed by all concerned.

It recognizes the importance of normally ignored areas like engineering, design, material planning and control, procurement, etc., in product quality.

Quality Assurance system formalises the organisation's responsibilities and conventions through a written manual.

The Quality Assurance Manual emphasizes the policy of the Management regarding Quality Assurance.

It spells out the organisation and demarcation of responsibilities, along with detailed systems & procedures related to key areas such as:

engineering and design
material control
welding
inspection
non-destructive examination
calibration
product control
field performance feedback
documentation
quality audit

An extract from the statement of policy is given in Annex-II.

2.2 ORGANISATION & METHODS (O&M)

2.2.1 Operation “Paper-Destruction”

The aim of this exercise was to destroy unwanted papers and utilise valuable office space for better purpose.

This exercise was carried out during August–September 1984.

Steps taken:

a. An Office Productivity Committee was formed with the General Manager (Central) as President and O&M departmental head as its Secretary.

b. Brainstorming sessions were conducted with all Departmental Managers.

c. A target of 30% paper reduction was fixed.

d. Sub-committees at departmental levels were formed.

e. These committees scrutinized and decided on the papers to be destroyed.

f. The Departmental heads approved the destruction of the papers earmarked.

g. The Committee arranged for collection of all unwanted papers and the President lit them ceremoniously.

Results of this exercise:

Destruction of about 50 tonnes of unwanted papers
Release of 2800 sq. ft. of office space
Emptying of 15 filing racks

2.2.2 Form Design and Control

The aim is to reduce clerical work by controlling information in the office.

The design and printing of all forms are the responsibilities of the O&M Department.

Operations carried out:

a. Requisitions for printing of new forms or repeat printing are sent to O&M Dept.

b. O&M Dept. maintains a Functional & Numerical index of all forms used in the Company.

c. It vets each form and decides on the need for the form, or its revision.

d. It improves the design of the forms so as to take care of both the users' needs and the computer personnel's requirements.

e. It provides the specifications for printing.

f. It works out the retention plan for various copies.

g. It checks the proofs as well as the final form.

Outcome:
About 50 printing requests are cancelled each year, leading to substantial savings in clerical work.

2.2.3 Systems and Procedures

The aim is to lay down suitable procedures for various office functions for smooth flow of work.

The O&M Department:

Introduces company-wide procedures
Defines departmental procedures based on requirements

Methodology adopted:

a. Defines scope and terms of reference of the procedure

b. Collects all details relevant to existing practices

c. Records them in the form of a flow process chart

d. Analyses data, proposes alternatives, discusses with operating personnel, and selects the most suitable alternative within company policy

e. Obtains approval of all concerned departments

f. Approves any changes after implementation

g. Issues final procedure jointly signed by O&M Manager and concerned departmental Manager

h. Follows up for implementation

Results achieved:

58 Company Procedures issued
85 Departmental Procedures issued (Annexure-III)

👉 This has:

Reduced clerical work considerably
Improved flow of information

2.2.4 Filing Systems and record retention studies at the record rooms

The aim is to maintain a Central Record room for the use of all departments for storing semi-active records required for statutory or administrative purposes.

As part of the exercise, filing and record retention systems were studied in 2 record rooms. This included :

taking inventory of all files kept in the record rooms
scrutinizing them
removing files for destruction
weeding out unwanted papers from the files
preparing an index for files
laying down procedures for referring to the files in the record room and for setting aside new files for storing.

The outcome of such a systematic study was the destruction of 70% of the files and 60% of storage space being relieved.

2.2.5 Central Word Processing facility

One of the important uses word processors are put to is to reduce typing load of various departments.

The Word Processing Centre has been functioning since 1982 and provides word processing and type-setting services to the various departments.

Some of the ways in which the Word Processing Centre helps individual departments are :

a. typing out voluminous documents, particularly those which require repetitive typing.

b. Vetting the documents

c. Maintaining separate libraries for each Dept.

d. Storing the documents for future use/reference.

The Central Word Processing facility helps in the full utilisation of the machines and renders timely service to the Depts.

2.2.6 Microfilming of documents at R&D centre

The main aims of microfilming are to reduce storage space and maintain confidentiality of the documents.

The microfilming system consists of a Camera, a processor, a reader and a reader printer. This system has been installed at the R&D Centre.

The system consists of :

microfilming all reports and drawings
arranging them in one of the microforms (fische roll, etc)
preparing a microfilm index
sending the duplicate microfilm report to the user
retaining the negative at a different location for safety purposes.

As a result of microfilming, storage space has been reduced by 80%.

2.2.7 Microprocessor-based Card attendance system

The objective is to reduce clerical work of transferring attendance data manually from Punched cards to Computer inputs.

To this end, a microprocessor-based card attendance system (mfd. by KELTRON) is being introduced at our factory.

The system works in the following manner :

Read stations are installed at various departments. Each employee is given a coded card. The employee inserts the card while reporting for work and while leaving the factory. The reader senses the time and the employee's pay sheet no. and sends the input to a Central unit.
The Central unit transfers this data to the Computer to which it is connected.
This input data is taken directly for attendance and salary calculations.

Advantages :

a. Savings in clerical work

b. Supervisors have access to attendance data pertaining to their employees instantly.

2.2.8 Issuing of pamphlets related to Cost saving

So as to make the staff aware and conscious of the cost involved in various operations, pamphlets/booklets are prepared and released from time to time.

This consists in -

a. identifying areas where there is scope for cost savings by any office staff.

b. collecting all relevant details

c. analysing them and working out various proposals.

d. discussing them with all concerned.

e. preparing a suitable pamphlet/booklet.

f. arranging to issue them by the General Manager.

A few examples of pamphlets issued are :

'Talk is not cheap' - as referred to telephone conversations.
'Reduce your Stationery Cost'
'Cut your telex cost'

2.2.9 Training Programme on office methods and on improvements for office staff

The objectives of such a programme are to appraise the staff of office systems, modernisation, computerisation etc, so that they can identify possible areas for improvement in their office.

Every year training programmes are conducted for office staff at various levels. Atleast one programme is conducted at each location. These are conducted in association with the Training Department and are designed for clerical and secretarial staff.

The coverage is :

oral communication
office correspondence
office aids
record keeping and filing systems
form design and control
office work measurement
office work simplification
systems charting and office productivity.

2.3 SAFETY

One of the most important services to manufacturing is that of safety. The three main functions of the Safety Department are :

Accident prevention
Fire prevention
Creating Safety consciousness

The best practices followed can be enumerated as under :

2.3.1 Engineering

Survey, recommend and implement systems and practices at the initial stage of plant inception.
Conduct periodical safety audit once the plant is operational.
Recommend correct and safe protective measures for various industrial operations.

2.3.2 Enforcement

Ensure observance of statutory rules and regulations with respect to safe practices as specified in Factories Act, Insurance Rules, Explosives Rules, Gas Cylinder Rules, Petroleum Rules and Local Municipal Act.

2.3.3 Education

Impart education and training in Safety by

Class room training programme
First-Aid Training
Traffic safety Training
Sign Boards
Safety Posters
Articles in Newsletters
Fire Fighting demonstrations

2.3.4 Enthusiasm

Generate enthusiasm through :

Safety contests
Slogan and Essay competitions
Safety Day celebrations.

2.3.5 Safety Committee

There should be a Safety Committee with Union representatives as members so that their participation is possible.

2.4 COMPUTER APPLICATIONS

Computer applications are legion. We have a fourth generation Computer system with 35 interactive terminals that can be used for integrated data processing systems besides engineering and other applications.

A wide variety of functional areas are covered for computerisation as described below :

2.4.1 Finance

Pay Roll Accounting System
Marketing Information System
Invoicing System for Standard Products
Customer Outstanding System
Suppliers' payment and Account System
Capital Assets accounting System
Fixed Deposit Accounting System

2.4.2 Materials

Materials Planning & Reservation System for Jobs.
On-line inventory System for Standard Switchgear Products
Inventory stock & replenishment System
Finished Goods Inventory System
Requirement Planning System for Standard Products
Vendor Master

2.4.3 Planning & Costing

Job costing
Shop performance reporting System
Project Management and Control System

2.4.4 Human Resources

Manpower Information System
Training Requirements Planning

2.5 COMPUTER AIDED DESIGN AND MANUFACTURE

We have been developing and executing engineering programmes on the in-house Honeywell-Bull Computer and on the DEC-10 facility at TIFR.

A brief outline of the programmes covering Mechanical, Structural and Thermal design, Interactive Graphics Applications, NC Programming for Computer-Aided Manufacturing are listed below :

2.5.1 Computer Aided Design (CAD)

Design of Multichamber Tower subject to wind and seismic loading
Beam loads in Multiplanes
Single phase, multipass Heat Exchangers

2.5.2 Interactive Graphics

Interpenetration curve development
Optimum hole layout on heat exchanger tube sheets
Stress Analysis by Finite Element method
Plant piping and Equipment layouts
Computer Aided Drafting - Heat Exchanger tube sheets
General Arrangement and Scheme drawings for Switchboards
PCB layouts and wire harness charts

2.5.3 Computer Aided Manufacturing (Through Paper Tape Generation) - (CAM)

Optimum multispindle operation on CNC Drilling Machine.
Nesting of varied shapes within a given plate size - CNC gas cutting machine.
Sheet metal blanking - Amada Turret Punching machine.

2.6 HOUSE-KEEPING

Good house-keeping is a matter of attitude and is developed through general awareness at all levels. The following are simple practices which help in good house-keeping :

a. Development of the correct attitude and Building up of a suitable culture

House-keeping is everybody's business and everybody should know and practise it.

Make people understand the advantages of good house-keeping, with respect to increased efficiency, safe working conditions, low operating cost, better use of floor space and motivating environment.

b. Responsibilities

Each person must understand that he is accountable for house-keeping of his work area.

A supervisor who lays stress on good house-keeping by his own actions encourages his workmen to follow him.

c. Making it easy for all by :

providing waste-baskets so that littering on the floor is minimised.
keeping a brush handy so that benches and machines are kept clean.
providing storage space so that tools and equipment can be kept properly.

d. Prevention of likely house-keeping problems

by plugging a leak in time or providing a tray to collect chips otherwise falling on the ground.

e. Encourage participation

by listening to suggestions from workmen who know their areas best, and organise house-keeping contests.

2.7 METHODS TIME MEASUREMENT (MTM) & PRE-DETERMINED MOTION TIME STANDARDS (PMTS)

Effective implementation of MTM techniques can be brought about by -

Presentation of PMTS concepts to Senior Engineers.
Exposure of PMTS techniques to middle and junior level Engineers
Intensive training of 5-6 weeks in PMTS and related subjects to participants drawn from various Engineering functions.
Encouragement to workers to participate in this area.
Facilities provided for training, such as Laboratory, Library, etc.

3. INFRASTRUCTURE

3.1 PLANT LAYOUT & MATERIAL HANDLING SYSTEM

In order to increase productivity in Industry, systematic layouts should be planned for the integration of all the activities starting from receipt of raw materials to despatch of finished goods. The buildings are to be designed to meet the functional needs and should be aesthetic. The master plan of the entire estate should be prepared so as to meet the above requirements as also the statutory requirements of State Govt., Central Govt. and other local authorities.

All the infrastructural facilities such as power generation, receipt and distribution, water supply (storage & distribution), drainage (sewage, industrial waste & storm water), effluent treatment (domestic & industrial) fuel storage and distribution, telephones, telex, ventilation, lighting, compressed air distribution, air-conditioning, exhaust air-monitoring, security, internal roads & street lighting, gardens, canteen, medical facilities, welfare & recreational facilities, fire fighting etc., should also be planned and integrated with the main manufacturing activity layouts planning.

The storage & material handling system should be designed to meet the requirements of industry considering immediate and future volume of operations and integration of all the operations from receiving of raw material to the dispatch of finished goods.

3.2 TRANSPORT

Although it is not statutory for industry to provide transport facilities to its workers, in order to increase efficiency and also to ensure timely reporting it is advisable to extend this facility to them. In doing so, the hardship of travelling by public transport systems is mitigated considerably. The time wasted in travelling to and fro can be saved and utilised by the workman to look after his family interests.

4. MARKETING

4.1 SALES NETWORK

In the case of products which are sold through the market using services of established dealers, it is advisable to have one's own sales network that can assist stockists and guide them in their sales efforts.

We have set up a sales network consisting of sales engineers, supervisors, representatives situated in the various Regional and Branch offices. Their primary function is to contact the prospective customers, find out their requirements and promote the sale of our products. This, they do on their own and also together with the Sales Personnel of the stockists covering that area. They also assist the stockists in dealing with problems that the customers may have, technical or otherwise, guide the stockists in planning their inventory and also help them in sorting out customers' complaints.

The field Salesmen/Supervisors of the Company also provide the necessary feed back from the market regarding competitors' activities and customers' reaction to our products, their complaints, price aspect etc.

4.2 LOYALTY TO STOCKISTS

We believe that in order to get loyalty from the stockists, it is equally necessary for the Company to show loyalty to them. With this in mind, we work very closely with our stockists and treat them as part of our organisational set-up. We back-up their sales efforts with the technical know-how that they sometimes lack, guide and help them in their sales efforts and at no time compete with them by selling our products directly to the customers. Only in some cases, due to Governmental restrictions, when customers are not in a position to purchase from the stockists, we handle the business directly. In this way, the stockists are assured of our full support in their sales efforts. Similarly, we discourage the stockists from encroaching on other stockists' areas, discourage inter-stockists' competition, so that they are assured of a reasonable return. We back up the stockists, as far as quality is concerned.

We also offer effective after-sales-service, which the stockists may not be in a position to provide. In short, we treat the stockists' operation as an extension of our own and do not treat them as though they are outsiders.

5. FINANCE

5.1 TIMELY PAYMENT TO SUPPLIERS

In big companies, payments to suppliers may involve large amounts of money. The terms of payment may vary as eg. Advance payments, Payment against deliveries, Payment against documents through banks, Payment against Hundis, Payment against various credit notes etc.

In order to carry out any of these systems effectively the payment system should be preferably computerised. In case the system is computerised, the following requirements need to be fulfilled :

a. The relevant documents like Purchase Orders, Suppliers' bills, Goods Receipt Note, etc, must be scrutinized for their completeness before they are fed to the Computer.

b. A computer Cell is to be created. This will go into the details of all the documents and check for its correctness.

5.1.1 Bill Passing

The Computer constantly processes the bill-passing documents. Each bill is verified with respect to the appropriate Goods Receipt Note and the relevant Purchase Order. From the bills which are duly passed, a number of statements are generated, eg. Purchase Register, Sales-tax Register, Suppliers' Ledger etc.

Bill passing, which is otherwise a routine and monotonous activity, is done on the computer with great speed and accuracy.

In case the cheques are also to be printed through the computer, the system should be developed in such a way that the cheques are received at frequent intervals and also posted in time to reach the suppliers on or before the due date. Prompt payment to suppliers is necessary because this helps in building their confidence in the Company.

Whenever tax deduction certificates and other sales-tax certifications are to be issued, they should be programmed to be issued by the computer alongwith the cheques. Besides, suppliers' ledgers, statements of accounts, trial balance etc., can also be obtained through the computer with greater speed and accuracy.

Up-to-date position of the pending bills, Goods Receipt Notes etc., are to be made available so that whenever any supplier turns up to enquire about his payment, he can be attended to immediately.

5.1.2 Meeting the Suppliers

Regular meetings with suppliers to understand and sort out their problems can create confidence among them. This will also serve as a feed back as to how the computerised system is working in achieving the objectives of making the payments to suppliers in time.

5.2 MANAGEMENT PLANNING & CONTROL SYSTEM

5.2.1 Aims of the System

The budgeting and performance reporting system, also known as the Management Planning & Control System (MPCS), forms one of the primary management tools for ensuring optimal corporate performance. MPCS is aimed at :

Ensuring Corporate Management's involvement in the budgeting process so that they can indicate the desired direction and thrust of the organisation in the future. This can help the decentralised units plan their operations accordingly.
Providing a forum to the lower levels of management for formulating and settling their budgets so that their involvement in and commitment to the final targets agreed upon are ensured.
Ensuring that the major assumptions underlying the budget targets are articulated and all possible factors impinging upon the company's operations are taken into account.
Continuously monitoring the performance against the budget with a view to highlighting the shortfalls in performance and "triggering" remedial action.

As part of the budget exercise every Manager should include productivity improvement targets.

5.2.2 The Budgeting Process

The budgeting process starts after the issuance of the Corporate Policy Guidelines by the President.

The budgets are developed at the operating levels and are consolidated upwards at Group/Unit levels. The budget proposals are reviewed and scrutinised at each stage of submission and consolidation. These are finally discussed at the "Settlement Sessions" at Corporate level. The budgets as approved by the Corporate Management are communicated to the respective Groups/Units. These approved annual budgets are broken down monthwise. These are used for comparing the actual performance during the course of the year. Performance against budget is reviewed every month during the meetings of the Budget Committees comprising Vice President (Operations), Vice President (Finance), General Manager (Finance) and the concerned Group General Manager. The General Managers review the performance of their sections with the respective Managers. These meetings help Corporate Management in identifying problem areas and deciding on the corrective course of action.

5.3 TRANSFER PRICING SYSTEM

5.3.1 Concept

Transfer pricing system assumes that the factory makes neither loss nor profit and that only the Marketing Division earns the profit.

For this purpose, the total factory cost is titled as Transfer Price. The factory manufactures the goods and passes these on to the Marketing Division at the Transfer Price.

5.3.2 Contents of Transfer Price

As stated earlier, the total factory cost is considered as Transfer Price. This would contain :

Product Cost
Service Departments' Overheads

The Product Cost consists of :

direct material
direct labour
direct expenses
material overheads
shop overheads

Service Departments' expenses consist of expenses of various service departments like -

Production planning & control
Work study
Research & Development
Purchase Department
Accounts Department
Labour Department

The Transfer Prices are developed before the year begins on the basis of budgeted factory costs collected under various elements indicated above.

The transfer prices so prepared are discussed amongst the Factory Manager and the Marketing Manager, wherein the Marketing Manager has a right to question the justification of the computation of transfer prices.

5.3.3 Revision

During the year, the transfer prices are reviewed on a quarterly basis. In case, as a result of revision in the cost of inputs, the total factory cost for the ensuing quarter is expected to go up or down by more than 3 percent of the transfer price, the same are revised.

5.3.4 Cost Variance

On a regular basis, the total actual costs are compared with the transfer prices. If the actual cost is higher, the factory is stated to have underrecovered the costs and vice versa. The cost variance or under/over recovery is considered a measure of performance of the factory.

The Cost Variance is broken up into different meaningful components segregating factors that are both controllable and uncontrollable by the Operating Managers. The former ones are generally assignable to various inefficiencies.

However, the underrecovery resulting from such inefficiencies is not expected to be passed on to the Marketing Division through the transfer price.

A reporting hierarchy can be developed on an exception basis so as to give adequate feed-back to various levels in the factory, to production departments as well as to the Service Departments. Micro job variance analysis is also carried out and reported to the Shop Foreman for effective corrective action.

Similarly, individual expenses under each account code can be reported to various Depts. along with the comparison with budgets.

5.3.5 Profit

The Marketing Division is presumed to be buying these goods from the factory at the transfer prices, sell these and earn profit for the Company. Thus, while fixing Sales prices, Transfer Prices are a major guiding factor. All kinds of marketing expenses are to be borne by the Marketing Division. The difference between the sales price and the transfer price is termed as 'Margin' on a product while from margins of products all the marketing overheads are subtracted to arrive at the contribution of that particular Marketing Division towards the Company's Profit. Company's Profit is determined as the total contribution generated by all the Divisions less the corporate overheads.

5.4 CAPITAL EXPENDITURE BUDGETING & CONTROL

5.4.1 Stages in capital budgeting

Deciding on overall amount to be spent on capital expenditure by a Manufacturing unit.
Compilation of Appropriation List containing all the proposals of capital expenditure in the ensuing year aggregating to the total amount indicated above.
Quarterly sanctioning of specific proposals from the appropriation list required to be committed during the particular quarter.
Execution of the specific proposal.
Control on capital expenditure under the specific proposal.
Monthly reporting.

5.4.2 Quarterly Sanction

Proposals to be undertaken and committed during the ensuing quarter are discussed within the Manufacturing Unit and then presented to Capital Budget Committee. The committee goes into the details of the technical and economic feasibility of that particular proposal. The committee consists of representatives from the concerned Manufacturing unit, Finance and Top Management. After scrutiny, the committee sanctions specific amounts for that specific capital expenditure proposal. The proposal may consist of buying a particular plant & machinery item or a civil construction project. The amount sanctioned may be spent at a later date depending upon when an equipment is purchased. In such a case the full amount may be spent at a time or may extend over a period of time when it concerns a civil construction project. For the purpose of financial planning, the initiators are expected to indicate the phase-wise cash outflow in respect of sanctioned proposals.

5.4.3 Commitment of Funds

The initiators then compile the relevant data in respect of the proposals and prepare a purchase requisition bringing out the detailed specifications of the proposal including the date of installation, completion, etc. In respect of civil construction projects, a detailed schedule of quantities is prepared and then tendered out.

On the strength of the purchase requisitions prepared as above, the purchase department negotiates with the suppliers/contractors and places a purchase order for the equipment or enters into an agreement with the contractor when it entails a contract.

5.4.4 Execution of the Sanction

In respect of an equipment, as soon as the same is received, preliminary inspection is carried out and after the installation, a detailed inspection of the same is carried out to ascertain that the equipment functions in accordance with the terms specified in the purchase order.

In respect of a civil construction job, the same is executed according to the schedule of quantities and the architect/consultant certifies that the job is properly completed as per the drawings.

5.4.5 Control on Capital Expenditure

a. Equipment :

Before the purchase order is placed on the supplier, a controlling agency ascertains that adequate budgetary sanction is available for the specific equipment requisitioned.

After commissioning for major expensive equipment, a six-monthly report has to be prepared by the initiator to bring out the estimated utilisation and actual utilisation of the equipment.

b. Civil Construction jobs :

During the period of construction, the following control measure is exercised on a bi-monthly basis:

In respect of a job, the actual expenditure accrued and the total estimated cost of the job are reviewed vis-à-vis the percentage of work yet to be completed as duly certified by the architect. The purpose of this review is to forewarn the possible cost over-run in respect of the job. Should such indication come to surface, an investigation is taken up to find out the reason for the cost over-run and corrective action is taken.

5.4.6 Monthly reporting

A monthly report indicating the actual commitment and cash-flow that has taken place till that month and the expected plan for commitment/cash flow and commissioning is submitted to the Capital Budget Committee (CBC).

This report also indicates the actual Cash-flow for the units and expected cash-flow for the period of 12 months thereafter. This serves two objectives :

Monitoring the actual cash-flow as envisaged in the plan
Providing finance for the balance period of the year.

6. MATERIALS & ANCILLARY

6.1 INVENTORY CONTROL

All items of inventory should be categorised after carrying out ABC analysis. For each category, inventory norms should be decided and indenting should be done as per the said norms. Monthly review of ‘A’ category items helps in controlling inventory.

6.2 VENDOR RATING

Regular Vendors should be scientifically rated on a 6-monthly or an yearly basis. The important criteria to be considered for rating should be the frequency of rejections, adherence to delivery schedules and supplying of the exact quantity as per the schedule. A specimen of Vendor Registration form is given in Annex. IV.

6.3 SOURCE DEVELOPMENT

Areas where additional vendors or better vendors are required should be identified. A team of engineers conversant with manufacturing processes should locate new vendors and nurse them till they become regular suppliers. The whole philosophy should be to treat vendors as partners in the path to progress.

6.4 SOURCE SEEKER

This is a quarterly publication compiled and released by the Source Development Cell of Central Materials Department. The main objectives of the publication are to inform concerned personnel about new products in the market as well as newly registered vendors for existing items. This reduces search time considerably on the part of purchasers and indenters.

6.5 ALL INDIA INVENTORY REPORTING

At the beginning of each year, budgets are prepared by the operating personnel. These are vetted by various levels of management and finally approved by Corporate Management. Every month the actual inventory is computed, compared with the budget and activity level and reported to various levels of management including Corporate Management. Wherever necessary, corrective action is initiated. Accountability for inventory rests with the Materials Manager for manufacturing materials, Production Managers for Work-in-Progress materials and Divisional Managers for Finished Goods.

6.6 IN-COMPANY STANDARDIZATION

The principles and techniques of Standardization can be applied to achieve beneficial results in virtually every phase of industry and business. In the present industrial context, standardization can cover terminology, basic engineering methods, materials, products and systems. Company Standards are written documents intended to control and guide design, development and manufacture of company’s products.

The basic aims of standardization should be to :

a. reduce material overhead costs
b. make procurement easy and improve reliability of suppliers
c. improve level of quality of procured materials
d. reduce unit cost of procured materials
e. improve communication between the company and its suppliers
f. promote Indian Standards.
g. participate in the formulation of National Standards.

Our mode of operations is based on the Committee method i.e. a main appointed Committee scrutinizes the draft standards prepared by the Standards Cell of the Materials Department before its release. A number of sub-committees on Ferrous & Non-ferrous materials, Packaging, Safety etc are involved in the drafting of the respective standard.

The scope of standardization has been recently extended to cover Stationery items, Uniforms, Office and Shop furniture and ergonomics.

As part of standardization, periodic trials of consumables are carried out with a view to finding out the best brand. This is decided in terms of the lowest total cost, i.e. material and labour. Generally, cutting tools and other labour-oriented items are eminently suitable for trials and the economic benefits are also sizable.

6.7 CODIFICATION

Codification of raw materials/consumables is done by Standards Cell of the Materials Department. The initiator fills up a 'New Item Stocking Request' form, giving all particulars of the new item and justification for its introduction. The Cell scrutinizes the request and allots code numbers.

A 10-digit all numeric code structure is followed. Broadly, the structure is as follows :

The 1st digit represents the general category such as

Capital goods
Spare parts
Raw materials
Consumables
Components etc.

The 2nd and 3rd digits represent type of materials, such as

Structural Steel
Carbon Steel
Alloy Steel
Copper
Plastics, etc.

The 4th and 5th digits represent the form of the material.

eg.

round
square
hexagonal
flat, etc.

The 6th and 7th digits represent the material specification.

eg.

structural quality
commercial quality, etc

The 8th, 9th and 10th digits represent actual sizes.

6.8 SCIENTIFIC PACKAGING

Packaging Cell attached to the Materials Department works out the packaging design for all products. The aims of the Cell are to design effective packaging at low cost. This is effected by the proper selection of materials, standardization of sizes, reducing wastage, finding new applications for conventional materials, reducing variety and introducing unitisation. In addition, the Cell keeps itself abreast of new materials developed in the field of packaging.

7. HUMAN RESOURCE PRODUCTIVITY

7.1 INTRODUCTION

Though Productivity means and includes various factors of Production, no other factor has assumed as much importance as Human Resource.

It is common knowledge that man can increase his effectiveness in a given situation provided he can concentrate fully, devoid of all troubles that might hinder his performance. This philosophy underlines various measures taken by an organisation to clear all obstacles in his path, so that he can concentrate on his job and thereby also derive greater job satisfaction.

In order to achieve this twin objective i.e. of improving job performance and job satisfaction, the following blueprint is suggested for adoption by industrial organisations.

7.2 MANPOWER INFORMATION SYSTEM (MIS)

This system provides timely information on the existing Manpower and assists Management in decision making. MIS could be manual or computerised based on the specific needs and size of the organisation. However, a computerised MIS is more advisable since our objective is to increase efficiency.

The system should be capable of storing and updating manpower information on an on-going basis by incorporating the changes in employees' records. The information could be categorised as under :

a. Personal history and social characteristics

b. Personnel Administration - Wages/Increments/Transfers.

c. Performance Appraisal Objective - Reward/Punishment system, Training & Development Programme.

d. Manpower Planning and Budgeting.

e. Leave and Disciplinary action
f. Changes in personal information
g. Separations

Involvement of all the user departments is a MUST for the effective design and implementation of MIS.

Since availability of information by itself is not an end in itself, a culture will have to be developed to take relevant decisions based on the data so available.

7.3 PERFORMANCE APPRAISAL

The Performance Appraisal system, based on the objectives set jointly by the superior and the subordinate, is recommended for assessing the performance of employees. In addition, the system facilitates in identifying :

a. his strengths and weaknesses
b. his potential for future growth
c. his training/developmental needs

To make this system effective, it is necessary that all the supervisors/managers be equipped emotionally and technically to operate it. They must be trained periodically to receive and give feed back, since proper feed back is the soul of this system.

The Performance Appraisal, based on Management by results, will help the Organisation weed out non-performers, and pave way for improved organisational efficiency and effectiveness. A specimen copy of the Performance Appraisal form is given in Annexure-V.

7.4 RECRUITMENT POLICY

Recruitment policy spells out clearly the norms for selecting people who will meet the job requirements with commensurate qualifications, experience and ability. The corner stone of a selection procedure is elimination of element of subjectivity (influence). It should ensure proper screening of applications with the help of Psychological, I.Q. and Trade Tests.

Advertisements must specify clearly the job profile and/or the incumbent's profile. Applications received should be rated separately by two agencies, where one of them is the initiating department which has a vacancy. The interview panel should consist of concerned departmental representatives and representatives from the Personnel Department. Maintaining objectivity throughout the selection process is the hall mark of a good selection procedure.

7.5 HOUSING SCHEME FOR EMPLOYEES

Provision of housing will be the most emotive issue in the Management - Union equation in times to come.

In the already established urban centres where land prices are phenomenal, it will not be possible for Organisations to provide housing to their employees. In such cases, the Organisations should provide all assistance in terms of procurement of land, services of architects etc.

In the new set-ups, housing colonies with recreational facilities, fair price shops and medical centres should be provided and the cost towards these should become part of the project cost.

7.6 TRAINING SCHEMES

At a time when availability of trained manpower is becoming difficult, it is for the Organisation to recruit fresh Graduates from Educational Institutions and train them to meet their growing manpower needs in various specialisations. Such "In-company training schemes" could be called "Graduate Engineer/Diploma Engineer Trainee" Scheme.

Such structured training programmes can help the trainees in advancing to positions of higher responsibilities in the various areas of manufacture, design, marketing, systems, personnel etc, within the organisation. They also help in the organisation getting an indepth knowledge of the strengths and weaknesses of the individuals.

This training should be in the form of 'Guided on-the-job training' by qualified internal and external faculty.

7.7 EDUCATION

The Company should view Education as an area of Corporate Social Responsibility. It may be of a supportive nature, leaving the primary responsibility of educating himself or his children, to the employee.

Companies are recommended to grant Merit Scholarships to the employees' children. Outstanding children may be given publicity in in-house journals.

Employees should also be encouraged to attend part-time courses.

Companies should encourage their officers to become visiting Faculty members in Educational Institutions.

Considering the growing difficulties in obtaining admission in technical institutes conducting diploma courses in the various branches of engineering, industries should also promote, sponsor or adopt technological institutes. These institutes should be equipped with the most modern machines and also house a library containing the latest books on technology.

7.8 WORKERS' EDUCATION SCHEME

In order to develop a disciplined, mature and enlightened workforce in the Company, instil organisational loyalty and mould them to be law-abiding corporate citizens, the Workers' Education Scheme should be implemented with all seriousness.

Batches of workers from all departments should be enrolled in the classes. The curriculum for the classes should be as given in Annexure- VI

7.9 CREDIT SOCIETY

To promote thrift and the saving habit amongst employees in the Organisation and also to help out employees who are in need of Emergency loans, the Company should

a. form a Co-operative Credit Society, registered under the Co-operative Societies Act.

b. encourage employees to become members of the Credit Society.

Working of the Societies should be totally independent of the Company. It must be viewed as an avenue for training of workmen in the areas of management. The Credit Society should be entirely managed by workmen. This offers scope for worker participation.

Since the Co-operative Society is recommended to form part of an integrated welfare programme for the workers, industries should provide space, furniture/fixtures to the society and encourage the process of office mechanisation leading to computerisation.

7.10 SUGGESTION SCHEME

A good suggestion scheme emerges only in an environment of good communication between workmen and management at all levels. There should be a feeling of involvement and a sense of belonging and pride in achievements of the organisation for the success of such a scheme.

Competition in the market is increasing and becoming fierce. Organisations can counter this only by reducing costs of production, improving quality, adhering to delivery schedules and offering better after sales service.

To achieve this, all areas of operations need to be improved through efficient working and in this, the suggestion scheme has a very vital role to play.

A good suggestion scheme should activate workmen to make suggestions towards enhancing work efficiency.

The important thrust of the Suggestion Scheme is the method of awarding and recognizing the suggestions made. In short, direct benefits of the Scheme will result in :

boosting morale
making workmen think
effecting better communication between Management and Workmen
improving human relations
improving employee involvement
making identification of the problems easier

7.11 WELFARE SCHEMES

In an under-developed economy with low productivity, mass poverty and heavy unemployment, the Corporate social responsibilities for welfare of the employees, increase manifold.

Most of the labour welfare activities today are prompted and re-inforced by legislations. Their aims are to improve health, safety and efficiency of the workmen in the work setting. A time has come to widen the scope of labour welfare to cover the all-round well being of the employees, not only as members of industrial and commercial undertakings but also as members of society at large.

It is recommended that the welfare facilities to be extended to the employees be promoted by scientific assessment of needs of the employees and not merely by spirit of philanthropy and charity.

The welfare benefits suggested are as under :

Medical services to employees and their families
Co-operative Credit Societies
Consumers' Co-operative Societies
Transport
Canteens
Protective Safety gear & uniforms
Libraries
Recreational and cultural activities like Sports, Picnics for small groups etc.
Workers' Education Classes
Counselling and guidance services to employees by trained counsellors.
Rehabilitation of widows through a co-operative society etc

The list is only illustrative. It is expected that the organisation's interests and investment in employees through Welfare Schemes will yield rich dividends in terms of improved industrial relations and promotion of Company loyalty. Besides, it will enable employees to function more efficiently.

7.12 PROJECT "WARM"

It is general experience that industrial organisations that are in existence for about 25 years now, are characterised by high wages, general lethargy, erosion of work ethics, low morale and excessive job security. This invariably results in the total stagnation of such organisations as also of the employees, leading to the Organisation losing competitive spirit and edge over others. New and modern industries with younger work force, with a set of modern values and new work culture pose a serious threat to such old, established Organisations.

In order to keep the industrial Organisations trim and fit and more cost effective, it is recommended that Project "WARM" and Project "ASH" be adopted by all the Industrial Organisations. (Refer Annexure-VII). The contents may vary slightly, depending upon the needs of the individual organisation.

7.13 COMMUNITY WELFARE

Industries should not only concentrate on the narrow aspect of Labour Welfare, but should also cover the community at large by extending various welfare schemes. They can do this by assisting Voluntary Social Welfare Organisations, by sponsoring fund raising programmes or by giving monetary grants.

Industries can also sponsor sports activities for the handicapped, etc.

Sponsoring of the destitute children through Community Aid and Sponsorship programme is another way of discharging the Industries' Social obligations. Industries may extend medical and allied services to the public, including Family Planning.

Industries setting up units in the interior parts of the country should anticipate the social change that it is likely to bring about and draw up an integrated social welfare programme for the village around the new factory, in consultation with local welfare agencies. This would include starting of primary and secondary schools, provision of medical centres, starting of Balwadis for children, etc.

7.14 CULTURE & VALUES

No modern society can survive or sustain itself except as an industrial society, using modern industrial technology. Industrial Technology requires large industrial organisations to operate and Industrial Organisations have become representatives of our society. They have become Institutions which set the standards of our social life. They lead, mould and also direct the mode of living of our society. Our social problems and social tensions are woven round the industrial organisations. Though in the minority, their wage scales influence the national wage levels, their work ethos represents the national work ethos. They have, in short, become the symbols of our social organisation. As social institutions, they are a product of our social needs and pressures. They are responsive and adaptive organisms. The basic change from an industrial organisation to industrial institution takes place due to infusion of VALUES. The following are certain values that each organisation must try to nurture:

Pragmatism
Co-operation
Sensitivity
Adaptability
Fairness
Loyalty and dedication
Entrepreneurship
Consistency
Self-sufficiency
Discipline
Clarity
Credibility
Adherence to law

Only through the infusion of such Values in its various activities can a good industrial organisation claim to be a social organisation. This could be illustrated by two simple examples :

a. Industrial Organisation must create culture amongst its employees that no bribe will be given to any one to cover up any irregularities. This would ensure spreading of a value which is socially desirable.

b. So also, industrial organisation must create a sense of social commitment in the areas of pollution, family planning, etc.

7.15 STRATEGIES FOR THE NEXT DECADE

Each industrial organisation would do well to study its own evolution and growth in terms of :

geographical spread of its activities
range of products
manufacturing processes
its strengths and weaknesses in various aspects of management
profile of its employees and their skills,
etc.

It should then look at its future more objectively, examine new geographical areas to be entered, new products to be manufactured, new technologies to be adopted and the market segments to be catered to. On the basis of such examination, a decision should be taken in regard to -

Whether new factories are to be set up in new locations,
Whether any merger or amalgamation with the existing set up is desirable,
Whether any sick units are to be taken over,
Whether any joint ventures are to be floated
etc.

On the basis of such an analysis, every organisation must prepare itself for a change in the coming decade. The change is to be expected mainly in the area of Man-Management. Organisations will have to tackle the following problems connected with the personnel :

Eroding work ethics
Stagnation of employees
Declining productivity
Changing skill requirements
Rising wages
Surplus manpower and 'dead-wood'
Flexible job classification
Militancy among workmen

A suggested model for new locations is as follows:

OLD NEW

a. Labour Intensive Capital Intensive
b. Obsolete Technology New Technology
c. Eroded Work-Ethics Farmer's Work-Ethics
d. Emphasis on 'Rights' Emphasis on 'Duties'
e. Highly centralised decision-making Decentralised decision-making
f. System/Procedure oriented Action/Result oriented
g. Many levels of hierarchy Few levels of hierarchy
h. Impersonal Industrial Relations Personalised Industrial Relations
i. Consultative style Participative style
j. Fat, Sluggish, Slow Response Lean, Alert, Quick-on-the-Draw
k. Input oriented Output oriented

The suggested strategies to counter these problems are :

a. Decentralised personnel set-up
b. Employee involvement
c. Change in the management attitude
d. Emphasis on Workers' Education
e. Better communications.

ANNEXURES

NOTE :

All the ratios mentioned under 2.1 above, are compared with the corresponding standards to measure productivity level.

2.2 ASSEMBLY, COMPONENTS & FINISHING SHOPS

2.2.1 Output in Standard Man-hour ÷ Input in Actual Man-hours.

2.3 STATIC CONTROL SHOPS

2.3.1 Output in standard man-hours ÷ Input in Actual man-hours

3.0 PACKAGING FACTORY

3.1 Output (in numbers) per month ÷ Total number of workmen (direct + Indirect) on roll during the month + Equivalent men for overtime hours.

This ratio is worked out every month and compared with the same for preceding month/s to observe the trend.

4.0 TRACTOR ENGINEERS LIMITED (TENGL)

4.1 Base Hours ÷ Actual Hours.

Base hours represent the actual work content of the job done and are calculated using the elemental time standard data developed by Caterpillar but modified to take into account the machines, methods and raw materials actually used in TENGL. Actual hours indicate the actual time spent by an operator in performing a particular operation and include operational time, set-up time and other non-productive time as included in Base hours.

4.2 Hourly Hour ÷ Base Hours.

Hourly hours are the hours spent by all men involved in production - direct and indirect. They are collected from attendance records and reflect the 'TOTAL LABOUR' required to MANUFACTURE.

This ratio indicates total man-hours required to produce a Base Hour.

ANNEXURE–I

PRODUCTIVITY MEASUREMENT RATIOS

1.0 ENGINEERING WORKSHOPS

1.1 FABRICATION SHOPS :

1.1.1 Standard Time ÷ Actual Time
(for Fabricators on jobs for which standard times are established)

1.1.2 Estimated Time ÷ Actual Time
(for Fabricators/Welders/STOs on jobs for which standard times are not established)

1.1.3 Allowed Time ÷ Actual time
(for Fabricators/Welders/STOs on all jobs. Allowed Time is based on the judgement of the Foreman and time standard, wherever available)

1.1.4 No. of Electrodes burnt per shift per Welder
(Adjustments are made for lack of work, short leaves, machine breakdown, welding position, electrode gauge, etc.)

Periodic sampling studies are carried out to control the average length of left-over electrodes.

1.1.5 X-ray defects - % of defective shots in number of shots taken per Welder and per shop.

1.2 MACHINE SHOPS

1.2.1 Actual Time ÷ Standard Time
(For Drilling Section)

1.2.2 Actual Time ÷ Allowed Time as indicated by the Foreman, based on his judgement and time standards at the time of allotting job (this ratio is used in all Sections other than Drilling Section).

1.2.3 Actual time for which machines are utilised ÷ Total time available for machine utilisation.

1.2.4 Value of spares (for machines) consumed ÷ Cumulative Depreciation of the respective machines.
(This ratio is used for high-value machines).

2.0 SWITCHGEAR FACTORIES

2.1 SWITCHBOARD FACTORY

2.1.1 LINK SHOP

2.1.1.1 Kgs. processed per man-hour.
2.1.1.2 Kgs. sheared per man-hour.

2.1.2 FABRICATION SHOP

2.1.2.1 Sheet Steel Kgs. sheared per man-hour.

2.1.2.2 Output in standard man-hour ÷ Input in Actual Man-hours
(This ratio is worked out for each group of Fabrication Shop separately as well as the groups combined.)

2.1.3 PAINT SHOP

2.1.3.1 Area painted (in Sq.Mtrs.) per man-hour.

2.1.4 PRE-ASSEMBLY SHOP

2.1.4.1 Man-hour per equivalent Frame (for CA Frame Assembly Shop).

2.1.4.2 Man-hour per equivalent Panel (for Shell Assy., Bus-bar Assy. & TQ Frame Assy).

2.1.4.3 Output in standard Man-hour ÷ Input in Actual Man-hour
(This ratio is used for Table Assy. Group and TQ frame Assy. Group).

2.1.5 MODULE ASSEMBLY SHOP

2.1.5.1 Man-hour per equivalent panel.

2.1.6 NON-STANDARD SHOPS

2.1.6.1 Man-hour per equivalent panel.

2.1.7 FINAL ASSEMBLY SHOPS

2.1.7.1 Man-hour per equivalent panel.

2.1.8 PACKING SHOP

2.1.8.1 Man-hour per equivalent CA section packed.

2.1.8.2 Man-hour per equivalent Loose Box packed

2.1.8.3 Man-hour per equivalent case packed.

4.3 Direct Labour Yield %, measured by

Scrap Hours relate to loss of Base Hours due to rejection and spoilage. Irrespective of the operation at which the parts are scrapped, 50% of the total Base Hours required to produce a finished part is taken as Scrap Hours per piece. Law of averages should eliminate any discrepancies in factual scrap hours.

This ratio represents performance in proper perspective.

4.4 Spoilage Hours to Base Hours Ratio measured by

5.0 EWAC ALLOYS LIMITED

5.1 ELECTRODE SHOP

5.1.1 Kgs. of Electrodes produced per man-hour worked.

5.1.2 Output in Standard Hours ÷ Input in Actual Hours.

5.2 MELTING SHOP

5.2.1 Number of Heats per shift. This is compared with the past actuals.

6.0 SERVICE DEPARTMENTS

6.1 CENTRAL STORES:

6.1.1 Receiving Section

6.1.1.1 Delay in preparation of Goods Receipt Note (GRN) measured by the percentage of GRNs prepared within 2 days and 5 days from the date of receipt of materials.

6.1.1.2 Delay in Release of GRNs measured by the percentage of GRNs released within 2 days, 5 days and 10 days, from the date of receipt of material.

6.1.2 Warehouse

6.1.2.1 Delay in collection of Finished Goods against Stores Credit Notes measured by the percentage of collection of finished goods within 2 days and 5 days from the date of receipt of Stores Credit Notes.

6.1.2.2 Delay in issue of materials against material requisitions (MRs) measured by the percentage of issue of materials within 2 days and 5 days from the date of receipt of MR.

6.1.3 Despatch Section

6.1.3.1 Delay in despatch of consignments measured by the percentage of consignment despatched within 1 day, 2 days, 3 days, 4 days and 5 days from the date of receipt of Delivery Notes.

6.1.4 Material Handling & Goods Traffic Section

6.1.4.1 Delay in collection of consignment measured by the percentage of consignment collected within 1 day, 2 days, 3 days, 4 days & 5 days from the date of receipt of Collection Advice.

NOTE:
All these parameters mentioned under 6.1.1, 6.1.2, 6.1.3 and 6.1.4 above, are compared with their corresponding targets to measure efficiency.

6.1.5 Disposal Section

6.1.5.1 Value of Disposal Requests pending at the end of every month. This is compared with the previous months.

6.1.5.2 Recovery against original value of Disposal Requests (surplus and obsolete items). This is worked out on monthly basis and the trend over a period is examined.

6.2 MAINTENANCE DEPARTMENT

6.2.1 Air-conditioning & Refrigeration section

6.2.1.1 Tonnage of AC & R maintained per person in AC & R Section.

6.2.2 Estate Maintenance

6.2.2.1 Total floor area ÷ Total No. of persons engaged in maintenance work.

6.2.2.2 Total floor area ÷ Total No. of sweepers and cleaners including those of contractors.

6.2.2.3 Total Garden Area ÷ Total No. of Gardeners.

6.2.3 Transport

6.2.3.1 No. of Persons Transported ÷ No. of persons working in Transport Dept.

6.2.4 Safety

6.2.4.1 Frequency Rate measured by

6.2.4.2 Severity Rate Measured by

6.2.5 Canteens

6.2.5.1 Total No. of persons fed ÷ Total No. of employees in canteens.

6.2.5.2 Food sale at constant price per canteen employee.

6.2.6 Overall for Service Departments' Group

6.2.6.1 Expenses of Service Department ÷ Production at Sales Value.

6.2.6.2 Production at Constant Price ÷ No. of Employees in Service Departments.

6.2.6.3 No. of Employees in Service Depts. ÷ Total No. of Employees.

7.0 WORKMEN & GRADED STAFF

7.1 Sales Value of Production at Constant Prices per Direct worker.

7.2 Direct Workers ÷ (Indirect workers + Graded Staff)

8.0 MANAGEMENT STAFF

8.1 Direct workers ÷ Management Staff

8.2 Sales Value of Production at constant prices per Management Staff.

8.3 Sales Value of Production at constant prices per employee.

9.0 ASSETS

9.1 Inventory Turnover Ratio

9.2 Fixed Assets Turnover Ratio

9.3 Total Assets Turnover Ratio

9.4 Sales value of production at constant prices per 100 Sq.mtrs. of space occupied.

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ANNEXURE II

EXTRACT FROM STATEMENT OF POLICY

IT IS OUR ENDEAVOUR TO ENGINEER AND MANUFACTURE PRODUCTS WITH A LEVEL OF IN-BUILT QUALITY WHICH WILL RESULT IN THEIR SAFE AND RELIABLE PERFORMANCE AND WHICH WILL BE RECOGNISED BY OUR CUSTOMERS AS BEING SURPASSED BY NONE OF OUR COMPETITORS.

THE QUALITY ASSURANCE PROGRAM HAS BEEN DESIGNED TO ACHIEVE THIS OBJECTIVE. THIS PROGRAM COVERS THE ENTIRE RANGE OF ACTIVITIES RELATED TO THE ENGINEERING AND MANUFACTURING OF OUR PRODUCTS SUCH AS HEAT EXCHANGERS, CHEMICAL REACTORS, PRESSURE VESSELS, STORAGE TANKS, ETC.

THE MANAGEMENT OF LARSEN & TOUBRO LIMITED EXTENDS ITS FULL SUPPORT TO THIS PROGRAM AND EXPECTS ALL EMPLOYEES TO BE STRICTLY GUIDED BY THE SYSTEMS AND PROCEDURES LAID DOWN IN THIS QUALITY ASSURANCE MANUAL. THE MANAGER - QUALITY ASSURANCE & INSPECTION IS IN-CHARGE OF THIS PROGRAM AND HAS FREEDOM TO IDENTIFY QUALITY CONTROL PROBLEMS AND TO INITIATE, RECOMMEND AND PROVIDE SOLUTIONS. IF THERE IS A CONFLICT, THE MATTER SHOULD BE BROUGHT TO THE ATTENTION OF THE GROUP GENERAL MANAGER FOR A FINAL DECISION.

ANNEXURE–III

LIST OF PROCEDURES ISSUED BY O&M SECTION

GENERAL PROCEDURES

S.NO	TITLE/DESCRIPTION
1	Overtime cards for new model Ericsson Attendance Recorders
2	Revised form for requisitioning Overtime Payment
3	Requisition of extra copies of Blue Print
4	Revised Material Requisition and Material Return Note
5	Stores Crediting of Finished Goods
6	Guidelines for use of Internal Mailing Envelopes.
7	Issue of Safety shoes
8	Outgoing Message Form
9	Direct despatch of Switchboards from Sub-contractors' Premises to customers in Bombay.
10	Entertainment slips
11	Procurement and Issue of Identity Badges
12	Requisitioning of Pool Mazdoors and giving work of casual nature on contract on lumpsum basis.
13	Exit of Materials
14	Revised Non-Billable Delivery Note forms.
15	Procurement of fortnightly Attendance cards.
16	Consignment Clearance Request
17	Revised Consignment Clearance Request
18	Collection of non-confidential discarded computer statements for making scribbling pads.
19	Drawing Issue Note
20	Issue of Stationery from Stationery Section.
21	Settlement of Closed Car/Motor Cycle/Scooter a/c. for employees leaving the company.

ANNEXURE–III (continued)

S.NO — TITLE/DESCRIPTION

22 Clearance Certificate

23 Preparation, distribution & retention of Invoice-cum-D' note for disposal of scrap/surplus items and sending billable processing materials to vendors.

24 Employee Gate Pass & permit for leaving the Dept. during working hours.

25 Disposal of materials from works.

26 Printing of Stationery

27 Material Collection Request

28 Revised Material Collection Request

29 Stock Transfer of goods from works to branch/Region.

30 Return of accounted materials to suppliers.

31 Manual for settlement of dues in case of resignation, termination, retirement and death of employee.

32 Preparation and forwarding of Accident Report

33 Security check of contractor's Workers

34 Security check of contractor's Personnel

35 Contract Note & order booking amendment

36 Speed Letter

37 Transfer of materials (from one job/cost centre to another)

38 Receipt of cements

39 Procuring, warehousing, issuing & accounting of Cement

40 Procurement, warehousing, issuing & accounting of Cement (Both levy & non-levy)

41 Joining Report for new recruits

42 Claiming of duty draw backs

43 Free supplies of finished goods to customers

44 Free supplies of FG to customers from Regional/Branch stores

S.NO — TITLE/DESCRIPTION (continued)

45 Purchase Request & Purchase Request Amendment.

46 Storage & Periodic destruction of old records at the Records Room

47 30 Tonne Avery Weigh Bridge

48 Stores Crediting & Billing Advice for B.O. items (directly going to site from supplier)

49 Stores crediting of B.O. items recd. at Receipt Stores.

50 Execution of civil work by outside contractor.

51 Exit of materials from city offices

52 Stock Transfer to various Stocking points (Regional/Branches)

53 Procurement, receipt, issue & accounting of construction steel required for civil work

54 Procurement & servicing of standard office equipment & furniture

55 Amended procedure for Disposal of fixed assets

56 Procedure for payment of bills to contractors for civil work.

57 Operating procedure for entry pass for regular visitors.

58 Operating procedure for telephone complaints.

59 Checking & control of Contractors' Material used for Major contracts.

60 Procedure for payment of bills for Company's telephone installed at residences of employees.

61 Procedure for Planning & Execution of excavation work.

SWITCHGEAR

S.NO — TITLE/DESCRIPTION

1 Advice for scrapping/salvaging/disposal form.

2 Use of Non Billable Delivery Notes as request for sending Stock items to vendors

3 Laboratory test requisition and test report.

4 Ordering, order execution & stores crediting of tools

5 Stores Crediting of Standard products.

6 Stores-crediting of Standard products to Central Stores.

7 Stock Indent

8 Stores-crediting of tailor-made items such as Petrol Pumps, Air Circuit Breaker etc.

9 Operating Procedure for disposal of reclaimed silver powder from Plating shop.

10 Planning, Ordering, receiving, issuing and accounting of cartons & packings.

11 Direct Delivery of some components/sub-assemblies to assembly shops.

PROJECT EXECUTION

1 Return of excess materials from project site to works and their disposal.

2 Insurance Request and raising of insurance claim for project items.

3 Discrepancy Report

4 Deputation Record

S.NO. — TITLE/DESCRIPTION

ELECTRONIC CONTROL

Site work time record
Urgent Sale of Electronic Control spares against payment.
Electronic control commissioning & servicing jobs.

SWITCHGEAR DIVISION (MARKETING)

Switchgear Stockists’ Monthly Performance report.
Preparation, distribution and retention of weekly manufacturing Indent.
Maintaining Productwise sales record for switchgear standard products.
Preparation, distribution & retention of indents.
Reserving, Requisitioning and follow-up of Indents but not in stock.

ENGINEERING WORKSHOPS

Operating Procedures for inspection of Camera & procurement of Iridium-192 source from Isotope Division, BARC (Trombay).
Stores crediting of Finished Goods to Central Stores.

SPARE PARTS

Preparation, distribution & retention of Material Requisition form for issuance of materials from Stores.
Preparation, distribution & retention of Material Return Note forms for return of materials to Stores.
Execution of orders for parts.

S.NO. — TITLE/DESCRIPTION

SECURITY

Procedure for collection of penalty from contractors for lost tokens.
Regulation entry & movement of visitors inside works.
Control on movement of cars through Gates.

CANTEEN

Record keeping for capital & semidurable utensil items of canteen.
Ordering of Consumables
Receiving of consumables and taking them into stock.
Issuing of consumables from Cafeterial stores and exit of consumables from Head office.
Accounting of consumables' stock at Pantries.
Reconciliation of consumables' stock.

CO-OPERATIVE SOCIETY

Admission of New members
Payment of Emergency Loan
Payment of Long term Loan
Settlement of Dues of a Member leaving the society
Recurring Deposit Scheme.
Term Deposit Scheme
Maintaining Personal Accounts Ledger
Reconciliation of Accounts.
Payment of Dividend & interests
Receiving of Cash or cheque.
Payments by cash or cheque

S.NO. — TITLE/DESCRIPTION

CEMENT PROJECT EXECUTION

Execution of job work
Receiving of machined castings and despatching the same to Project site.

ELECTRODES

Monthly status Report
Maintaining Data related to Purchase Orders & Records of receipts and issues of materials.
Maintaining Records of Finished Goods inventory
Procedure for Stores-crediting of Finished goods.

EXPORT

Billing Procedure for Export.
Maintaining of Kardex for Export Master card.

TRAVEL

Booking of Transit Houses

SHIPPING

Operating Procedure for Stores Indent.

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Monday, 7 March 2016

DRAFT RECOMMENDATIONS FOR PRODUCTIVITY IMPROVEMENT

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