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On the verge of being the most competitive casting suppliers in the world

The clear issues, which the Indian foundry industry must tackle, are skills development, government policies and environmental concerns, says the president of the Institute of Indian Foundrymen Vikas Garg.
Speaking at a CEO meeting during the 63rd Indian Foundry Congress, Garg said the Indian foundry sector needed to help sustain the government growth plans for the country. During the event, invited panellists were asked to report on the key issues of skills development, government support and future economic policies, and environmental responsibility. 
Delegates heard how the IIF has signed an agreement with the VDMA (the German Engineering Federation) in Germany to help enhance the skills level of Indian foundrymen.
The Senior Expert Service (SES) programme will see retired industrial experts from Germany - predominantly with mechanical engineering experience - offer consultancy services to companies in India on assignments typically lasting for a four to eight week period. Foundries involved will incur costs that include international travel, expenses and nominal daily allowances for the consultants and some project handling costs and the programme will be part funded by the Federal Ministry.
The programme aims to help with the transfer of skills and assistance with specific issues rather than working on product development and marketing and is intended to act as a bridge between the German and Indian foundry markets.
Speaking candidly about the need to change, Shailendra Singh, joint secretary, DIPP, Ministry of Commerce & Industry, told delegates: “Many foundries have made large investments. Before we regarded the foundry sector as a ‘sunset industry’ and we were very pessimistic but now we recognise that it supports all manufacturing. However, our productivity is slow, we can’t attract people at all levels and both raw material prices and high capital equipment costs are causing us problems. It will be very difficult for our industry to survive in India unless we improve. Dark and dangerous foundries have to change.”

The will and the skill
The industrial analysts view is clear – “We have to unlearn what we have learned and re-learn,” said S G Pawar, the head of the Pune foundry of TATA Motors Ltd. “The biggest challenge we are facing is skills. We are losing people from the industry and it seems that nobody wants to join us – we need the will and the skill.”
Speaking about how his foundry teaches basic training to everyone on the shop floor rather than making the assumption their employees know the basics, he said this would be how the industry would survive. “We give seven days fundamental training to operatives, things like how to put a chaplet in a water jacket and how to trim a core. Standard operating processes for everyone must be followed by using the head, heart and hands. The person working on the shop floor has all the solutions not the person working in the office.”

The cost of investment
The managing director of Kirloskar Ferrous Industries Ltd of Karnataka was particularly positive about the future demand for castings. R V Gumaste said the biggest problem would be to satisfy the government target of eight per cent growth rate year on year. “The cost of money in India is a real challenge with high interest rates,” he said. “A typical foundry making blocks and heads for the automotive industry – which is where the greatest demand will be – requires several hundred crores investment [tens of millions of euros]. After a foundry is commissioned it is around three months before it makes its first block and to be up to speed with production levels takes around 18 months. Typical timescales to be at full capacity are about three years.” He said three years was a long time to be waiting to be in profit. 
He explained how his foundry was committed to investing in the latest technology but that it was a difficult road to take. “We have come a long way. All our core shooters used to come from Indian suppliers, which was fine but we were limited on what we could produce. Now we require more accurate tooling for today’s complex castings. We converted to CAD/CAM and progress was needed in our toolrooms. Basically, investments keep on increasing. 
“Every industry requires castings so what choice do they have? They have to buy castings from Indian foundries but we must improve quality and consistency.” He said the industry had to improve to be able to attract investors. “With profit margins of around 2-3 per cent it is difficult as an investor wants around 10 per cent.”
Parag Bhandare, director of AKP Foundries pvt Ltd, Karnakata, said he was disappointed with the general skills level. “We have seen many initiatives from the government but I am not too happy with the skills level of people coming from educational establishments.”
He called for more capital allowance support for specific foundry equipment. “Dust extraction is expensive and we need government support for depreciation of equipment like this so we can afford to improve our facilities.” His presentation came with a warning: “Remember we must make improvements because you won’t always get what you want but you will always get what you are!”

India vs China
The thorny issue of comparisons with other former emerging nations was also touched upon. Dr Nithyanadan Devaraaj of Larsen & Toubro Ltd, Coimbotore, said: “There are the inevitable comparisons in terms of productivity between India and China. A project I worked on took the Indian company 18 months to get to production, it took the Chinese company six months.” He blamed bureaucracy for much of the delay. “We have lots of levels we have to go through and it takes time. Our support structure is not like that in the western world. Also the interest rate affects us. Our situation helps bankers make profit – the profit does not often come down the value chain.
“We are competing with our user and supplier industries as well as competitive industries. The value chain profitability should be considered. The foundry industry has to survive for other manufacturing industries to survive – it’s important.”
The managing director of the Chennai-based iron foundry Nelcast Ltd, Deepak Reddy, enthused: “We are on the verge of being the most competitive casting suppliers in the world.”
He said government needed to recognise this and offer more assistance. “Getting capacity utilisation is very hard – it takes most foundries five years. This is at a time when they have had a lot of investment so it is hard to bear. The government could help with this along with the tedious and time-consuming process of getting approvals. We can’t do things in ten year’s time the same as we are today. I truly believe that five years from today, India will be the best place to buy castings.”

Environmental concerns grow
Speaking about the environmental impact of the casting process in India, N Krishna Samraj - managing director of Magna Electro Castings Ltd and vice president of the IIF - said the current situation was unsustainable. “The last statistics show the country produces a total of 10m castings a year which equates to a conservative estimate of around 15bn kw hours of energy. If we are to develop to meet the government targets this figure looks set to grow to 30bn kwh. Also for every one tonne of good castings produced we dump one tonne of sand, so we can assume we have dumped ten million tonnes of sand – that is not acceptable.
“The leading large foundries have already adopted sand reclamation and the government could really help small and medium foundries with things like joint ownership of equipment to help with issues like sand reclamation.”

Don’t moan about government support – get your act together
In a candid and often critical debate Amarendra Sinha – the Special Secretary to Government of India and Development Commissioner in the Mininstry of Micro, Small and Medium Enterprises – urged the Indian foundry industry to get its act together. “Why are you discussing the same problems as when I attended the event in 2011?” he said. “What have you been doing since then? I blame everyone in this room including myself.”
In an impassioned presentation, he offered to work together with the industry to help solve the most relevant issues such as a shortage of skilled workers. 
“You need to produce a skillset list and we can work together to get the required courses written and delivered but you must do this as it is you who know what you need. We can develop modules and standardise them.”
In terms of the environmental question of sand reclamation he promoted the idea of working with local investors. “In my own business I need the foundry industry so I have to spend the money to make that happen and other investors will also make this happen. We can’t rely on the government.”
The IIF has reported that Mr Sinha has assured the foundry industry that his office has shortlisted five clusters for the installation of sand reclamation plants for which land had to be arranged by the industry. His office is also soon to launch a project on improving the energy efficiency in foundries with the help of Energy Efficiency Services Limited (EESL) - a joint venture to facilitate implementation of energy efficiency projects in India - by leveraging available funds up to US$300m. 

Think differently
Despite a barrage of questions from the floor, Mr Sinha returned answers and struck a chord with the fired up delegates. “You need to do some disruptive thinking and I mean ‘disruptive’ not constructive – you need to think differently,” he said. He urged the industry to fully understand the consequences of new technology and what that would do to the market. “We are talking about 3D printing but we as a country are not ready for things like 3D. I am setting up centres for this but this is where your castings are going – it is disruptive and you need to think about what this technology is doing to your industry.
“Look to Germany, they did not follow a route of open/closed innovation strategy, industry and academia work together. You have to protect innovation. You have to accept that, to protect inflation, interest rates won’t come down in a hurry but green shoots are visible.”
Asking the industry to make the most of opportunities and to form a clear proposal about what it needs, only time will tell whether he inspired the assembled crowd to think differently!