By
Mukesh Gulati
Foundation for MSME Clusters
New Delhi
Batala
Goraya
Jalandhar
Kaithal
Narwana
Samalkha
Gurgaon
Faridabad
Agra
Bhiwadi
Jaipur
Ahmedabad
Rajkot
Bhopal
Indore
Jamshedpur
Dewas
Vadodara
Aurangabad
Kirloskarvadi
Satara
Kolhapur
Nagpur Raipur
Cuttack
Pune
Sholapur
Sangli
Belgaum
Shimoga
Mysore
Tiruchirapalli
Coimbatore
Howrah Uttarpara
Kharagpore Calcutta
Diamond Harbour Road
Liluah
Hyderabad
Nellore
Renigunta
Bangalore
Chennai
Sholingur Sriperumbudur
Dindigul
Ranchi
Gudur
Ennore
Ponneri
Foundry Cluster
Foundry units with
capacity – 50,000
tones per year and
above
70,000 tonnes of coke can be saved per
annum worth Rs. 100 crores ~ 16 million
USD
Which equals 7000 trucks load
of Coke
HOW???
ENERGY EFFICIENCY
MEASURES
Foundation for MSME Clusters
Foundry industry Scenario
 India is the second largest producer of casting
products after China 5,500 units
 Clustered in 45 clusters ranging from 30-500 units.
 95 % of the foundry units are small; 5% are
medium/large units
 Energy cost is 30% of production cost (70% in
melting)
 Through coke, furnace oil, natural gas and electricity
 One MT of coke often melts 4-8 MTs of metal
(Best 10-12 MT)
Foundation for MSME Clusters
Scaling up to 500 more in 4 years (2012-15)
 Through 80% EU funding under Switch
Asia Facility
No of Clusters
 That targets 18,000 Tons of coke savings
p.a. in 500 enterprises
800
700
700
 With GIZ, GRI, IICA, SIDBI and UNIDO
as partners
 Industry Association Capacity building;
 Aggregate reporting initiative; (GRI)
 Building new financial products &
financial linkages; (SIDBI)
 Supporting govt. for access to public
schemes of assistance (IICA, UNIDO,
GIZ)
Cluster Units
 250 Cupolas to upgrade and another 250
enterprise to change operational practices
600
500
400
No of Clusters
300
200
200
100
100
0
1993-2008
Foundation for MSME Clusters
2008-2012
Years
2012-2015
Conventional cold blast cupola
Divided Blast Cupola
Molten Metal to
Moulds
Molten Metal Pouring
in a bucket
Process
Mould Preparation
Casted and Machined
Parts
A Question arises ……
Why does it not self spread when business case exists?
Reasons
Technology
acceptance
barrier
• Bank Linkages
• Costly
technology
Investment
barrier
Awareness
Barrier
• Weak associations
• Untrained fabricators
Lack of consultants
willing to work with
MSMEs
• No incentive
for contractual
labor
Not all clusters have equal scope for
change
Scope for improvements varies significantly across different clusters thus
requiring customized approach for every cluster even if is in the same
sector
Foundation for MSME Clusters
Economics of change in the short term is the main driver
for the owner
•Customization of solutions
Every enterprise requires customization of solutions
suiting to its specific requirements of the varieties of raw
materials & fuel used, output flow required, quality
specifications of output, size of equipment used, age of
existing equipment to be replaced etc.
•Low investment options
•Criticality of
technical inputs
Low investment options with higher gains in the short
run are preferred. If it leads to downscaling of best
available technology in the market, let it be
Foundation for MSME Clusters
Change in practices is a bigger factor of change
than equipment & technology
 The Technology acceptance barrier and the Awareness
barrier are harder to cross than the Investment barrier.
 Adoption of simple operational methods, often has far
more scope for energy efficiency when compared to capital
intensive equipment change
Seeing is believing and relying on key opinion makers
•Exposure Visits and
Trust Building
•Spread of positive
word locally
•The rate of adoption
of
change
will
therefore be very
slow initially and
then pick up fast,
following an S-shape
curve
A positive word from local trusted industry leader, equipment
provider, a production supervisor or a local consultant is more
effective than seminars, books and advertisements put together
“When the technical expert explained
us the usefulness of DBC during the
seminar, it sounded just right, but I
wanted to see for myself and talk to the
owner and supervisor of a company that
had actually adopted this technology
before saying yes. Others waited for
many more to adopt the changes before
taking the plunge. It has therefore been
a slow start in our cluster but took off
once the number reached a critical
mass”-Mukul Gupta (Vikrant
Foundry, Phagwara)
Quick and low transaction cost of financing is the key
•Internal or informal sources
of financing are therefore
more preferred routes
•Availability of low ticket
financing and ‘pay-as-youearn’ systems of financing
are perceived to potential
winners.
Foundation for MSME Clusters
“I needed only Rs 6 Lacs for
the cupola upgradation but
did not want to wait for a few
months before getting the
loan disbursed. Once the
potential gain was clear to me,
I preferred to go ahead with
internal resources and some
borrowings from friends. I
would have preferred if there
was a pay-as-you-earn system
of financing where I could
have paid out of the savings
generated “, Yashpal Gosai,
Owner Gosai Foundry,
Phagwara
Other responsibility agenda follows once economics is taken care of
Adoption of occupational health
and safety (OHS) practices,
organizing of health camps,
contributing to social security
and investing into better
working conditions is adopted
following economic gains
"We have been doing something or the
other for our labour, but in bits and
pieces. The project has heralded a proper
diagnosis about what is critical and what
can be done about it through a systematic
approach. We have been able to pool
resources to get good local expertise to do
factory cleaning, undertake layout
changes, selective mechanizations and
organize health camps. These have not
only helped improve the work
environment, but also ensured direct
business gains. It gives a nice feeling and
the workers are likely to stay on"
Ankit Madhogaria, Owner, Noble
Marketiers Pvt Ltd, Biradingi, Howrah
Foundation for MSME Clusters
Empowering Key local stakeholders is the route to
scaling up
On-Job training for
all the Fabricators
and Production
Supervisors
Business case and empowerment for local stakeholders including
fabricators, equipment suppliers, industry associations, production
supervisors and consultants is the way to scale up
“I generally make 20 new cupola furnaces every year in my area.
I also design the furnaces myself with so many years of
experience at my back. I have now learnt basic elements of a
proper design based on process requirements and the need for
a design sheet. The project offers technical support and helps
me in fabricating as per the required specifications. I am sure
this will help many new cupolas with better efficiency and
longer life” , Joginder Singh, Owner, MS Fabricator, Ludhiana
Foundation for MSME Clusters
Paver Blocks developed out of solid waste
Indian Cluster Scenario
Scale: Industries-11; Total clusters–196; Energy consumption- 30-35%
of the manufacturing cost. Huge potential for intervention
Better Designed Products: Product innovation is very limited
across most sub-sectors
Improved production methods: Several pilot initiatives in the past
that need to be up scaled
Waste Management: Mainly undertaken as end-of-pipe treatment
under the pressure of regulatory authorities, media and community
Foundation for MSME Clusters
Other Unexplored Sustainability Measures
•Product redesigning and quality inputs
•New ways of waste utilisation and recycling are
required
•Use of renewable energy
•Application of ICT to measure and change
•Schemes redesigns and strengthening
knowledge backbone
Foundation for MSME Clusters
Way forward - Up scaling
 Set up benchmarking/reporting systems at aggregate levels
 Continue developing new pilots to refine methodologies
 Initiate regional/ national missions on key sub-sectors
 Picking low hanging options first
 Using integrated holistic approach
 Provide appropriate acceptable & commercially viable solutions
 Strengthen local industry associations and spread awareness
 Create nation wide cadre of specialised consultants and
equipment providers
 Recognise and reward enterprises, associations, institutions and
banks
 National study of industrial symbiosis
 Create new financial products and ensure reach out
Foundation for MSME Clusters