How this small industrial manufacturer created a company of Rs 20 cr without manufacturing products in-house

Ease of doing business for MSMEs: So far, Minimac Systems has raised a debt of Rs 5 crore from banks. About 30-40% of the entire manufacturing process is done in-house.

Ease of doing business for MSMEs: Anshuman Agrawal of Pune-based Minimac Systems, which manufactures lubrication and hydraulic oil systems and supplies BHEL, GE, Adani Power, Aditya Birla Group, HP, Reliance, NTPC and others, did not have enough money to pay -Increase manufacturing capacity when the company was launched in 2012. However, Agrawal, who was previously part of the product development team at Tata Motors, has attracted growing interest from companies in the purification and reconditioning market for various machines used in the manufacturing sector.

So, just like any other MSME, Agrawal has also raised a bank loan based on guarantees. However, he did not deploy it to set up fixed assets, including land, manufacturing units and machinery. “We didn’t have a strategy where we invested a lot before starting the business. We have outsourced a lot of things and use the installed capacity of other factories to manufacture. Since then, we have stuck with an “asset light” approach and continue to outsource the majority of our manufacturing. My balance sheet today has virtually no fixed assets. We have invested almost all of the money raised in working capital, ”Agrawal told Financial Express Online. Minimac Systems is one of the MSMEs recognized by the Department for the Promotion of Industry and Internal Trade (DPIIT).

Tangible fixed assets have also been like a debt fund for Agrawal, as the recovery of these investments takes longer. So far, Minimac Systems has raised Rs 5 crore debt from banks and current revenues have been less than Rs 20 crore. About 30-40% of the entire manufacturing process at Minimac is carried out in internal, including machine design and concept, while the rest is contracted out.

“We have certain parts in our equipment for which we need vertical machining centers and horizontal machining centers. These are machines that help you make these parts. Outsourcing them might cost me 5% of my margin, but by doing them myself, I would have to create resources that would be recouped in about 10 years, ”Agrawal said.

At Tata Motors, Agrawal explained how the company created a strategic sourcing group to identify all the components of an automobile that can be outsourced to other parties without sharing intellectual property. The same strategy could work for manufacturers in all industries where multiple processes are involved in making a machine.

“So this is the area you need to think about first. If your product has multiple processes, and outside of those processes, if you can create a configuration for one and the rest seems too expensive, you can outsource others. In addition, one should also understand how much overlap there is between the products. If you make 10 products per year and all of them have different processes, look for the common process in at least eight of those products. This common process, you can do it on your own and create an asset for it, but if there are proprietary processes for one or two products, would you like to create an asset for that product? Agrawal added.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.


Source link

Comments are closed.