A combination of politics, regulatory framework and economic slowdown has had a cascading effect on procurements.

Thermax India Ltd. is headquartered in Pune and operates globally through 19 International offices, 12 sales and service offices and 12 manufacturing facilities – 7 of which are in India and 5 overseas.

Having experience of over four decades in the energy sector, Thermax offers a range of boilers and thermal oil heaters, energy chillers and customised products like exhaust gas boilers.  It also helps industries reduce energy costs by shifting to abundantly available, alternate energy such as biomass. Abhaya Bhargava analyses the nature of Indian strategic procurement and states achievements of Thermax in procurement field.

Indian strategic procurement
India’s position in terms of strategic procurement for infrastructure projects depends on the sector being considered and the organisations executing the projects. For example, areas like ports, highways and railways have seen project delays disrupting procurement patterns. Here, there is definitely scope for improvement. However, there are also some sectors where procurements are more streamlined.

Thermax makes use of all the levers of strategic procurement in a well planned manner. These include consolidation of buying, standardisation of packages and practices like reverse auctions conducted in a time bound way.

Major challenges
Procurement community is currently facing some challenges. Out of which uncertain time schedules, highly stressed cash flows and cost pressures are the major ones. The issue of coal availability for power plants is illustrative. According to Mr Bhargava, “Developers, who have signed power purchase agreements, in the absence of clear cut policy decisions and implementations, are forced to put the entire project procurement on hold.”

He further points out, “A combination of politics, regulatory framework and economic slowdown has had a cascading effect on procurements. Cost pressures in the areas of labour, fuel and transport have added to the troubles of the procurement community.”

Transport and warehousing facilities need to improve
There has been a definite improvement in the construction of roads and bridges. Still, transportation especially of ODC (over dimensional consignments) is a challenge in certain parts of the country.

India still lacks adequate highways, roads and bridges. Though we have many rivers, our inland waterways are still not developed for freight movement. The limitations are especially severe in the East and North East. “Corrupt practices centred on ‘well meaning rules and regulations’ add to time delays and costs,” Mr Bhargava adds.

Availability of vehicles for transport is a major factor needs to be taken care of. Also warehousing at project sites continues to be area of concern.

Electronic platform
Thermax uses an electronic platform for reverse or forward auctions related to procurement of disposal of material and to avail services. Its entire procurement is carried out in an ERP environment.  Also it uses business intelligence tools along with the functionality of MS Excel to analyse spend and develop better strategies for procurement.

– Abhaya Bhargava,
VP, Corporate Sourcing,
Thermax Ltd.