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MEAGAL STELPLAST: STEERING A NEW PATH

ANIRBAN KAR
EPGP-12A-022
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Summary

 Meagel Stelplast (MSL) manufactures automobile horn for replacement market for Delhi, India.
 MSL founded by Anil Kishore in 1995 has developed good reputation over the years for producing good
quality horns.
 MSL manufactures on an average 15000 horns per month but it’s competitors were manufacturing much
more than them.
 Planned to improve the productivity but did not meet with much success.
 MSL wanted to become supplier to original equipment manufacturers (OEMs) and it failed after few of
them visited the plant.
 MSL have never faced shortage of order and always followed made-to-order policy.
 MSL produced wide range of horns which increased ten fold since inception.
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Summary

 One of the prominent problem that MSL faced was that the demand was unpredictable.
 MSL had a good employee trust relationship which later became sore with the introduction of automated
machines.
 MSL lacked formal procedure and process. The tasks were manual and there were no standard for
evaluation.
 They faced difficulty to retain employees due to government initiatives like MNREGA.
 The company was in dilemma, whether to obtain certificate and supply to OEM or increase current capacity.
Supplying to OEM would require ISO 9001-2000, IS 1884 and Automotive Research Association of India
(ARAI) certification.
 MSL also wanted to decide whether it would keep fixed pay or piece rate system for the employees.
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Actors

 Anil Kishore who founded the Meagel Stelplast (MSL) in 1995.

 Achin Kishore who has recently completed his management degree and spent time understanding the
product and process.
 Full time employees in the plant who shares a good relationship with the management and were paid
monthly wages.
 Newly hired workers who were paid on piece rate basis and whose productivity was 8% more than the
older workers.
 Though MSL had developed a good reputation and was producing on an average 15000 horns per month,
the competitors were producing much more than that.
 One of the SME which started along with MSL produced 28000 horns per month in 2011 and 2012.
 MSL was not able to build a strong brand name of its product and was selling the horns for INR 150 in
comparison to INR 200 for branded horns.
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Problem faced by MSL

 Anil Kishore wanted to increase the productivity without much success.

 As MSL was into the replacement market, the demand was unpredictable.
 Initially MSL enjoyed employees trust and had lowest attrition rate but things changed later with the
introduction of automated machines which the workers were reluctant to use.
 MSL also faced problem of the replacement demand due to cheaper Chinese imports.
 MSL did not have any formal ordering method for raw materials.
 The orders, invoices, inventory and bills of material were maintained manually. A lot of time was spent to
prevent shortages and ensure adequate availability of material.
 MSL did not have any formal production standard and hence could not evaluate its performance.
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Problem faced by MSL

 Management procured many automation devices in 2010 but the workers were reluctant to use.
 This led to a tensed relationship between management and workers. The management also felt that the
costly materials are being pilfered.
 MSL was finding difficult to retain employees due to various government schemes like MNREGA.
 MSL did not have any information system to keep track and hence led to an environment of mistrust.
 MSL’s horn had a warranty period of 3 years but 10 percent of the product used to be returned and
management failed to determine the cause of return.
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Analysis
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Analysis
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Analysis
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Analysis

 The Layout of the plant shows two workbench viz. Workbench 1 for workers on monthly
basis and workbench 2 for workers on per piece basis.
 The layout has a testing area and store and office.
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Proposed Solution

 MSL was in a dilemma whether to put a separate plant for OEM or increase the capacity
of existing operations.
 Also, MSL was not sure if the new workers to be hired should be given fixed pay or piece
rate system.
 Though MSL had lot of space for extension but there was an increase of building and land
regulation tightening in Delhi. With this, MSL expansion would be limited after a certain
point.
 Also, the demand in the replacement market is very uncertain.
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Proposed Solution

 MSL can put up a separate plant and enter the OEM market by acquiring necessary
certification.
 This would help MSL to get a steady flow of orders in future.
 As, the prerequisite for OEM market is also for the product to be certified to IS 1884, this
would give the consumers a sense of belief in the product and increase value in the
market.
 Also, the newly hired workers can be made to have fixed pay as it would provide a sense
of security and hence increase the employees trust in the management leading to high
productivity.