SAP IMPLEMENTATION at Navin Fluorine's Chemical Business September 12, 2005

Chemical Engineering World - Mumbai

"The chemicals industry needs to constantly adapt to the cycles of the business and must focus on
increasing materials management efficiency due to scarcity of resources. In this context, Bristlecone's
consultancy on SAP ERP solution made Navin Flourine, leading player in fluorochemicals, realise
business benefits through streamlined operating costs and greater organisational efficiency."

Navin Flourine is India's leading company in fluorochemicals with revenues of over Rs 225 crore. Part
of the reputed Arvind Mafatlal Group, the 38-year old speciality chemical company manufactures a
wide range of organic and inorganic fluorochemicals and refrigerant gases in India, which are widely
used in Pharmaceuticals and chemical companies.

Introduction
Typical to any chemical company, the most crucial and tedious task for Navin Flourine was managing
materials that were utilised in the manufacturing of speciality chemicals and refrigerants. Another
imperative at Navin Fluorine was to ensure the process of understanding the material requirement,
tracking it on a need basis replenishing it remained foolproof. This necessitated active involvement
from all the departments of the company such as production, logistics and marketing. Navin Fluorine
was working with cumbersome legacy systems that gave scope for a high rate of error and could
negatively impact the company's internal data. At this juncture, Navin Fluorine approached
Bristlecone for professional consultancy to deploy an ERP solution.

Bristlecone's Mandate
Bristlecone had to implement the ERP solution that could streamline and integrate all aspects of the
business, provide real time MIS reports to the management, coupled with the ability to tap
opportunities. This customisation was to be done on the basis of some significant parameters
identified by Navin Fluorine like the 80-20 rule, local presence, competition and 'start small-grow big'
theory.

The Challenge
The project had to be accomplished in the stipulated time frame in line with the overall objectives of
the integration. Further, the new set up could demand a change in mindset generating resistance
among employees and management. The employees thereby had to be made comfortable with the
unprecedented changes that followed the implementation.

ERP implementation
Having made the technical choices to go in for Bristlecone's SAP solution, the deployment was
carried out in successive iterations. The implementation was the most critical phase in the entire
exercise, as it involved a lot of investment and impacted not only external business but also the
internal processes. Hence, a formal buy-in was sought from the top management and senior
managers to ensure success of SAP ERP at Navin Fluorine. Secondly, after an intricate study of the
existing processes and understanding the requirements of the business, the ERP solution was
customized to deliver desired results. Further, a strategic roadmap based on priorities like the
requirement of hardware, manpower and licensing was drafted. Lastly, in order to track this
functioning, a formal feedback mechanism was institutionalised in the form of regular workshops
and reviews.

Benefits
Any ERP implementation comes with a gestation period of 9 to 12 months to show initial results. The
management of Navin Flourine was well aware of the situation and perceived the long term
investment as a means of achieving life long advantages. The decision paid rich dividends as the ERP
solution offered transparency to their business transactions and opened up the possibility of
conducting business the new way - electronic commerce. Further, tangible benefits in the form of
efficiency processes resulted in savings of 1.5 person days per month. Roughly translated, it amounts
to an addition possible increased in top line revenues by over 0.75 - 1 percent for every year.

Small and Medium-sized Enterprise and SAP

Contribution to Indian Market
Small and medium-sized enterprise (SMEs) has become the talk of town today. SMEs can be
well defined as organizations with turnover that falls below some specific limits.

A lucid elucidation of the term SME would further manifest its close association with
European commission (EU). The abbreviation, SME is generally used in the EU & many
other international organizations including World Bank, the United States & the WTO. The
term has also become quite familiar in many other countries.

Earlier, European commission had its own definition of what constitutes an SME; however,
EU has now standardized the concept. The current definition of an SME goes like this
“companies with fewer than 50 employees are ‘small’ & those with fewer than 250 are
‘medium’ sized companies”.

Association with SME may prove to be the source of ultimate and ever-increasing progress to
many entrepreneurs. Clicking on the right technology is the key to success.

SMEs today must be totally prepared to accept considerable challenges and also be
thoroughly equipped with all the necessary assets to deal with a client-base that is inquisitive,
intelligent and well educated.

Today, SMEs have shifted their focus to information technology (IT) as the industry has
realized that IT plays a prominent role in the current economic progress worldwide.

The majority of SME Business sectors now consider IT as their key to success & economic
growth.

IT in conjunction with calculative business strategy is the magic potion for the growth of
SME.
Most entrepreneurs across the globe have a notion that the ever-increasing competition may
prove to be a big hurdle for SMEs. However, experts believe that implementation of correct
technology that would offer a unified & updated view of operations is the key to enhanced
business-process-efficiency.

Including IT in to a business unit may not be an easy task. Most businesses initiate with a
simple system, one that works to maintain the basic business operations indicative of a start-
up company.

What most businesses ignore is upgrading the technology. This culminates into inadequate
collections of outmoded applications.

Another flipside of having an obsolete system is the information gap. Data Stored in multiple
locations is often not connected resulting in business process breakdowns & loss in revenue.
Installing an upgraded system would offer great profits to an SME. The benefits also include
instant optimization of business processes, reduction in operational costs & enhancement in
customer acquisition & retention. An SME can efficiently cut down its total cost of
ownership with the help of adopting newest IT technology.

What business solution should SMEs look for?

This may be the question that puzzles most entrepreneurs. The solutions are just few words
away. Read the points given below to look out for adequate business solution.

a) Industry Specificity: Industry specificity offers best practices and domain knowledge of the
vertical/sub vertical that the SME operates in.

b) Flexibility/Scalability: This is one of the most advantageous features that are really
significant. An industry must be flexible enough to incorporate current systems with existing
disparate or outmoded applications.

c) Operational transparency: The strict requirements of global accounting & corporate

governance have pressurized businesses to possess greater transparency, time lines &
accuracy in both financial reporting & managerial control.

d) End-To-End & Real-Time Visibility: The up-to-the-minute upgraded information across

manufacturing, customer relationship management, & finance is the current demand of
business environment.

e) Integration: Ideal business software for SMEs is defined as one that is instinctive, flawless
and user-friendly. Hence business owners must consider software that is easy to integrate into
the existing system of the company.

f) Ease-of-use & User Empowerment: Usability is the main feature that must be considered as
a key component by a company when choosing a software or adopting a technology.

g) Analytics: Strategic and operational success of a company depends on an understanding of

a company’s customers & prospects. In addition, a fact-based understanding of company’s
suppliers, partners & employees in conjunction with wide economic indicators is extremely
important.
If we take a glimpse into the history, most SMEs trusted on limited business software. A
traditional SME would run on an accounting & financial reporting package. The payroll or
sales management areas were managed by separate software.

The main reason may be the non-affordability of these companies to embrace benefits of
sophisticated, integrated company-wide ERP systems utilized by big businesses.

Times have changed now. SAP, one of the most popular business vendors has successfully
come out with business management systems. These systems are specifically designed for
SMEs. SMEs can now look forward to deploy the most sophisticated business software
solutions, that would offer them more than just financial & accounting updates. The newest
technology introduced by SAP would offer extensive capabilities to manage the entire
business, covering all specific & crucial areas. These solutions would efficiently offer great
profits to an SME.

Almost all SMEs across the globe understand the importance of focusing more & more on IT.
However, the main hurdle they are facing is the inability to afford the exorbitant amount of
investment. The low equity capital of SMEs serves as a barrier in receiving credit from a
bank. This has left many entrepreneurs in this industry in a dilemma.

SAP serves as the ultimate financial solution in this regard.

According to Alan Sedghi, President & CEO of SAP South Asia, “SAP offers two solutions
designed specifically for small & midsize companies-SAP Business one & the prepackaged
mySAP All-in-one solutions to the SMB segment in India”.

He also adds- “SAP Business one is an easy-to-use business & operational management
solution for emerging & dynamic businesses ranging in size from as low as a few
employees”.

The SME sector constitutes approximately 95 percent of the total industrial units in India.
Small enterprises include 99.4 percent of the country’s SME world.

The current economy of SME is enjoying great profits as per a global survey conducted by
Crisil, HSBC Bank & grand Thortom.

Many SMEs in India have given a warm welcome to SAP. One such company is Associated
Capsules Private Limited (ACPL). ACPL, one of the world’s largest producers of empty hard
gelatin capsules has chosen SAP because of its strong presence in India, great service backup
& support.

The company is currently running five plants situated in Maharashtra. These plants are
successfully serving about 1, 000 customers worldwide.

The general manager (IT), Mr. Nitin J. Parekh, says, “We choose SAP because of its strong
presence in India & the positive response of several pharma companies who were already
using SAP”.
ACPL was able to solve many problems during the implementation of SAP. Currently the
company focuses on integrated IT network. This facilitated the organization to make quicker
& instant decision.

Director of Associated Capsules Private Limited Mr. Karan Singh confirms, “SAP has
brought transparency into the system. Very soon, our customers will be able to place orders
through the Internet”.

Navin fluorine, a leading fluorine & specialty chemicals company choose SAP’s, ERP
solution. Choosing SAP has offered pure business solutions to the organization. Now Navin
fluorine is rich in capabilities to achieve significant savings. This is facilitated by SAP’s
ability to track complex procedures.

Sanjay Mittal, head of IT at Navin fluorine quotes, “SAP has helped us become a truly
integrated, process-based organization that allows us to respond to market challenges”.
Within just a year after SAP was implemented the company enjoyed significant benefits.
These benefits included smoother flow of information, enhanced productivity and improved
time to market. In a Nutshell, the company has successfully been able to recover its return on
investment (ROI) within the first year of implementation.

Not only Navin fluorine & Associated Capsules Private Limited have benefited by this
newest technology, but also thousands of SMEs across the globe have benefited and
enhanced their productivity successfully.

Choosing SAP offers the following benefits to an organization:

a) SAP offers pure business solutions

b) SAP offers local help within a country

c) SAP is a global leadership in the ERP solution space

d) Manages growth in an organization

e) SAP has a global resource base and offers an organization, the opportunity to expand its’
presence across the globe.

f) Today, SAP is the only vendor that offers the Auto CAD interface that allows engineering
designs to be fed onto a bill of material, thereby making it easy for the customers to make
decisions.

g) It is the market leader in offering solutions to SMEs.

SAP is a pioneer & the leader in the Indian SME market. It is the ultimate business solutions
in the country and offers the crème of business solutions to the SMEs here.

In the first quarter of 2006, SAP has been successful in signing on over more than SME
customers.
SAP currently focuses on offering two solutions designed specifically for SMEs namely, SAP
Business one & mySAP All-in-one solutions.

SAP business One is a user-friendly business & operational management solution for
businesses that have few employees. The other facility, mySAP All-in-one is a prepackaged
micro-virtualized templated solution. It is equipped with content, tools & methodologies that
facilitate effective implementation of turnkey. SAP channel partners sell, deploy and support
both SAP Business one & MySAP All-in-one solutions.

As already discussed, SAP has contributed a lot to the Indian market. It has developed a
strong partner ecosystem to offer mySAP All-in-one solutions to most enterprises based in
India.

Alan Sedghi says, “Our business partners bring extensive domain expertise in specific micro-
vertical segments & geographies.”

SAP is leading in India with over 20 mySAP All-in-one partners in the country and that offer
over 20 micro-vertical solutions certified by SAP.

Some of SAP partners include

• Bristle cone

• Wipro

• Siemens Information Systems ltd.

• Patni

• Polaris

• Oak Brook

• Caritor

Some of the country’s micro-vertical industries such as automotive suppliers,

Pharmaceuticals, Construction, Rubber, Textiles, Apparels etc. are also enjoying the benefits
of SAP solutions.

There are many customers who are contented with mySAP All-in-one solutions and Adeep
locks, Navin Fluorine, DCM engg., Calcom Cements, Murudeshwar ceramics & Luxor
writing are few of these customers.

The launch of SAP Business One has also been quite successful and there are plans to further
enhance SAP’s focus on the small & midsize businesses in India. The president & CEO of
SAP South Asia, Alan Sedghi adds, “We are witnessing very significant interest from Indian
small enterprises for SAP Business One. We have signed with Hewlett Packard (HP) as a
national distributor & are also in discussion with a few more partners for expanding our
distribution reach”. SAP has been eventually successful in building a multi tier channel
ecosystem.
SAP financing is also a strategic step by SAP solutions based in South Asia to offer simple,
cost effective, predictable & financing for SAP customers who currently exist as well as
those who are prospective customers. SAP financing is specially designed to meet the
specific needs of the customer by combining all relevant costs into a quantifiable monthly
payment.

Leading analysts like frost & Sullivan have authenticated SAP’s leadership and presented
SAP, the valuable “frost & Sullivan market leadership award in India Mid-Market” for two
years consecutively.

This is the biggest achievement for SAP. Hence, the award is enough to offer credibility to
the business solutions.

The software requirements of SMEs are experiencing a transformation. SMEs are under great
pressure to keep tabs on their processes & financial progress even more closely these days.

The main reason behind this is the introduction of stricter accounting & corporate governance
requirements, the compulsion to agree with the US. Sarbanes-Oxley Act & comply with the
international financial reporting standards.

SAP has played a major role in promoting SMEs that were striving to face the tough
competition in the industry.

SAP possesses the most integrated, affordable & business management solution. These
powerful features of SAP have facilitated SMEs to move ahead and emulate in the industry.

In a nutshell, SAP is ready to take SMEs to the next level.