Covacsis’ flagship solution, Intelligent Plant Framework, helps manufacturing firms become more financially efficient on the production floor. Backed by RIL’s GenNext Ventures, Blume Ventures and Cisco’s venture capital arm, the company aims clinch 2000 customers in the next three years
THE EFFICIENCY GAP IN MANUFACTURING
After a comprehensive 14-month research across large organisations in the manufacturing sector, Tarun Mishra, former COO of Mahindra Logisoft Business Solutions, and his co-founder Abhijeet Mhatre realised that the sector was in dire need of efficiency in terms of production. And, the quantum leap could be achieved only with the help of technology. This was the macro-level problem they set out to solve with their startup.
MEETING IT THROUGH TECHNOLOGY
In 2009, they founded Covacsis, a company which delivers big data analytics solutions aimed at making the production floor more efficient and data-driven. Its flagship solution, Intelligent Plant Framework (IPF), helps plant managers understand the micro-economics of the production floor (its machines and equipment), draw actionable insights about performance standards and in turn improve production efficiency.
PRODUCTION IS NOT JUST ABOUT VOLUMES
Let’s take an example. If an external investor invests a certain amount in a plant, to them, the plant (or equipment) is measured in terms of value creation or revenue generation. However, to the plant manager, it is measured in terms of amount of production. As a result, even though an equipment produces X amount of goods in a month, it may still be making a loss. “Unless a plant manager measures it in totality, such as, calculating cost of conversion and the amount of money they are losing every minute, they can’t make the plant more financially efficient,” cites Mishra. This is Covacsis’ value proposition; to enable financial efficiency (and not volume-related efficiency) on the production floor.
Its flagship solution, IPF, has been designed in such a manner that the customisation element (for each company) is not more than four to five per cent, thus ensuring that the process can go live in less than 25 days. Typically, Covacsis adopts a direct sales strategy where it alternates between a capital expenditure and an operating expenditure model, depending on the nature of the company.
CLIMBING THE GROWTH LADDER
Between 2012 and 2014, Covacsis has raised three rounds of funding totally USD 450K from Blume Ventures, GenNext Ventures, and the venture capital arm of Reliance Industries, and Cisco, among others. As Mishra indicates, the funds were primarily driven towards product development (developing a sector agnostic solution), and scaling up the venture, a part of which includes entering into international markets.
Three years from now, the company aims to achieve revenue of Rs. 200 crore and rope in more than 2,000 clients on board. Currently, they serve several marquee clients including Sun Pharma, Cipla, Goodyear and Raymond.