After heading the financial product business of a Canadian company for four years, Tarun Mishra called it quits in 2003 to realise the dream he nurtured since graduation days at the Indian Institute of Technology, Bombay (IIT-B).
Today, Mishra is 35 and heads Covacsis, a technology start-up located on the IIT-B campus, which has built a solution called ‘Real time production diagnostics (RTPD)’ which “helps organisations avoid inevitable changes on the production floor”. While shop-floor managers might miss the intermittent breakdowns and thousands of granular production, cost fluctuations, etc on the floor, Covacsis’ RTPD helps managements understand the impact of each and every incident on the top-line and bottom-line and respond to such incidents in the shortest possible time.
Mishra’s company has been incubating at IIT Bombay’s Society for Innovation and Entrepreneurship (SINE) for the past three years. SINE provides facilities to entrepreneurs at a subsidised rate. The model at IIT-B is simple. It is based on equity-cum-royalty model. The institute takes a minority stake of 8 to 10 per cent in each of the firm that incubates. Once the company gets an angel funding IIT-B liquidates part of its holding.
“Incubating at IIT-Bombay has been of great help as we would not have been able to pay for the high rentals for office space in Mumbai. Specially in our case where the company is building a business model around product and solution, meeting the office expenses itself can take a toll on the entrepreneur,” says Mishra.
After the first round normally, IIT-B liquidates one-third of its stake.In case of a product, once the company is formed the patent is then transferred on to the name of the company. Each company is allowed to stay in at SINE for a period of three-years. The Rs 10-12 lakh is in addition to the subsidy that the institute provides for incubates. Other than providing space to these companies at one-third the rate of market, each firms gets a set-up of 6 PCs and other hygiene factor.
For a company, installing Covacsis RTPD means graduation from automation-based manufacturing floor to a knowledge-based manufacturing floor where the limitation due to knowledge asymmetry among production teams is eradicated and companies can increase competence infinitely.
“I clearly saw that despite having worldclass controller-based automated machines on the floor at one end and enterprise resource planning (ERP) systems on the other, companies do struggle to have better quality products and maintain cost efficiency at the same time. I realised that these ERP systems are manned by men who are bound to miss the granular information about breakdowns, reprocessing and utilities cost fluctuations, etc, which affects the product quality and plant efficiency. So we decided to provide unified diagnostics of all equipment, at micro level, minus human intervention,” says Mishra.
More From This Section
For instance, one of Covacsis early clients, uses RTPD on the production floor. “When we did a prototype for the client, our system discovered 18 number of shutdowns in 21 hours. The floor manager instead was reported only four shutdowns. We realised that these stoppages damage the product quality and productivity which neither gets accounted by the ERP system nor otherwise,” adds Mishra.
Covacsis within a short span of time is engaged with several leading companies and set to expand rapidly. I can always have a report in real time. “If you hire a consultant to find where you stand in comparison to the industry benchmark, the consultant would take around six months to get you the updated report. In these months the industry would have already gone through several innovative and economic changes. Whereas, our system gives you the each and every details in real time and helps you measure your own performance,” says Mishra.
Meanwhile, Covacsis is poised for growth in the financial year 2010-11. “We already broke even in the very first year of operation in 09-10. We have senior executives, and accomplished business leaders who are closely helping Covacsis and guiding us create next order of value for our customers,” says Mishra who is seeing possibility of raising fund through equity in near future to attain a high growth trajectory.
“Customers from various sectors pays us to install our system which provides real time diagnostics of entire floor (across all machineries and equipment) and they recover the cost in less than six months. Benefit from our system is extremely disproportional. Any alternate solution will cost at least six times more than ours,” adds Mishra. Additionally, Covacsis has devised a disruptive service delivery model to serve value to its customers on continual basis year after year.