Mba Project on Ashok Leyland Assignment

Mba Project on Ashok Leyland Assignment Words: 8132

CHAPTER 1 INTRODUCTION ECONOMIC SCENARIO India is blessed in terms of natural resources, skilled labor and a well educated young people with a population of over 1210. 2 million people in 2010. The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). The country’s per capita GDP (PPP) is $3,586 (IMF, 129th) in 2010. According to the world bank India’s current growth rate of GDP is 7. 8 per cent in the year 2011. India exports were worth 25941 Millions USD in May of 2011. Exports amount to 22% of India’s GDP.

Gems and jewelry constitute the single largest export item, accounting for 16 percent of exports. India is also leading exporter of textile goods, engineering goods, chemicals, leather manufactures and services. India’s main export partners are European Union, United States, United Arab Emirates and China . India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals. India reported a trade deficit equivalent to 14965 Millions USD in May of 2011.

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India GDP Per Capita stands at 718 US dollars and when adjusted by purchasing power parity, stands at 2946 US dollars according to the World Bank. The Government Debt in India was last reported at 69. 2 percent of the country? s GDP. [pic] Figure 1. 1GDP of India Industrial Production in India expanded 5. 6 percent in May of 2011. Industrial production measures changes in output for the industrial sector of the economy which includes manufacturing, mining, and utilities The inflation rate in India was last reported at 8. 2 percent in May of 2011 The (FEE) or Foreign Exchange Earnings went up to a whopping US$ 12. 88 billion during the period January-November 2010 The per capita income of the Indians have risen by 17. 9% to Rs 54,835 in the fiscal year 2010-11 from Rs 46,492 in the fiscal year 2009-10, stated the revised government data. The new per capita income figure estimates on the present market prices is over Rs 8,000, which is more than the last projection of Rs 46,492 calculated by the Central Statistical Organization.

The per capita income was at Rs 35,917 in fiscal year 2011 as compared to Rs 33,731 in the previous year, said the data on national income. The size of the economy at the present prices surged to Rs 73,06,990 crore in FY11, posting 19. 1% rise as compared to Rs 61,33,230 crore in FY10. In a move to stem the rising prices, the Reserve Bank of India (RBI) on 26. 07. 2011 hiked the short-term indicative policy rate (repo rate) by 50 basis points from 7. 5 per cent to 8 per cent with immediate effect.

With the hike in repo rate (the rate at which banks borrow from the central bank) the reverse repo rate (the rate at which banks park their funds with the RBI), with a spread of 100 basis points below the repo rate, automatically adjusts to 7 per cent this dampens sectors such as infrastructure and automobile. |Policy rates |Exchange rates |Lending rate | |Bank rate-6% |INR/1USD-44. 1553 |Base rate-9. 25-10. 5% | |Repo rate-8% |INR/IEURO-63. 1018 |BPLR-12. 75%-19% | |Reverse repo rate-7% |INR/1POUND-72. 1034 | | Table 1. 1 Bank interest rates The RBI has also revised the WPI inflation projection for March 2012 from 6 per cent to 7 per cent. However, it has retained the projection of real GDP growth for the current year at 8 per cent. Crude oil prices remain volatile and are a major risk factor.

CHAPTER 2 INDUSTRY ANALYSIS 2. 1 AUTOMOBILE INDUSTRY HISTORY In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three wheeler, military tractor that made use of steam engine. Oliver Evans was the first to design a steam engine driven automobile in the U. S. The automobile industry finally came of age with Henry Ford in 1914 for the bulk production in cars. This lead to the development of the industry and it first begun in the assembly lines of his car factory.

According to the history of automobile industry U. S, dominated the automobile markets around the globe with no notable competitors. However, after the end of Second World War in 1945, the automobile industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U. S automobile industry was flooded with foreign automobile companies, especially those of Japan and Germany. 2. 2 INDIAN AUTOMOBILE INDUSTRY

At present time, Indian automobile industry is making a major contribution in increasing the country’s GDP by 9% every year. Annually, the Indian automobile industry is growing at an average rate of 30% and marking itself as one of the fastest growing industries in India. In January 2010, total automobile sales in the domestic market reached 1114157 units, the figures shows an increment of 44. 9% compared to the sales units of 7,68,698 of same period last year. Even for the month of April-October after a gap of 11 years, total automobile sales in India stood at 1,120,081 Units.

Automobile industry has provided direct and indirect employment to 13. 1 million people. At present India is the largest tractor and three-wheel vehicle producer, second largest two-wheel vehicle producer, fourth largest commercial vehicle producer and eleventh largest passenger car producer. National Manufacturing Competitiveness Council (NMCC) has been set up by the Government to provide a continuing forum for policy dialogue to energies and sustain the growth of manufacturing industries in India. [pic] Figure 2. 1 Segment Wise Market Share Of Automobiles

Over the past few years, the Motor Vehicle Manufacturing industry has become more volatile. This has been the result of fluctuations in metal prices and fuel prices, as well as changes in legislation and assistance packages. India’s increasing per capita disposable income and growth in exports is playing a major role in the rise and the competitiveness of the industry . 2. 3 COMMERCIAL VEHICLE INDUSTRY Trucks and buses are basically used for carrying people, goods and materials in bulk fall in Commercial Vehicles sector.

These trucks are classified into sub-categories like depending on their size and functional use: haulage, rigid trucks, tippers, cabs, delivery vans and trailers. In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. The fuel efficiency of these vehicles have also improved to a great extent in the past few years. . As per statistics launched by Society of Indian Automobile Manufacturers (SIAM), the Commercial Vehicles segment grew marginally at 4. 07 percent. While Medium & Heavy Commercial Vehicles declined by 1. 6 percent, Light Commercial Vehicles recorded a growth of 12. 29 percent. [pic] Figure 2. 2 commercial vehicle market share in India The major players of truck manufacturers in India are Ashok Leyland, Eicher, Tata Motors, Mahindra, SML Isuzu and Swaraj Mazda. Determinants of demand for this industry include vehicle prices (which are determined largely by wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle (mainly determined by the price of petrol), income, interest rates, scrapping rates, and product innovation.

As per Automotive Mission Plan 2006–2016 (2008), the Indian Government recognizes its role as a catalyst and facilitator to encourage the companies to move to higher level of competitive performance. The Indian Government wants to create a policy environment to help companies gain competitive advantage. The government aims that with its policies its encourage growth, promote domestic competition and stimulate innovation. An allocation of Rs. 214,000 crore (US$ 46. 5 billion) for infrastructure in 2011-12 budget reflects an increase of 23. 3% automobile sector growth over 2010-11. CHAPTER 3 COMPANY ANALYSIS 3. HISTORY 3. 1. 1 ASHOK MOTORS Following the independence of India, Pandit Jawaharlal Nehru, India’s first Prime Minister, persuaded Mr Raghunandan Saran, an industrialist, to enter automotive manufacture. The company began in 7th September of 1948 as Ashok Motors company based in Chennai, India Started operation initially to assemble Austin cars. The product line soon shifted from cars to commercial vehicles because that was seen as an opportunity to serve a larger section of the society. The first major product introduction, the Comet truck, is reflective of the role this Company has played over the years.

Company led with the country’s first turbocharged engine and gearboxes and axles to go with the higher power engines. 3. 1. 2 HINDUJA GROUP Parmanand Deepchand Hinduja, a young entrepreneur from the fabled town of Shikarpur, realized early in life that business was all about spotting opportunities, and seizing them wherever they surfaced. He travelled to Mumbai in 1914, and quickly learnt the ropes of business. The business journey, which began in Sind, entered the international arena with an office in Iran (the first outside India) in 1919.

Merchant Banking and Trade were the twin pillars of the business and the Group remained headquartered in Iran, until 1979 when it moved to Europe. . It is involved in banking and finance, transport, energy (oil), technology, media and telecom business. The Group has expanded and diversified its businesses, with significant social and charitable contributions, under the present leadership of Chairman, Srichand, ably supported by his brothers, Gopichand, Prakash and Ashok. The Hinduja Group bought into Ashok Leyland, India’s second largest HCV manufacturer, in 1987. The tag line for HINDUJA GROUP is “Vision for Tomorrow Values for All Time”. 3. 1. 3 ASHOK LEYLAND LIMITED (ALL) The company was renamed and started manufacturing commercial vehicles in 1955 with equity participation by British Leyland. The products were branded as Ashok Leyland. Today the company is the flagship of the Hinduja Group, a British-based and Indian originated transnational conglomerate with 51% ownership. Over the years, Ashok Leyland vehicles have built a reputation for reliability and ruggedness. This was mainly due to the product design legacy carried over from British Leyland.

Ashok Leyland had collaboration with the Japanese company Hino Motors from whom the technology for the H-series engines was bought. Many indigenous versions of H-series engine were developed with 4 and 6 cylinder and also conforming to BS2 and BS3 emission norms in India. These engines proved to be extremely popular with the customers primarily for their excellent fuel efficiency. Most current models of Ashok Leyland come with H-series engines. The tag line for ALL is “Engineering Tomorrows” [pic] Table 3. 1 Share Holding Pattern of ALL 3. 2 MISSION STATEMENT OF ALL • Identifying with the customer. Being the lowest cost manufacturer. • Global benchmarking our products, processes and people, against the best in the Industry. 3. 3 VISION STATEMENT OF ALL “Achieving leadership in the medium/heavy duty segments of the domestic commercial vehicle market and a significant presence in the world market through transport solutions that best anticipate customer needs, with the highest value -to-cost ratio. ” 3. 4 THE BUSINESS PHILOSOPHY ” My Dharma (duty) is to work, so that I can give. ” Parmanand Deepchand Hinduja (1901-1971) Founder, Hinduja Group. . 5 GUIDING PRINCIPLES Work to give Word is a bond. Act Local, Think Global. Partnership for Growth Advance Fearlessly, 3. 6 THE FIVE ALL VALUES ARE 1. International 2. Speedy 3. Value Creator 4. Innovative 5. Ethical 3. 8 FACILITIES The company has seven manufacturing locations in India 1) Ennore, Tamilnadu 2) Hosur: Unit 1, Tamilnadu 3) Hosur: Unit 2, Tamilnadu 4) Hosur: Unit 2A, Tamilnadu 5) Alwar, Rajasthan 6) Bhandara, Maharashtra 7) Pantnagar, Uttarakhand 3. 7 ASSOCIATE COMPANIES • Automotive Coaches & Components Ltd (ACCL) • Lanka Ashok Leyland Hinduja Foundries • IRIZAR – TVS • Ashok Leyland Project Services Ltd • Albonair Gmbh • Gulf Ashley Motors Ltd • Ennore Foundries Ltd 3. 9 JOINT VENTURES • Nissan Motor Company-Nissan:49%, Ashok Leyland:51% • John Deere -50:50 Partnership • Automotive Infotronics-50:50 Partnership • Optare 3. 11 QUALITY POLICY The quality policy of Ashok Leyland is to make continual improvements in the processes that constitute the quality management system, to make them more robust and to enhance their effectiveness and efficiency in achieving stated objectives leading to . Superior products manufactured as also services offered by the company. 2. Maximum use of employee’s potential to contribute to quality and environment by progressive up gradation of their knowledge and skills as appropriate to their functions. 3. Seamless involvement from suppliers and dealers in the mission of the company to address customers changing needs and protection of the environment | | | | | | | | | | | | | | | | | | | | | 3. 13 CORPORATE SOCIAL RESPONSIBILITY (CSR) • Fun Bus – Gift from Ashok Leyland exclusively for free use by children of orphanages • Green Mission – All the vehicle manufacturing units of Ashok Leyland were ISO 14001 certified with Environmental Management System also effluent treatment and energy conservation. • AIDS Awareness-Awareness and prevention programmes were started at the Hosur factories among convoy drivers with employee volunteerism. • Community Service-Contributions include construction of buildings for government/private educational institutions, providing borewells, bus shelters, streetlights and community television sets. 3. 2 RECESSION Company lost 1. 8% market share in the Indian medium and heavy commercial vehicle market during the financial year 2008-09, mainly due to loss of sales in the truck segment. The Company sold 6,812 vehicles in the overseas markets during 2008-09. This represents a decrease of approximately 6. 5% over the previous year. To contain costs and conserve cash, the Company worked only about 50% of the working days in all its manufacturing units during the second half of the year 3. 13 ORGANIZATIONAL CHART OF ASHOK LEYLAND LTD [pic] Figure 3. 1 Organizational Chart Of Ashok Leyland Ltd. CHAPTER 4 FUNCTIONAL ANALYSIS 4. 1 HUMAN RESOURCE DEPARTMENT

Ashok Leyland is one of the largest private sector employers in India – with about 12,000 employees working in 6 factories and offices spread over the length and breadth of India. It is the responsibility of the Human resource department to maintain a pool of job seekers data and to employ the talented persons in its plant. The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding the staffing needs of an organization and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. [pic] Figure 4. 1 segments of personnel employed 4. 1. 1 HR Roles Tracking and implementing new trends in the industry • Helping the line management to implement improvements • Focused on operational excellence • Responsible for developing the human capital potential in the organization 4. 1. 2 HR Responsibilities • Demonstrate the line management the will to keep the responsibility for the human capital costs • Keep the competitive advantage on the market (and not just the job market) • Demonstrate the will to drive the main hr processes to keep the organization in the excellent health • Supporting the business strategy to reach the business initiatives • Responsible for the tasks resulting from the business strategy 4. 1. 3 FUNCTIONS OF HR DEPARTMENT 1) HR ACQUISITON ) Recruitment b) Selection 2) HR DEVELOPMENT a) Training and development b) Organization development 3) PERFORMANCE AND COMPENSATION a) Performance appraisal b) Incentives and benefits 4) MOTIVATION a) Creating motivation environment b) Empowerment and participation c) HR Mobility 1) HR ACQUISITION a) RECRUITMENT Recruitment is the process of ‘finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants from which new employees are selected. b) SELECTION The following are various external sources of recruitment: • Consultancies Campus recruitment • Lateral entries 1. CONSULTANCIES The department heads where requirements are needed informs to the HR department about the requirement. The concerned persons for recruitment gets approval for filling the vacancies. Then the consultancies are approached telling the requirements. The fit applications are mailed to attend the interview. If satisfied, they are called for the personal interview. 2. CAMPUS RECRUITMENT The recruitment panel goes to the reputed colleges to select the candidates. On the following basis they recruit the candidates GETs – Graduate Engineer Training DETs – Diploma Engineer Training ITI 3. LATERAL ENTRIES

The following is the process of lateral entry recruitment: 1. Sourcing 2. Interview a. Written test b. Technical round interview c. Personal Interview 2) HR DEVELOPMENT a)TRAINING PROGRAMS • Quad 1 executives • Competencies and priority needs of departments/ units • E-learning • Induction for DET (2 years) GET (1 year), Laterals (7 days) • GENMOD training program. • General-Planning for retirement Budget spent for training (8hrs- 1day) middle managers (3 to 4 persons) is 3-4 lakhs • WORKMEN CAPABILITY BUILDING Training & Development for the unionized employees at the manufacturing units is focused on skill development. Both internal and external training is given for associates.

Guest lectures of external faculty and various other industrial visits will be arranged for associates. In addition to some programmes like engineering drawing and waste elimination are also conducted. • TRAINING FOR SENIOR/ MIDDLE LEVEL MANAGEMENT Both external and internal training is given for the executives. Faculty from outside agencies will be arranged for training them. They also get faculty from corporate level. Training for senior/middle level management is done on the following basis: 1. Technical 2. Behavioral 3. Functional • MANAGEMENT DEVELOPMENT PLAN Management development plan of Ashok Leyland focuses on the following competencies • People leadership Transformational leadership • Project management capability • Result orientation • Entrepreneurial perspective HR processes such as job evaluation and competency mapping will be dovetailed into the development plan to enhance objectivity and effectiveness. DEVELOPMENT ACTIVITIES The following are the developmental activities: TEI – Total Employee Involvement CFG – Cross Functional Group QC – Quality Circles SS – Suggestion Scheme Re-deployment 3) PERFORMANCE AND COMPENSATION 1. PERFORMANCE APPRAISAL “Performance appraisal is the systematic evaluation of the individual with regard to his or her performance on the job and his potential for development”.

In Ashok Leyland graphical scale method is followed, it is also known as linear rating scale. In this, a printed appraisal form is used for each appraise. The form consists of various employee characteristics and his job performance. Various characteristics include initiative, leadership, dependability, creative ability, analytical ability etc.. ,The rating is done on the basis of scale which is in continuum representing various degrees of particular quality. Ashok Leyland use numbers say 5, 4, 3, 2 and 1 to denote points for various degrees of excellent-poor, high-low, good-bad and so on. The appraisal form is divided into 8 parts where under each part separate sections are being covered. Part I- Performance in the present job (Employees achievements, goals) • Part II- Work behavior (Plans, objectives, activities, execution of plans) • Part III- Abilities (Job knowledge, commitment to achieve results at work) • Part IV- Potential ( Areas of interest, personality traits, strength, weakness) • Part V- Overall performance rating ( Based on assessment of part I, II III) • Part VI- Training need (To improve performance in present job, to assume higher responsibility) • Part VII- Development plan (Job rotation, job enlargement, special assignment/ reputation) • Part VIII- Other comments Five point scale of Ashok Leyland showing levels of performance: 5-

Exceptional – Consistently outstanding performance. 4- Superior – – Performance which is consistently significant beyond job requirements contributes in related area also. 3- Good – Performance which adequately meets job requirements and occasionally produces good over and above requirements 2- Barely satisfactory – Just meets minimum job requirements 1- Unsatisfactory – Does not meet job requirement at all. The appraisal form also consists of customer satisfaction survey where the need, service provider and period of assessment are all identified.

It also follows graphical scale method using a five point scale based on the criteria 1)Quality ( Customer needs, service information, quality works, complaints etc.. ,). 2) Delivery (Delivery time, point of use, use or parts/service information) 3) Communication (Interaction with customers, listening to customer views, timely feedback, and review changes with the customer) 4) Responsiveness (Responding to customer complaints, changes to customer needs) 5) Improvement (Positive attitude for improvement, implementation & effectiveness of improvement and improvements at the customer end) [pic] • EMPLOYEE RETENTION Performance linked pay

The company has an annual appraisal system in place and pursuant to this system, Performance linked pay, annual variable pay and/or commission is paid to the employees. Employee motivation Ashok Leyland targets 100% of its employees to be involved in its continuous Improvement activities. Reward systems such as IMPROVE, RISE, BITES, 100% CLUB and GEMBA passport scheme motivates people to contribute their ideas. • INCENTIVES 1) Surcharge on Direct Booking Incentive. 2) Special Incentive Scheme. EMPLOYEE WELFARE SCHEMES The following are the welfare schemes available to the employees. ? Canteen facilities ? Medical claims ? Transport facilities ? Ashok Leyland school for their children ? Scholarship schemes ? Recreation facilities • BENEFITS 1) Tuition fee refund:

Reimbursement of expenses related to course fees, examination fees and purchase of books is allowed upto 75% of amount spent per academic year subject to a maximum amount as given by personnel administration. 2) Major medical plan: Benefits will be available within the laid down overall limits for self dependants viz. reimbursement of medical expenses and interest free loan 3) Medical reimbursement: Domiciliary expenses incurred on domiciliary medical treatment shall be reimbursed subject to the annual limits fixed from time to time. 4) Domestic travel: Boarding and lodging expenses per diem allowance, when an employee opts to makes his own arrangements , out of pocket expenses, other expenses such as local conveyances, office phone calls. ) Conveyance reimbursement: It is made on self certification of expenses by the executives. This will stand withdrawn in the event of company transport being provided. 6) Vehicle loan: Interest free loan upto 100% of the cost of a new two wheeler subject to a maximum limit stipulated from time to time. 7) Group term insurance: It is in addition to the accident insurance cover provided by the company for executives. In the event of accidental death, the beneficiaries will receive benefit under both policies. 8) Sixth day compensation (ie. Saturday): Executives in CG 25 (Corporate Grade) and below will be paid 7. 5% of basic salary for every 6th day (optional) worked.

The 6th day compensation as indicated above will be considered as salary for the purpose of contribution to PF and eligibility for bonus/ Ex-gratia. 9) Maternity leave: Total period: 12 weeks leave with pay (6 weeks before delivery and 6 weeks immediately following the delivery) for lady executives. 10) Leave: All executives are eligible for privilege leave (PL)-30 days, sick leave (SL)- 7 days, casual leave (CL)- 7 days, national and festival holidays. All leave will be credited in January, every year. 11) Retirement age: The age of retirement from company’s service will be the last day of the calendar month in which the employees attains the age of fifty eight years. 4) MOTIVATION EMPOWERMENT AND PARTICIPATION IMPROVE

Improve is an annual company- wide event to record, recognize and award employees for their positive involvement in organizational growth innovation and customer satisfaction. RISE The expansion for RISE is Reward For Individual Search For Excellence. It is an integrated award and is given to the associates. If an employee does some good activity or work apart from his usual one he is being awarded with RISE. PROMOTION OPPORTUNITIES Promotions is based on the seniority, eligibility for post ,efficiency, skill,qualification etc.. , The management decides whether to fill a post of outside recruitment or through promotion. Workman shall be considered for promotion to a post based on certain rules. He has rendered a minimum period of qualification service of five years. • He possesses the qualification prescribed for the post to which he is to be considered. SEPARATIONS Separation involves cessation of services of personnel from an organization. When people leave the organization, Exit interviews are usually conducted to know the reasons for leaving. The common reasons given are: • Better opportunities • Lack of growth ALLOWANCES • House rent allowance • Washing allowance • Uniform and stitching allowance • Night shift allowance • Conveyance allowance • Milk and vitamins allowances • Flexibility allowance • Quality certification allowance Direct production allowance 4. 2 FINANCE DEPARTMENT Finance is considered as the life blood of business. This is because in the modern money-oriented economy, finance is one of the basic foundations of all kinds of economic activities. Finance function may be defined as the procurement of funds and their effective utilization. 4. 2. 1 ROLE OF FINANCE DEPARTMENT • Recorder (accounting) of all Financial Transactions • Reporting of Financial Performance • Arranging long and short term funds – Capital and Debt • Working Capital Management • Compliance of tax and other corporate laws • Risk Management • Controllership function • Audit coordination Investor Relations 4. 2. 2 RESPONSIBILITIES OF FINANCE DEPARTMENT • The pricing department is responsible for the fixing of prices for sales of the vehicles and for buying of raw materials and semi finished goods. • Treasury section is responsible for all kinds of funding managements such as investments. • Taxation section is responsible for remittance of tax, filing of returns, handling of litigations etc.. , • Costing and Budgeting department is responsible for the unit costing of each product in particular, such as spare parts and a vehicle as whole. 4. 2. 3 STRUCTURE OF FINANCE DEPARTMENT [pic] Figure 4. 2 Structure Of Finance Department 4. 2. PROCESS & ACTIVITIES OF FINANCE a) Financial Accounts • Quarterly, Half-yearly and annual results published as per listing requirements • Limited Review / audit coordination. • Annual Reports – Disclosures made are comprehensive; complied much before they become mandatory • Early completion of accounts, audit process; forefront in adherence to accounting standards & other guidelines. • Audit Committee – comprises of Stalwarts from the profession. • Automation of processes b) Financial Planning & Control • Financial Planning includes estimating the amount of capital to be raised and laying down the policies as to administration of the financial plan. Monthly MIS: Very Comprehensive with wider coverage and highly informative. • Monthly review covers business volumes, market share, physical and financial parameters including alerts on laggards, exceptions in all fronts. • Exception reporting and Profit management measures form integral part of this process c) Treasury Management • Raising of Funds • Funds Management • Debt Servicing • Risk Management d) Costing & Pricing • Strategic pricing of products, quotes for various tenders. • Special pricing for export contracts. • Monitoring of cost of production of various models and for make or buy decisions • Project / capex evaluations for optimization and for making commitment Decisions e) Taxation Compliance with Direct (Income Tax Act, Wealth Tax) & Indirect Taxes (Excise, Customs, Service Tax, Sales tax etc). • Tax planning is an important component of business decisions. • Recent major developments include introduction of Service Tax legislation and VAT across many States. • Aligning the business process across the organization and maximizing the benefits against such legislations is a major task handled by Finance. • Regular tasks include remittance of tax, filing of returns, handling of litigations etc. 4. 2. 5 PLANNING & MANAGING CASH FLOWS 1. Planning cash flows Rolling Quarterly cash forecast prepared and monitored weekly seeking explanation for variance in order to control and direct operations. 2.

Management of daily funds • Collections from 49 locations pooled under cash management system in to centralized accounts with consortium banks at Chennai. • Various payments reported are collated and funded for in the various bank accounts depending on the expected debits. • Surplus for the day, if any, invested for tenor which is based on requirement of funds back in to the system. • Deficit funded through short term loans from banks, availed based on best product available / rate offered 4. 2. 6 STRATEGIC GOALS • Raise resources to the tune of roughly US$ 1. 8 billion for funding expansion plans of AL, Nissan and other JVs over the next 3 years Achieve optimum funding mix / restructuring of companies to minimize the cost of raising of funds. • Maximize tax efficiencies to improve cost competitiveness of products and improve viability of projects. • Make globalization a reality through acquisitions and setting up of new ventures abroad by leveraging AL’s strengths. Bench mark financial processes to the best in the world and improve the bar; maintain high standards of financial discipline. • Maintain excellent relations with international investor community through effective communication for international offerings. 4. 2. 7 FINANCIAL CHALLENGES AHEAD • Global slowdown challenging break even. Decrease in Margins due to inability to pass on cost increases due to competitive pressures – partially compensated by increase in volumes. • Profitability pressures due to changes in business mix and commodity price movements. • Forex management – unforeseen volatility in major currencies; particularly important with forex loans • Supporting inorganic growth – evaluation & funding of emerging options. • Need to fund major capex & investments – Rs. 2400 cr in the next 3 years; major investments in JVs • Tackling financial covenant breaches. • Increase in interest rates • Business integration of overseas units. • Managing expectations of stakeholders 4. 2. 8 RECORD ROOM

Ashok Leyland has been computerized for all its financial transactions using a special software developed on its own. The bill copy , GRM with sr. no has to be entered in the system and the paper record is maintained for 10 yrs. 4. 2. 9 BANKERS OF ALL • Bank of Baroda • Canara Bank • Central Bank • Citi bank N. A • HDFC Bank Limited • ICICI Bank Limited • Punjab National Bank • Standard Chartered Bank • State Bank Of India • HSBC limited 4. 2. 10 SUPPLIER Supplier is selected by the corporate office and the payment terms are decided at the time of making contract the payment period for each supplier varies from 30 days, 45 days, 90 days and so on. Some of the major suppliers are BOSCH. MICO, MERITA, AXLE INDIA, etc. , 4. 2. 11 CORPORATE FEEDBACK

Ashok Leyland reported a 33. 93 per cent increase in net profit to Rs 298. 2 crore for the quarter ended March 2011. The company had reported a net profit of Rs 222. 7 crore for the fourth quarter last financial year, Ashok Leyland said in a filing to the Bombay Stock Exchange. The company’s net sales rose to Rs 3,828. 5 crore in the quarter ended March, from Rs 2,939 crore in the same period last financial year. The company’s board, which met on Thursday, has recommended a dividend of Rs 2 per share (200 per cent) of Re 1 face value for the full financial year. In the year ended March, the company has posted a net profit of Rs 631. 29 crore, up 49 per cent from Rs 423. 7 crore in the previous financial year . Net sales rose to Rs 11,117. 7 crore from Rs 7,244. 71 crore in the previous financial year. [pic] Table 4. 1 Sales Record Of Ashok Leyland Ltd Its operating profit margin fell marginally on a y-o-y basis to 9. 8% in the first quarter of FY12, while net sales improved 6. 3% to Rs 2,495. 5 crore. However, pressure on its margins in the quarter under review was due to higher employee costs. The company’s total vehicle sales (CVs and passenger buses), including exports, fell 9. 9% y-o-y to 19,277 units in the quarter under review. And in its key medium and heavy (M&H) CV segment, the company witnessed a 14. % y-o-y decline in unit sales in the quarter. Analysts highlight the impact of rising auto finance rates and sluggish growth in the broader industrial sector, which impacted demand for Ashok Leyland’s M commercial vehicle range. Higher finance costs also contributed in the 29. 6% y-o-y decline in the company’s net profit in the June 2011 quarter. Growth in net sales in the first quarter of FY11 was considerably weaker than that reported in the trailing four quarters ended March 2011. 4. 2. 12 LISTING IN STOCK EXCHANGE The Company’s shares are listed on the Madras, Bombay and National Stock Exchanges. Based on shareholders’ approval at the AGM held on 22. 7. 003, the shares have been delisted from The Stock Exchanges, Ahmedabad with effect from 15. 1. 2004, The Delhi Stock Exchange Association Limited with effect from 23. 1. 2004 and The Calcutta Stock Exchange Association Limited with effect from 25. 4. 2005. The GDRs and FCCNs are listed on the London Stock Exchange. The Listing Fee has been paid upto date, to all the Stock Exchanges. The Privately Placed Debentures of the Company are listed with Bombay Stock Exchange Limited / National Stock Exchange of India Limited. 4. 2. 13 DIVIDEND Dividend of 150% (Rs. 1. 50 per share) for the financial year 2007-08 was approved by the Shareholders at the Annual General Meeting held on July 30, 2008 and paid to the shareholders.

Consequent to the amendment to Section 205A of the Companies Act, 1956 and introduction of Section 205C by the Companies (Amendment) Act, 1999, the amount of dividends remaining unclaimed for a period of seven years is to be transferred to the Investor Education and Protection Fund. Accordingly, the dividend declared for all the financial years ended March 31, 2002 has been transferred to Investor Education and Protection Fund. The amount so transferred cannot be claimed either from the Company or from the Fund. [pic] Table 4. 2 Dividend Of ALL The Board of Directors of Ashok Leyland, the Hinduja Group flagship, on 15th June, 2011 approved, the issue and allotment of fully paid Bonus Shares in proportion of one share of Re. /- each for every share held as on the Record /Book Closure Date, subject to statutory approvals and also approval by the shareholders at the Annual General meeting to be held on 19th July 2011. 4. 3 AUDIT DEPARTMENT Messrs M S Krishnaswami & Rajan (Registration No. 01554S), Chartered Accountants, and Messrs Deloitte Haskins & Sells (Registration No. 117366W), Chartered Accountants be and are hereby appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting on a remuneration of Rs. 25 lakhs (Rupees twenty five lakhs only) each, in addition to reimbursement of out-of-pocket expenses. There are over 35 members in the company who work for all the branches regardless of one plant who are CA, IFRS and Accounts qualified with professional, semiprofessional and technically talented. Each employee undergoes training for 3 months in a cyclic order to equip with the changing technologies. 4.. 3. 1 ROLE OF AUDIT DEPARTMENT Accounting is a major means of helping managers of an organization, equity investors of an organization, potential equity investors, creditors and bond holders of an organization, potential creditors and bond holders of an organization, suppliers and customers of an organization and other stake holders to take decisions.

Accounting provides information for three major purposes: 1. External reporting: These reports are used investors, creditors, government authorities, and other outside parties. 2. Routine internal reporting: These reports which are periodically generated are used by managers of the company for their internal decisions. 3. Nonroutine internal reporting: This information or reports are generated to support projects and other decisions that come up as the need arises from them. The Audit committee of ALL prepares yearly plans for the three vertical functions for the period of July to June which are divided to individual executives. Then a review committee forms a draft report is prepared then a eply is taken to frame a final report which is submitted to department head monthly wise. And are divided based on the criticality in to high , medium and low impact. An Internal audit review portal has been maintained by ALL which Contains the updated information of the budget amendments and various taxes of central government as and when the changes are done those will be reflected in the company’s financial planning. 4. 4 MATERIAL PLANNING & PURCHASE DEPARTMENT Corporate office prepares master production schedule for all the plants yearly and provides its production plan divided by month wise and send it to the AGM twice a month at the beginning and middle of the month.

The prepared schedule given to the supplier has a constant requirement for 4 weeks and tentative (varying) requirement for next 8 month. Purchase schedule has the net requirement of the materials and ERP has the gross requirement which is used in the bill of materials in off track. The order placed to the vendor is calculated by subtracting the net requirement from the materials in store and work in progress which assures inventory control. Input of raw material is depending on the production plan, BOM, ERP and spare parts required. Inter unit process i. e transfer of materials with each unit is also monitored. BOM changes with the engineering design modification and value engineering.

The material purchase order has been prepared and the quotations are forwarded to the chief of audit department for sanction of fund and then the quotations are sent to the concerned supplier in the zone for the delivery of raw material to the concerned plant within 2 weeks by following JIT method and then the parts are moved to the central stores in each and every plant before sent to the assembly line. Strategic planning committee at the corporate office defines the component used and new product introduction or supplier changes. During the recession period inventory control is strictly followed by having no waste policy, avoiding excess parts, inter transferring materials with other unit and reducing material in warding. Production plan meeting is conducted twice a month at the corporate office having experts in planning committee 5. PRODUCTION DEPARTMENT

Production is an organized process of manufacturing/producing goods and services through the use of input resources of men, materials, money, machine, methods. 4. 5. 1 PRODUCTION MANAGEMENT STRATEGIES Long range strategies • Effective management of technology. • Innovation in product management and process technology. • Globalization in industry. • Goodwill inside and outside the organization. • An aggressive marketing strategy and risk taking ability. Short range strategies • Location and layout. • Product selection and technology. • Capital selection and investment. • Flexible strategy of production. • Standardization of design. • Economy of size and variety. Figure 4. 3 Process Flow Chart Of Ashok Leyland 4. 5. PRODUCTION SYSTEM 4. 5. 3 DEPARTMENT STRUCTURE [pic] Figure 4. 4 Department Structure Of Plant I Manufacturing 4. 5. 4 PLANT LAYOUT Production layout is employed in chassis assembly and engine assembly where in the Facilities are arranged in a line as per the sequence of the component manufactured has to be assembled to make the required design of engines and chases. Characteristics • Mechanized material handling. • Lesser work in progress. • Special purpose machines are used. ENGINE ASSEMBLY • The engine case arrives at the first section and it is fitted with cam shaft and flywheel. • The pistons are attached one by one to the crankshaft. Later fuel filters, oil coolers are attached. • Belt and gears for the running came is attached in the next section. • Finally the engine timing is set and sent for mounting on the body of a truck or a bus. [pic] Figure 4. 5 Keno H Series Engine FRAME ASSEMBLY: Stage 1: Mounting Of Side Members And Cross Members Stage 2: Mounting Of Front Spring-Rear, Front Spring-Rear, Rear Spring-Front, Rear Spring-Middle, Rear Spring-Rear. Stage 3: Fitting Of Engine Mounting Brackets And Fes Mounting Brackets Stage 4: Side Members Fastening To Torque Limit, Steering Box Bracket, Side Members Reaming, Front Tie Channel Mounting

Stage 5: Fitment Of Fes Rear Brackets, Shock Absorber Brackets And Torque Checking Passing Stage: Checking And Tilting STAGES OF CHASSIS ASSEMBLY: Stage 1: Lay down regular Stage 2: Fixing of I & U bolt. Stage 3: Brake chamber. Stage 4: Steering gear. Stage 5: Silencer. Stage 6: Fuel / water separator. Stage 7: Air tank. Stage 8: Fuel tank. Stage 9: Engine mounting. Stage 10: Air/fuel piping. Stage 11: Propeller shaft. Stage 12: ACE link assembly Stage 13: Exhaust piping. Stage 14: Radiator. Stage 15: Tyre mounting. Stage 16: Lubrication. Stage 17: Front end structure (FES) Cab mounting. Stage 18: Bumper. Stage 19: Steering. Now the cockpit of the truck is mounted on the body of the truck correctly and then it is sent for a drive or to the storage area.

For every 13 minutes a truck rolls out from the factory and 135 chassis are assembled per day as per agreement. Both these sections have a conveyor belt on which each process is carried on. The belt keeps on moving and the operator has to complete his designated job or else its nothing but an error. PDI (PRE DELIVERY INSPECTION) Testing of vehicle on real road conditions The following are the various tests done to test the vehicle: 1. Speed test 2. Acceleration test 3. Vibration test 4. Torque tightening 5. Oil level and water level checking 6. Electrical components checking 7. Air leakage test 8. Grease level checking 9. Power steering hose routing and clamping 10.

Road test 4. 6PRODUCTION CONTROL MTSL (mktg) department determines the demand as 950 chases per month therefore the model wise schedule is prepared week wise and the schedule is given for material purchase which is divided as day plan in this department and are sequentially arranged and given to assembly units. As per the capacity per day 44 chases is produced which is sequentially arranged in the issue list and material required is sent to the stores to assembly section. The material account is prepared with input raw material and output chassis is recorded in the IOR. Technical standard is followed and EMS audit is done 4. 7 PLANT ENGINEERING

Plant engineering is responsible for proper functioning of the plant by carrying out maintenance operations such as electrical and electronics equipments maintenance, forklift charging and its repairing, repairing of pneumatic circuits etc.. It is also responsible for maintenance works carried out in the organisation. The following are the various types of maintenance: • Predictive maintenance • Preventive maintenance • Breakdown maintenance • Routine maintenance 1. PREDICTIVE MAINTENANCE: Predictive maintenance is done on assumption by experience before the occurring or by any symptoms of occurring. 2. PREVENTIVE MAINTENANCE: Preventive maintenance is work directed to the prevention of failure of a facility 3. BREAKDOWN MAINTENANCE:

Breakdown maintenance is work which is carried out after a failure, but for which advanced provision has been made in the form of spares, material , labour and equipment 4. ROUTINE MAINTENANCE: Routine maintenance is done on even time or on routine basis. It includes machine lubrication, replacement of bulbs throughout plant to arrest building deterioration. 4. 8 QUALITY CONTROL & TQM DEPARTMENT Ashok Leyland believe that our impressive strides in the marketplace stem in equal parts from our proactive approach and our customers’ unstinting support, earned the only way Ashok Leyland know: by giving our customers the most appropriate transport solutions for each of their applications, and by backing them up with consultancy, finance, driver training and a responsive after-market network.

Ashok Leyland are conscious of the fact that vehicles are more than just a means of transporting people and goods; Ashok Leyland understand that they have a deep and far-reaching impact on society, the national economy and the environment. Ashok Leyland has, therefore, always endeavored to engineer products and systems that promote progress on all these fronts. Ashok Leyland firmly believe that this honest approach will make the Ashok Leyland marquee the symbol of the very best in transportation, today and tomorrow. Ashok Leyland care for their customer, they try to give best quality engineering as well as best quality service to their customer.

The major characteristic through which Ashok Leyland give the best quality to their customer are:- |* Reliability |* Conformance | |* Maintainability |* Durability | |* Safety |* Service | |* Strength |* Response | |* Performance |*Aesthetics | |* Features |* Reputation |

Ashok Leyland is committed to achieve customer satisfaction by anticipating and delivering superior value to the customer in relation to their own business, through the products and services offered by the company and comply with statutory requirements The quality assurance of Ashok Leyland is to make continual improvements in the processes that constitute the quality management system, to make them more robust and to enhance their effectiveness and efficiency in achieving stated objectives leading to (1). Superior products manufactured as also services offered by the company. (2). Maximum use of employees potential to contribute to quality and environment by progressive up gradation of their knowledge and skills as appropriate to their functions. (3). Seamless involvement from suppliers and dealers in the mission of the company to address customers changing needs and protection of the environment.

For the Quality assurance Ashok Leyland completed journey towards global standards of quality, history to win the ISO 9002 certification. The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001. 4. 8. 1 DEPARTMENT STRUCTURE [pic] Figure 4. 6 Department Structure of Plant I TQM 4. 8. 2 QUALITY CONTROL FUNTIONS 1. Incoming quality management A sample of material from the supplier is tested for the quality specification 2. In processing The material at the stores are tested for quality and certified before processing 3. Assembly testing The parts assembled in the unit are tested for Euro norms and engine heuristics 4. Warranty

Failed product delivered to the customers are analyzed at the field and report is sent to the corporate. TYPES OF TESTING TEAM 1. Engine rectification team 2. Vehicle rectification team DEPARTMENTS 1. Metrologies The instrument used for preparation of the parts are tested and calibrated for perception. Now a day it is outsourced to “TESBA group” which has NABL certification 2. Quality lab The minor part making instrument is tested with the measuring tools. TRAINING Week wise training is given to the associates to self certify parts at each stage. MISSION GEMBA It is a quality control technique which was introduced in the year 2005 and followed till date.

There are over 25 centers all over the plant Under GEMBA in which every day the employees of the centers will assemble and discuss about the work done on previous day, problems faced and plan for today’s activity before starting up the work. GEMBA: Gemba is a Japanese word meaning “Real Place” where the real action takes place. In the manufacturing business, Gemba is the shop floor; in a service business, the place where the customer and the service come together. It is also the quality of human interaction in the workplace between co-workers, with customers and business partners. Launched in June 2005 as a company- wide initiative, Mission Gemba’s objective is to provide information, develop skills and empower employees to reach world-class levels in quality, cost and delivery.

The logic is simple and undisputable: value is created at the Gemba and the Gemba knows its work best. GEMBA KAIZEN: Three ground rules for practicing kaizen in Gemba. 1. House Keeping 2. Muda Elimination [Waste Elimination] • Waste of over production • Waste of inventory • Waste of waiting • Waste of Motion • Waste of transportation • Waste of Producing Rejects • Waste of processing 3. Standardization. GEMBA MISSION: NEW 7+1 INITIATIVE (N7i) 1. New Genbas for associative participation 2. Improving housekeeping 5’S 3. Quality on customer focus 4. Employee effort reduction 5. Effective cost management 6. Inventory management for beneficial financial control 7.

Improvement in machine uptime & production on critical machines +1. Safety for all GEMBA passport scheme Under this scheme a separate passport is maintained for each employee and points are added for contribution toward GEMBA goal achievement. And the company has announced various gifts for the aggregated points such as 110800( Sony LCD TV) to 250(Parker pen). This is used to analyze the driving attitude change to the front line employee and provide technical debottlenecking to workforce 4. 8. 3 TOTAL QUALITY MANAGEMENT FUNCTIONS 1. Total employee involvement (TEI) 2. Quality management systems (QMS) 3. Management information systems (MIS) 4. Handling visitors TOTAL EMPLOYEE INVOLVEMENT (TEI) 1.

SUGGESTION SCHEMES 1. The technique used to capture the idea of the employee for improvement, the idea can be given as a individual or by a group activity. 2. The idea can be given from the bottom level to manager (CG24A) cadre are forwarded to separate evaluation committee and are discussed for feasibility. 3. The idea can be of two categories such as product and process. the product suggestion are analyzed by a panel of engineers and process suggestion are analyzed for feasibility at the individual department. 4. The suggestion can be of recurring saving or one time saving to the company and may result in tangible benefit or intangible benefit. 5.

The suggestion provider is awarded by certificates and monetary benefit of Rs 50 to Rs 25000 for each suggestion based on their worth to company. 2. QUALITY CIRCLES It is the group of employees consisting of 1 executive facilitator, leader and 5 member of management presentation. This group in each plant will compete inside the company and are awarded for best idea the winners will be participating in the QCFI,CII and NIQR. QCFI is conducted as state, national and international level, CII is conducted at state, regional and national level, NIQR is conducted at state level the prize money is Rs 40000 and recognition for the company on the international level. 3. SMALL GROUP ACTIVITIES

It consists of executives and workmen who forms a small group to improve their work activity and they are governed by awarding quality circle awards 4. CROSS FUNCTIONAL TEAM It consists of executives from each functional area to work together and provide suggestion for the improvement at work place and are competing at CII for the recognition. Also the RISE award is given to the employee CHAPTER 5 SWOT ANALYSIS STRENGTHS 1. Good Training System. 2. Good Organizational Climate. 3. High Market Share 4. Skilled Employees 5. Standard Quality Product 6. Company provides better credit facility to dealers WEAKNESSES 1. High price 2. Sales representatives are less 3. No promotional efforts OPPORTUNITIES 1. Demand for heavy vehicle has stepped up all over the globe. 2.

Technology development enhances market leadership THREATS 1. High competition by MNC’S entry into Indian market. 2. Frequent Changes in Technologies. 3. Government Policies and Rising Fuel Prices. CHAPTER 6 FINDINGS AND SUGGESTIONS 1. In ALL there is good employer-employee relationship. 2. It targets 100% of its employees to be involved in its continuous improvement activities by motivating them through various financial and non-financial Incentives. 3. There is a well integration of all the functional departments which facilitates the use of software like ERP. 4. To solve work related problems, QC (Quality Circle) and cross functional team are made effective 5.

Ashok Leyland has not got a foothold in the luxury trucks segment in its domestic markets 6. Advertisement is not given much importance. 7. The company is increasing its global foot print by entering Asian and African markets. CHAPTER 7 CONCLUSION The summer internship and the resulted report have been of great help to the student, as an aspirant manager, to understand the functioning of a major establishment like Ashok Leyland. The summer internship has also revealed many unknown facts about the Working of a manufacturing unit and familiarize about the assembling of commercial Vehicles. CHAPTER 8 BIBLIOGRAPHY Ashok Leyland ? In- House Journal – Ashley News ? Annual Report 2010-11, annual report 2009-10 Data gathered from the employees of Ashok Leyland Ltd working in various departments. National Strategy for Manufacturing report 2010 WEB BIBLIOGRAPHY ? www. ashokleyland. com ? www. hindujagroup. com ? www. india. gov. in ? www. economictimes. com ? www. indiainfoline. com ? www. auto. indiamart. com ———————– End Product Fixing Of Flywheel Housing Assembly of oil pumps Fitting of stainers Compressor fitting Fitting of oil coolant Fitting of belt Fixing Of Cam Shaft Fixing Crank Shaft and bearing caps Engine Assembly End Milling Boring washing Finish milling Rough milling Drilling Assembly of bearing caps Components machined Purchase of raw materials

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