Merlyn2 project

KEC Unit 2. HUBLI

INTRODUCTION

1FATIMA DEGREE COLLEGE (BBA), HUBLI

KEC Unit 2. HUBLI

EXECUTIVE SUMMARY

Working capital management is one of the most important aspects of financial management.

Every company requires management of its working capital to run its business smoothly and

successfully. Proper management of working capital is necessary to maintain both liquidity and

profitability of a company .The working capital management involves deciding upon the amount

and the composition of current assests and how to finance these assests.working capital

management has become an important tool to judge the performance of a business.

Kirloskar electric company limited unit 2 was established in 1976 and ever since has maintained

its undisputed position as a market leader.

The key benefit of the study is to get knowledge of correct and appropriate measures of

evaluating the working capital management and the application of different outcomes regarding

the ratio relating to working capital in the company. And the different measures to be taken for

the proper outcomes. The study also helps in finding out the capital management patterns in the

management of cash, management of accounts receivables, and the management of the

inventories of the company and the different aspects involved in the working capital

management of kirloskar electric company limited unit 2.,.


KEC Unit 2. HUBLI

INTRODUCTION

I studied the Unit 2nd of KEC at Hubli it would be better if we are well informed about the

Kirloskar group of industry.

It was establishment of Kirloskar group of co’s made a very good significant change in the

history of Indian electric industry , Even Mr.Laxman Rao Kirloskar founder of the group

probably would not have dreamt about the group would grow to this large extent in such a

fashion .

Founder Mr.Laxman Rao kirloskar strongly believe that ‘’Co’s progress was determined by the

integration of man and his intellect with technological growth and environment ‘’. His belief

paid him of in such a manner that the group ranks in the top 20 industries in India.

The very first product of Kirloskar was the ‘’Iron plough “which was must ahead of its time. The

design being done with the customer in mind Kirloskar become to be known as the other name

for the product.

Since from its first product the group showed its commitment to continues innovation , quality ,

continuing technology and advancement the group still has the same as its ‘’Golden Rule “ .


KEC Unit 2. HUBLI

RESEARCH AND METHODOLOGY


KEC Unit 2. HUBLI

RESEARCH METHODOLOGY

Methodology aims to the present a clear idea of the research procedure used in this study, since the valve of systematic and scientific research lies in Methodology the goals should be reached with accuracy using least amt of time.

The method employed in the budget for collection and analysis of the information is the primary source and secondary.

Primary:-

• Observation method :-

By Observation the various steps in the work of the dept the data collected and also glancing over the task performed by the employees during the working hours .

Secondary source:-

Magazines, company profiles, Reports, etc.


KEC Unit 2. HUBLI

MILESTONES IN THE HISTORY OF KEC

1946 ---- KEC established at Bangalore.

1948 ---- A new era opens for Indian K.E.C produces the country’s very first AC

motors

1954 ---- Impatient for progress, the company gets into product diversification producing

its first transformers.

1956 ---- First transformer manufactured.

1958 --- A critical power situation inspires production of the country’s first

transformers.

1963 ---- The patient of breakdown continues. DC motors and DC generators roll off the

assembly line.

1965 ---- Market demand increases. India’s first motorized gear unit joins the K.E.C

product range.

1966 ---- Intensive research and development sets the pace for production of the first

induction heating equipment.

1973 ---- First oversees office at Malaysia.

1976 ---- Office at Nairobi established

1982 ---- New collaborations. Better products. Thyristor, Converters, made in

collaboration with Thorn EMI, U.K.

1987 ---- Introduction of CNC systems and factory automation.

1989 ---- More collaboration. More products. With Fuji of Japan for investors and with

Toshiba of Japan for UPS

1991 ----Toyo Denki collaboration for motors and generators up to 10MW/ MVA.

Production of technologically advanced large DC motors and large AC machines in

collaboration with AEG Daimler Benz of Germany up to 20MW

1992 ---- The company starts production of Hi- Tech CRT based CNC systems.

1993 ---- Kirloskar Electric becomes the first company in India to receive ISO 9001

certification for its entire product range and for all its manufacturing units.


KEC Unit 2. HUBLI

1995 ---- Took over Voltas Transformer and started manufacturing plant at Tumkur for

Manufacturing units

1996 ---- Celebrated Golden jubilee and started manufacture of wind turbine.

2001 ---- Company restructure.

2002 ---- First test lab was started at Tumkur.

2003 ---- Received NVLAP certificate test lab.

2004 ---- Customer Excellence Certificate.


KEC Unit 2. HUBLI

K.E.C. UNITS

Units Place Products

Unit - 1 Bangalore AC motors, AC generators, motorized gear units.

Unit – 2 Hubli AC motors, AC generators, motorized gear units.

Unit – 3

Recently

Closed

Peenya DC motors, generators, traction.

Unit -4 Mysore • Industrial electronic group- thyristor devices,

static invertors, UPS systems.

• Factory automation group- digital readouts,

CNC systems, Servo drives and induction

heaters.

Unit – 5

Recently

Closed

Bangalore Transformers.

Unit – 6 Pune Automation electric equipments, small range

induction motors and alternators up to 5 HP.

Unit – 7 Tumkur Stampings, Die cast rotors/ bodies and coils.


KEC Unit 2. HUBLI

Unit – 8 Pune Cast resin, transformers, and oil filled transformers.


KEC Unit 2. HUBLI

ORGANISATION SET UP OF KEC

Board of Directors manages KEC Unit II. Mr. Vijay Kirloskar is the Managing Director and

Chairman. Under the managing director, there is an Executive Vice- President. A chief

executive manages each of this unit.

BOARD OF DIRECTORS

Vijay Kirloskar : Chairman and Managing Director

Agarwal. S.N : Director

Anil Kumar Bhandari : Director

Sarosh. J. Ghandy : Director

Mythili BAL Subramanian : IDBI Nominee

Ramesh. D. Damle : LIC Nominee

Malik. P.S : Dy. Managing Director

Venkatesh Murthy. D.R : Director Sales & Marketing

Company Secretary : P. Y. Mahajan

Auditors : B.K.Ramdhyani & co. Bangalore


KEC Unit 2. HUBLI

BANKERS

• Bank of Baroda

• Bank of India

• State bank of India

• State bank of Mysore

• State bank of Travancore

• Standard Chartered Bank

• The Hong Kong & Shanghai Banking Corp.

REGISTERED OFFICE

Industrial Suburb, Rajajinagar

Bangalore – 560010


KEC Unit 2. HUBLI

FACTORIES

Belvadi Industrial Area, Mysore

• Gokul Road, Hubli

• Hirehalli, Tumkur. QUALITY POLICY

The quality price of KEC shall be to design, manufacture and market at competitive

prices, products of such quality, which results in customer satisfaction, quality reputation and

market leadership.

MISSION

• To remain a leading producer of electrical technology products in India.

• To continuously grow in our business and become a significant player in the world

market.

• To maximize return on investment.

• To achieve international levels of excellence in technology and quality.

VALUES

• Products of highest technology and quality.

• Customer orientation

• Teamwork among our people.

• Profits for growth


KEC Unit 2. HUBLI

GUIDING PRINCIPLES

• Innovate continuously to excel in design and manufacturing.

• Development products required by market.

• Manufacture products of highest quality

• Focus on customer in all actions.

• Respond promptly to customer needs.

• Deliver supplies on time every time.

• Treat each other with trust and respect to build a team.

• Develop people by training and delegation.

• Adopt process-oriented thinking, continuous improvement, and management by facts

priority.

• Reduce costs constantly to remain competitive.

• Earn enough profits to fund growth and diversification.

• Offer goods and services at competitive prices.

• Look upon dealers, suppliers and business associates as partners.

• Maintain safe, clean and healthy environment.

• Conduct business in a socially responsible manner.


KEC Unit 2. HUBLI

HOD’S OF KIRLOSKAR ELECTRIC CO.LIMITED,

UNIT-II

CEO - K.S.S.PANIKAR

PERSONNEL - U.PARAMESHWARA

PRODUCTION - A.B.JOSHI (SHOP III),

- D.S.WODEYAR (SHOP III),

FINANCE - K.SHRIDHAR

MARKETING - V.RAMPRASAD

ENGINEERING - D.A.DESAI

MMD - ASHOK KADAKOLI

MED & MSD - S.V.PUROHIT


KEC Unit 2. HUBLI

CEN.PLANNING - A.B.JOSHI

DEPARTMENT

STUDY


KEC Unit 2. HUBLI

ORGANISATION STRUCTURE OF KEC UNIT IIPersonnel Department

(Senior Manager)

HUBLI


Chief Executive

Deputy General Manager

Production Department

(Senior Manager)

Finance Department

(Senior

Manager)

Central Planning

(Assistant Manager)

Stores

(junior Manager)

Engineering Department

(Senior Manager)

Quality Assurance Department

(Senior Manager)

Marketing

(Deputy Manager)

M.M.D

(Assistant Manager)Person

nel Department

KEC Unit 2. HUBLI

MANPOWER IN KEC UNIT-II

AS on 01-05-2007

Table: 1

Human Resource Total Members

Daily rated employees (DRE’s) From grade 1 to 8

432

Monthly rated employees (MRE’s) From grade 1 to 7

45

Officers, Engineers and above From grade 8 to 16

85

Total 562

Besides these permanent employees, around 81 trainees are recruited and contract Labour are

hired only for some specific purposes and in never employed in production or feeder shops.

Officer’s cadre is divided into 2 categories.

• Junior officers from the grade from 5 to 7

• Junior officer 1: Grade 5



2. Senior officers from the grade from 8 to 9

Officer: Grade 8

Senior Officer: Grade 9


KEC Unit 2. HUBLI

The manager cadre is classified as follows from grade 10 to 16

Assistant Manager - Grade 10

Deputy Manager - Grade 11

Manager - Grade 12

Deputy Senior Manager - Grade 13

Senior manager - Grade 14

Deputy General Manager - Grade 15

General Manager - Grade 16


KEC Unit 2. HUBLI

PRODUCT PROFILE

AC Generator AC motor

`

DC Motor Traction Equipment

We design and manufacture our products according to the standards of :

• ISO (International Organization for Standardization)

• IEC (International Electro technical Commission)

• BIS (Bureau of Indian Standards)

• BSI (British Standards Institution)

• JEM(Japan Electrical Manufactures Association)


KEC Unit 2. HUBLI

PERSONNEL DEPARTMENT

K.E.C, company recognizes its employees as its most important asset for its continued growth.

Human resources management in Kirloskar Electric Company shall striver to ensure continuous

organizational growth by nurturing the strengths of its employees and providing the environment

and opportunity for every individual to rise to his/her highest potential, identity and achieve

his/her personal goal within the framework of organizational, social and natural objectives. To

achieve this following sections are formed to perform the various functions including, Positive

Motivation, Preparation and maintenance of quality plans with aid of systems, procedures and

work instructions published collectively in quality manuals.

Scope: Personnel Department is applicable to personal welfare safety and security.

Responsibility of Personnel Department :

Implementation and maintenance of various functions is the responsibilities of the Head of

Department (HOD) with appropriate duties assigned to section in charges (SIC) and staff.

Functions:

The Main functions of Personnel Department are:

HOD-PERSONAL AND INDUSTRIAL RELATIONS:

• To ensure that harmonious relations exists between workers and management

• To ensure safe working conditions and to provide safety equipments.

• To Co-ordinate security and vigilance activities

• Manpower planning accountability.


KEC Unit 2. HUBLI

ORGANISATIONAL CHART OF PERSONNEL DEPARTMENT

MARKETING DEPARTMENTSuccess of any product totally depends on HO it is marked and positioned din the market.

Marketing department is one of the important functional divisions of KEC UNIT-II, which is

basically, identifies and meets the needs of customers profitably. The people in the marketing

department are responsible for the growth of a business concern because they come in direct

contact with the customers who now are considered as King of the market as it is a buyer’s

market and no more a seller’s market.


HOD

SIC TRAINING IN CHARGE

CANTEEN

DEPARTMENT ASSISTANT

SECURITY OFFICER

WELFARE OFFICER

IND.REL OFFICER

AMBULANCE ROOM

TIME OFFICE I.C

KEC Unit 2. HUBLI

As marketing departments basic principle is to take care of the customers to achieve way

they have divided their department in to their sections such as:

• Marketing

• Customer Service

• Communication

Marketing is further having its subgroups i.e. technical group, which does the job of tendering or

equally handling Execution, is planning group.

The network of marketing department has all over India at 28 branches known as sales

office/branches.

The function of this division in K.E.C UNIT-II starts to determine the needs of the customers

their documents concurrently then accurately to communicate then to various departments.


KEC Unit 2. HUBLI

Marketing:-

When a branch office in any part of its network receives an order in case of special product (i.e.

as per customer requirements) it sends an order acceptance copy i.e. duly verified by the sales

engineering of that branch to the tendering group where this OA copy is examined and sent to

planning department and further forwarded engineering department for design and development

of special product who prepares its engineering

Specification and sends it to the purchase department if any new or additional components are

regard to the production department. The marketing department based on the demand contacts

the materials management department issues materials on the amount and the type of material,

which required. Based on the amount required the department based on the demand contacts the

materials management department issued materials on the amount required the production

scheduling, routing and the like has to be carried out.

K.E.C UNIT-II is planning turnover is 100 crores for last year achieved to the 84 crore.

This planning for turnover is 110 crores.

AC-Generator Marketing:-

In case of AC-Generator the final customer is directly purchase through Manufacture of

Branch office or Dealer.

The O.E.M. (Original Equipment Manufacturer) who in turn places the purchase order to

the branch office, the order acceptance form along with desired specifications is studied.

Carefully in the marketing department and if found possible for production is immediately

informed to the O.E.M the information is also forwarded to the production units


KEC Unit 2. HUBLI

AC Motor Marketing:-

The customer decided the rating of a motor required and approaches to the dealer, the

dealer in turn acceptance and passes it on to the branch office which prepares an order

acceptance and passes to customers and another to the unit of the production otherwise customer

is directly contact through the marketing department.

The order acceptance is then separated into the one for standard products and other for special

products. The special products requirements have to be discussed with the engineering

department and then accepted.

CREDIT POLICY:

Generally K.E.C-II does not follow the policy. But sometimes the credit is issued to a

particular customer depending on the volume of the purchase, the type of a customer K.E.C

UNIT-II has a credit policy extending to a maximum of 30 days.

Objectives:

The objectives of marketing department are to achieve customer satisfaction with quality

products, price, and delivery in time, and presale service after sale service, maintain brand image

and earn profit for further diversification.

COMPETITIORS

• Organized sector

• BHEL

• ASEA

• Crompton Greaves Ltd.

• Bharat Bijli ltd.

• Asian Brawn Boweri Ltd (ABB Ltd.)

• General Electrical Company Ltd.

• Jyoti Ltd.


KEC Unit 2. HUBLI

Unorganized Sector:

• Mainly cottage industries.

Direct Customers.

• OEM’s (Original Equipment Manufacturer’s)

• OEA’s (Original Equipment Assembler’s)

• Government organization (Railway, Airports)

• Indian Defense

• Indian Railways

• Other Industries


KEC Unit 2. HUBLI

• ORGANISATION CHART OF MARKETING


GROUP ACM SIC WEST AND EAST JMU

SIC NORTH AND SOUTH RNA

SIC PING & EXECN RPK

FIC GKN

SIC AKN

SIC PING & EXEN SGM

GROUP ACG

HOD MARKETING

KEC Unit 2. HUBLI

MATERIAL MANAGEMENT DEPARTMENTObjectives:

To provide components can service for manufacturing as required by others functional

divisions.

Scope:

• To plan and procure materials confirming to specifications through adequate selection of

sub contractor.

• To feed the materials to the production division at required schedules at an economic

cost.

Functions:-

• Work out material requirement based on sales requisite plan (SRP), Sales constancy plan

(SCP) and Critical credit requirement (CCR)

• To exercise purchase order as per procedure.

• To plan for non-production item based on purchase requisitions to materials management

division.

• To finalize terms of purchase.

Job Description and Responsibility

• To maintain and direct the organization, which is adequate to perform material

management functions.

• To define the duties and responsibilities of MMD and to ensure that they carried out

effectively.

• To plan for realistic purchase budget.

• To manage obsolete surplus and scrap material.


KEC Unit 2. HUBLI

SIC’S:

• To plan the material requirement

• To order material and on approved suppliers and supply in the quantity necessary to

satisfy marketing requirement.

• To monitor the material recipient as per delivery schedule indicated in purchase order and

co-coordinating with supplier.

• To monitor the material release for production in accordance with SRP/SCP/CCP.

FIC’S

• To plan the materials requirement.

• To order material and on approved supplied and supply in the quantity necessary to

satisfy marketing requirement.

• To monitor the material release for production in accordance with SRP/SCP/CCP

• To follow with supplier for supplier for supplying, required material at required time of

manufacturing.

• To keep the manufacturing division and other functional divisions other than the

manufacturing informed of related activities to facilitate overall coordination related

activities include information regarding material availability supplier training programs

reasoning for user training for supplier products etc.

• To determine the need of stock replacement through use of daily material receipt

perpetual inventory.

• To monitor and reconcile materials issued to suppliers.


KEC Unit 2. HUBLI

ORGANIZATION CHART OF MMD

FINANCE DEPARTMENT

Finance department is the blood of any business organization to survive. Any organization

handicapped by finance will never complete an ultimately results in failure and a burden to

economy. Finance department is concerned with planning and controlling of company financial

resources.

The company policy is formulated and credit worthiness of the customer is evaluated audits such

as cash audit, internal audit, cost audit is done per month. In the finance department of KEC

UNIT-II, there are 26 staff members contributing towards the effective functioning of the

department.


CEO HOD MMD

ACM S3 SIC SHOP3

OFFICE ASSISTANT

SIC SHOP V ACG

FIC EXECUTIVE SHOPS

KEC Unit 2. HUBLI

ORGANISATIONAL HIERARCHY OF FINANCE DEPARTMENT

KEC UNIT-II, is characterized by the fact that all the collaboration are sent to corporate office at

Bangalore and the expenditure of the particular day are sent to the unit as per the requirement of

the units.


CORPORATE FINANCE

CHIEF EXECUTIVE

GRADE 8 AND ABOVE

M.R.E’s up to GRADE 7

KEC Unit 2. HUBLI

FUNCTIONS:-

FINANCING FUNCTIONS

It includes cash payments, receipts, bank receipts and payments.

CREDIT MANAGEMENT:

Due to the competition, now a day’s credit is a means to achieve the target without credit sale

any organizational can fulfill their targets.

COSTING

Costing relates to calculation of production cost per unit and it tries to minimize the cost of

production and helps in the function of pricing with marketing department.

AUDITS:-

Audit is a way to confirm about the accountancy of the functions and records of all over

activities. It has employed cost Audit and Internal Audit etc.

RECORDING AND MAINTAINING OF ACCOUNTS:-

These are the present and future reference of the company’s financial position. These are useful

for Shareholders, Creditors, Suppliers, and Bankers etc.


KEC Unit 2. HUBLI

BANKERS OF K.E.C UNIT-II

K.E.C UNIT-II has the following Bankers:

1. Bank of Baroda

2. Bank of India

3. Canara Bank

4. Hong Kong Bank

5. State Bank of India

6. State Bank of Mysore.

Financial Institutions:

Following are the financial Institutions of K.E.C UNIT-II:

• Industrial Credit & Investment Corporation of India (ICICI)

• Industrial Development Bank of India (IDBI)

• Unit Trust of India (UTI)

K.E.C UNIT-II production per month is worth 10 crores. But now it attempting to rise to

Rs 11 to 11.5 crores, the raw materials is steel and copper. These are procured from steel

Authority of India Ltd., and Hindustan Copper Ltd. 1% of the total turnover is used for

welfare expenses and 6% of total turnover is used for salary or expenditure.

On an average the KEC Unit-II is paying Rs.150 lakhs as excise duty/month, 6% of total

turnover is given as salary and 1% of the total turnover is spent on welfare activities. The method

of depreciation followed is straight-line method. The company has adopted FIFO method for

costing.


KEC Unit 2. HUBLI

Listing on Stock exchanges:

• Bangalore Stock Exchange Ltd., (KIRELECRRI)

• Madras Stock Exchange Ltd.(KRL)

ENGINEERING DEPARTMENT

Quality Policy of Engineering:

The quality policy of K.E.C UNIT-II shall be continuously improving the quality

management system in design, manufacture, market and service at competitive prices. Product of

such quality, resulting in customer satisfaction, quality, reputation and market leadership, The

role of engineering department is to design and develop products and components taking into

consideration the cost, product ability, usability, and maintenance of the product.

Scope :

Applicable to quality objectives identified for improvement in design and development of

products manufactured in KEC UNIT-II.

Responsibility:

The head of the engineering department is responsible for receiving the objectives.


KEC Unit 2. HUBLI

Procedure:

Objectives shall be derived from the organizational quality policy and need to meet

customer and product requirement.

Quality objectives by engineering department will lead to

• Simplification in design

• Standardization of components

• Reduction in reworking of design

• Reduction cost of production.

• For achieving or reworking quality objectives appropriate statistical quality control

technique shall be used.

Functions:

• Preparation revision and release of engineering and electrical specifications.

• Preparation, revision and control of drawings and release of material risk.

• Validation of design of products.

• Effective implementation of the design changes.


KEC Unit 2. HUBLI

PRODUCTION DEPARTMENT

In many manufacturing unit production department forms the most important department

of all the whole running of the unit depends upon this department the proper and timely

functioning of this department helps in products reaching the customers end at right time. Slight

difference in timing and quality upsets the cycle. Thus the production department we can say is

the heart of the firm.

K.E.C UNIT-II philosophy has always been to excel in what one knows best in the

process of development. KEC UNIT-II has laid great emphasis on adopting technology to suit

the environment in which it has to operate K.E.C UNIT-II’s production process are continuously

of upgraded from time to time by the latest technology.

Objectives:

• To follow up the production schedule as per the plan.

• To maintain the close and coordinated relationship with other department.

• To upgrade technical efficiency of production.

K.E.C UNIT-II there is six shops in this department all of which have got different

functions to perform. The product moves from first to sixth shop and then to the dispatch.

H.O.D Production heads the production department with a total shop of 600.

The whole shop is divided into among six shops.

The department is divided into 2 groups.

• Feeder shop (Shop I and Shop II)

• Assembly Shop (Shop III and Shop V)

• Shop IV is used as Research and Development Center is also called as

“Invotech Center” and Shop VI is painting section.


KEC Unit 2. HUBLI

Brief description of shops:

SHOP I:

The matching functions are carried out in this shop which has 5 lines engaged in

production namely welding section, sub assembly, labor section, tools and jigs crib and tool

room.

There are totally 80 machines and 100 workers in shop I. The raw materials arrived in

this shop where the metal drilling, milling and shaft fixing is done and sent to the next process.

The winding are also done in the shop I.

Here the process of Bodies – KH 100 to LD 225 frames.

Covers – KH 63 to LD 225 frame.

Shaft – KH 63 to LD 180 frame.

Gear cases – MGH 100 to MGH 225 frame.

Gears/pinions for Geared motors are done and also undertake manufacturing JIGS and

FIXTURES and DIE-CASTING dies.


KEC Unit 2. HUBLI

ROTOR SUB ASSEMBLY:

Rotor is the static part in the ACM’s and dynamic that is moving in the ACG’s. The rotor

goes through the following process.

1) Sinking:

The roots are treated in the solution for convenience of inserting the shaft so that they

expand and make it easy for insertion of the shaft.

2) Turning:

The correct turning and made according to the specification.

3) Fan Shop Drilling:

This is the process where in the fan is to be fixed and for this purpose drilling is done and

then locks are fixed for safety.

4) Balancing:

This step involves balancing the rotor properly.

WINDING:

Winding is the most important functional part of the machine. It has to be done manually

and precisely. This is the only process, which is totally manual. The motor is wound with correct

rating wires.


KEC Unit 2. HUBLI

SHOP II

Shop II is die cast shop. Here in this shop only die-casting is done. That is the shapes of

body and nameplates final shape. The shop II has two machines, one for nameplate pressing and

another for body.

It houses the router section, here stampings are received and die casting of the metal

stamping is carried in a furnace heated at 675 degrees Celsius 755 degree Celsius

ROTOR SECTION:

Here processing of rotor sub assembling for KH 63 to 180 frames, SD 71 flange machine

is undertaken.

DIE-CASTING SECTION :

Here die-casting for motor for 63 to 225 frame motors and die-casting of bodies, flanges,

covers, and terminal boxes from KH 63 to 10 frames.

SHOP-III

This shop can be called as assembly shop because the products here will get upto 90%

only, final finishing will be at this stage.

The assembling of motors of the frame size motors are assembled in this shop in three

different assembly lines namely:

• The non-standard line for custom mode and is operated manually.

• The standard line for this standard motor is also called verticals assembly line where the

motors are assembled mechanically by various stations in the machines acquired for the

specific purposes.


KEC Unit 2. HUBLI

• The export line is where the motors have to be exported assembled with due care and is

done manually. After assembling the motors they are sent to the painting section, which

is housed in the same shop.

SHOP IV:

It works as research and development center for the company. It keeps its eye on the

changes that are taking place in the electrical world and tries to adopt those changes in their

manufacturing process. So it acts as research and development in the company

SHOP V:

Here assembling of medium and large motors generators and MGU’s under separate bays

like ACM bay, ACG bay and MGUU bay.

Product Rating

A.C Motors Frame 200 to 225 15 KW to 75 K W

A.C Generator Frame and

180 & 250

DS-DL-CMA 2.5KVA to 90KVA

Motorized gear units 90 to 225 0.75 KW to 22 KW

Painting and testing is also done here.


KEC Unit 2. HUBLI

SHOP VI :

In this section, components used in the motors are pre treated and painted.

K.E.C UNIT-II has to its credit the pioneering of the latest technology called “Unibake”

system. Earlier this system was applied to all the products but recently it has been restricted only

for export orders. The domestic products are painted in conventional manner.

ORGANISATION CHART OF FEEDER SHOPS

K.E.C has its corporate and marketing office at Bangalore. National Offices are divided into 4

zones.

1. North Zone : Delhi, Ludhiana, and Jaipur

2. East Zone : Kolkata, Jamshedpur, Guwahati, Bhubaneshwar and Ranchi.

3. West Zone : Mumbai, Nagpur, Pune, Ahmedabad, Surat and Indore.


CEO

HOD Production

SIC – FEEDER SHOPS

FIC, T ROOM AND T CRIB

FIC, Shaft Body

FIC DIE CASTING

FIC SHOP6

KEC Unit 2. HUBLI

4. South Zone : Chennai, Coimbatore, Cochin, Hyderabad, Bangalore, Belgaum,

Pondicherry

QUALITY ASSURANCE

Quality is the fitness to end-use, it is all persuasive. In this modern and competitive world each and every company is trying hard to introduce to quality and every defect free product K.E.C has a full fledge quality assurance department headed by highly qualified professionals committed to developing products that keep phase with the changing desires and needs of the consumers. Quality plays important role in K.E.C UNIT-II because its products are used for industrial customer applications. Hence it must satisfy and come up to the customer expectations.

Objective:

The role of QA division is to assist all functional division in achieving and maintaining

level of specified quality requirement economically.

This unit being ISO-9001, certified unit, has to follow the stringent quality specification.

This department facilitates the total quality management (TQM) in all the departments, by

adopting process controls at all stages.

The quality assurance department follows a definite set of systems and procedures, which

are incorporated in the manuals. The manuals are drafted to the lines of the standards as specified

by the ISO-9000 series of clause for quality documentation.


KEC Unit 2. HUBLI

Functions:

The functional responsibilities of different sections of QA divisions are as follows:

• Releasing of accepted products for further process.

• Evaluating quality rating of suppliers.

• Generation of NC reports for analysis/ review and initiating corrective action and

preventive action.

• Quality information and reporting.

• Maintaining documents and records as per procedures.

FEEDER SHOPS QA:

Feeder shops QA is responsible for

• Inspection/ Testing of parts, sub assembly as per appropriate quality plan/ documents

procedures/ inspection plans other documents.

• Ensuring proper identification and inspection status.

• Updating, revising inspection plans procedure as and when found necessary.

• Generation of Non-conformance reports for analysis, revive and collective action,

preventive action.

• Ensuring that calibrated instruments are used for measurements and coordinating with

calibration section for periodic calibration.


KEC Unit 2. HUBLI

FINAL INSPECTION AND TESTING:

Conduction routing/ type/ engineering tests on products to specified requirements as per

documented procedures:

• Maintaining test records and providing test certificates.

• Ensuring tested products and conforming to specified requirements and complete in all

respects.

• Providing inspection/ tests stating for confirming products.

• Providing engineering test results for design modification where necessary.

• Assisting in customer inspection.

QUALITY LABORATORY:

• Periodic calibration of instruments as per documented process.

• Arranging for repair/ rectification/ disposal of measuring instruments.

• Planning for new instruments/ organizing calibration function from external agencies.

• Maintaining documents/ records as per procedures.

QUALITY SYSTEMS:

• Maintaining quality systems as per ISO 9001-2000

• Assisting HOD QA for conduction quality related training programs

• Analysis and reporting of customer complaints internal non-conformance reports.

• Conducting systems audits, monitoring corrective actions, preventive actions.

• Implementing of corrective actions and preventive actions.


KEC Unit 2. HUBLI

COMPUTER DIVISIONWe are into technology revolution where process and manual jobs have been atomized or

computerized. So getting along with revolution K.E.C UNIT-II has also steeped into the field of

computers and has computerized its various departments of the unit.

Objective:

The computer division is responsible for software developments, maintenance of

computer hardware accessories, using appropriate methods.

Scope:

This is applicable to all the functions performed by the computer divisions of K.E.C

UNIT-II, Hubli.

The head of computer division has overall responsibility and delegate works to other staff

as appropriate.

FUNCTIONS:

• Maintenance of computer hardware accessories :

User department raises requisition for hardware breakdown. The call is attended enclosed

after acknowledge for the user.

• Preventive maintenance of computers and accessories :

Preventive maintenance is carried out for computer hardware every half yearly and every

quarterly and updated in the history card. This activity is acknowledged with the preventive

maintenance sticker and stuck on the computer accessories

.


KEC Unit 2. HUBLI

• Software Revalidation :

Software revalidation is done annually as per the procedure defined in software

revalidation and records are maintained.

• Back – Ups:

Regular backup is ensured department wise as per the procedure defined.

• Document Control:

Records files are updated and maintained in the document control register.

GENERAL FUNCTIONS:

Computer department works as a supporting device for all department and all the

functional activities like payroll preparation and accounts receivables management is done with

the help of computer department. In production field, it will help in planning, investment

management etc. The company also has CMAN and ERP procedure to strengthen their

production activities.


KEC Unit 2. HUBLI

ORGANIZATION OF COMPUTER DEPARTMENT


SIC-Software Development/Revalidation Maintenance

SIC-Software Development/modification/Hardware/Backup

FIC-Hardware/Electrical Maintenance

FIC-

Software Development/Maintenance

KEC Unit 2. HUBLI

CENTRAL PLANNINGObjective:

To describe the quality management system process & procedures followed in production

department.

Scope:

• Applicable to Central Planning Department.

• To demonstrate product manufactured meets requirements by following applicable

process.

• For effective application, implementation, continued improvement in the different areas

of work.

Approach:

Activities in the department are carried out with required resources. Resources include

Building, Personnel, Manufacturing equipments, Test equipment etc. the available resources are

managed to make quality products. The department, Organization, Process & Other activities

followed for QMS requirements is given.

Functions:

• Release of material against SR/SCP to all departments.

• Plan on basis of material availability.

• Sub-contract is given.

• Re-planning of material against the non-conformance.

• Maintain of product identification and tractability.

• Corrective action.

• Maintain quality records.


KEC Unit 2. HUBLI

ORGANISATION CHART OF CENTRAL PLANNING


CEO

HOD CP

SIC-Planning SIC-component manufacturing/sub contract FIC

FIC-Assembly planning

FIC-Die-casting& Rotor sub- assembly

FUC-Sub contract

FIC-Records

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MANUFACTURING ENGINEERING DEPARTMENT(MED)

Functions:• Preparation general assembly drawings of jigs, fixtures, dies, tooling, storage devices &

gauges.

• Recession of drawing with design changes.

• Coordinating with production for finalizing the manufacturing process.

• Preparation of process sheets.

Job Responsibilities: HOD

• Overall administration of MED.

• Development around organization to achieve the required objectives of the department.

• Coordinate with other department to carry out the department activities.

• Monitor the activities of the department through proper documentation.

• Planning & procurement of Capital equipment.

• Establish quality objective for the department function.

• Design of jigs/ fixtures/ tooling.

• Determining and defining of process for manufacturing activities process sheets.

• Assisting process determination at supplier for component machining activities & release

of process sheets wherever required.

• Organizing for procurement of capital required for manufacturing activities.


KEC Unit 2. HUBLI

ORGANISATIONAL CHART OF MED

GENERAL STORES

To describe the process and procedure followed in stores department. A guide for

effective,


CEO

HOD MED

SIC MED

FIC

Jigs/Fixtures/Dies & Tooling &

Preparation & Release of Process Sheets

KEC Unit 2. HUBLI

ORGANIZATION CHART OF STORES

Objective:

The role of stores is to maintain accountability of the materials received, stored and

issued as per the specified requirements.

Scope:

Applicable to stores activities.

Responsibility:

The head of stores division is responsible for overall function of the stores with duties

delegated to SIC/FIC as applicable.

Functions:

• Receive material as per delivery Chilean/ Invoice/ Credit Reports.

• Ensure identification, inspection status, and supplier identification on the components

vendor code/ material code in the delivery Challan/ invoice.

DUTIES AND RESPONSIBILITIES OF HOD:

• Overall administration of stores.

• Establishment of inventory norms & controls.

• Establishing & maintaining quality systems in stores division.


CEO HOD Stores SIC Stores

KEC Unit 2. HUBLI

DUTIES & RESPONSIBILITIES OF SIC STORES:

• Overall administration of stores.

• Ensuring that all components / products received in stores are inspected and tested as per

the applicable specification/procedures.

• Ensure receipt, storage & issue of materials.

DUTIES AND RESPONSIBILITIES OF FIC STORES

• Receive and stores materials as per delivery Challan/ Invoice/ Audit reports.

• Ensure identification & inspection status for the components/ products.

• Preparation of receipt memos.

• Storing of outstanding in specified areas like mobile racks/ pallets etc.,

• Issue of materials to shops/ suppliers as per indents


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INTRODUCTION TO WORKING CAPITAL


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WHAT IS WORKING CAPITAL?

Working capital refers to the investment by the company in short terms assets such as cash,

marketable securities. Net current assets or net working capital refers to the current assets less

current liabilities.

Symbolically, it means, Net Current Assets = Current Assets Current Liabilities.

DEFINITIONS OF WORKING CAPITAL:

The following are the most important definitions of Working capital:

1) Working capital is the difference between the inflow and outflow of funds. In other words it is

the net cash inflow.

2) Working capital represents the total of all current assets. In other words it is the Gross

working capital, it is also known as Circulating capital or Current capital for current assets are

rotating in their nature.

3) Working capital is defined as the excess of current assets over current liabilities and

provisions. In other words it is the Net Current Assets or Net Working Capital.


KEC Unit 2. HUBLI

Importance of working capital

Working capital may be regarded as the lifeblood of the business. Without insufficient working

capital, any business organization cannot run smoothly or successfully in the business the

Working capital is comparable to the blood of the human body. Therefore the study of working

capital is of major importance to the internal and external analysis because of its close

relationship with the current day to day operations of a business. The inadequacy or

mismanagement of working capital is the leading cause of business failures. To meet the current

requirements of a business enterprise such as the purchases of services, raw materials etc.

working capital is essential. It is also pointed out that working capital is nothing but one segment

of the capital structure of a business. In short, the cash and credit in the business, is comparable

to the blood in the human body like finances life and strength i.e. profit of solvency to the

business enterprise. Financial management is called upon to maintain always the right cash

balance so that flow of fund is maintained at a desirable speed not allowing slow down. Thus

enterprise can have a balance between liquidity and profitability. Therefore the management of

working capital is essential in each and every activity.


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WORKING CAPITAL MANAGEMENT

INTRODUCTION:

Working Capital is the key difference between the long term financial management and short

term financial management in terms of the timing of cash Long term finance involves the cash

flow over the extended period of time i.e. 5 to 15 years, while short term financial decisions

involve cash flow within a year or within operating cycle. Working capital management is a

short term financial management.

Working capital management is concerned with the problems that arise in attempting to manage

the current assets, the current liabilities & the inter relationship that exists between them. The

current assets refer to those assets which can be easily converted into cash in ordinary course of

business, without disrupting the operations of the firm.

Composition of working capital

Major Current Assets

1) Cash

2) Accounts Receivables

3) Inventory

4) Marketable Securities

Major Current Liabilities

1) Bank Overdraft

2) Outstanding Expenses

3) Accounts Payable


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4) Bills Payable

The Goal of Capital Management is to manage the firm’s current assets &liabilities, so that the

satisfactory level of working capital is maintained. If the firm cannot maintain the satisfactory

level of working capital, it is likely to become insolvent & may be forced into bankruptcy. To

maintain the margin of safety current asset should be large enough to cover its current assets.

Main theme of the theory of working capital management is interaction between the current

assets & current liabilities.

CONCEPT OF WORKING CAPITAL:

There are 2 concepts:

• Gross Working Capital

• Net Working Capital


KEC Unit 2. HUBLI

Gross working capital : -

It is referred as total current assets. Focuses on, Optimum investment in current assets: Excessive

investments impair firm’s profitability, as idle investment earns nothing. Inadequate working

capital can threaten solvency of the firm because of its inability to meet its current obligations.

Therefore there should be adequate investment in current assets.

Financing of current assets:

Whenever the need for working capital funds arises, agreement should be made quickly. If

surplus funds are available they should be invested in short term securities.

Net working capital (NWC) defined by 2 ways, Difference between current assets and current

liabilities Net working capital is that portion of current assets which is financed with long term

funds.

NET WORKING CAPITAL = CURRENT ASSETS

CURRENT

LIABILITIES

If the working capital is efficiently managed then liquidity and profitability both will improve.

They are not components of working capital but outcome of working capital. Working capital is

basically related with the question of profitability versus liquidity & related aspects of risk.


KEC Unit 2. HUBLI

IMPLICATIONS OF NET WORKING CAPITAL

Net working capital is necessary because the cash outflows and inflows do not coincide. In

general the cash outflows resulting from payments of current liability are relatively predictable.

The cash inflows are however difficult to predict. More predictable the cash inflows are, the less

NWC will be required. But where the cash inflows are uncertain, it will be necessary to maintain

current assets at level adequate to cover current liabilities that are there must be NWC. For

evaluating NWC position, an important consideration is tradeoff between probability and risk.

The term profitability is measured by profits after expenses. The term risk is defined as the

profitability that a firm will become technically insolvent so that it will not be able to meet its

obligations when they become due for payment. The risk of becoming technically insolvent is

measured by NWC. If the firm wants to increase profitability, the risk will definitely increase. If

firm wants to reduce the risk, the profitability will decrease.


KEC Unit 2. HUBLI

PLANNING OF WORKING CAPITAL:

Working capital is required to run day to day business operations. Firms differ in their

requirement of working capital (WC). Firms aim is to maximize the wealth of share holders and

to earn sufficient return from its operations. WCM is a significant facet of financial management.

Its importance stems from two reasons: Investment in current asset represents a substantial

portion of total investment. Investment in current assets and level of current liability has to be

geared quickly to change in sales.

Business undertaking required funds for two purposes: To create productive capacity through

purchase of fixed assets. To finance current assets required for running of the business.

The importance of WCM is reflected in the fact that financial managers spend a great deal of

time in managing current assets and current liabilities. The extent to which profit can be earned

is dependent upon the magnitude of sales. Sales are necessary for earning profits. However, sales

do not convert into cash instantly; there is invariably a time lag between sale of goods and the

receipt of cash. WC management affect the profitability and liquidity of the firm which are

inversely proportional to each other, hence proper balance should be maintained between two.

To convert the sale of goods into cash, there is need for WC in the form of current asset to deal

with the problem arising out of immediate realization of cash against good sold. Sufficient WC is

necessary to sustain sales activity. This is referred to as the operating or cash cycle.


KEC Unit 2. HUBLI

Kirloskar Industries Previous Years »

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '12

Mar '11 Mar '10 Mar '09 Mar '08

12

mths12 mths 12 mths 12 mths 12 mths

Sources Of FundsTotal Share Capital 9.71 9.71 9.71 38.83 38.83Equity Share Capital

9.71 9.71 9.71 38.83 38.83

Share Application Money

0.00 0.00 0.00 0.00 0.00

Preference Share Capital

0.00 0.00 0.00 0.00 0.00

Reserves 584.40 521.45 468.94 921.25 876.16Revaluation Reserves

0.00 0.00 0.00 0.00 0.00

Networth 594.11 531.16 478.65 960.08 914.99Secured Loans 0.00 0.00 0.00 348.94 342.77Unsecured Loans 0.00 0.00 0.00 0.05 0.12Total Debt 0.00 0.00 0.00 348.99 342.89Total Liabilities 594.11 531.16 478.65 1,309.07 1,257.88

Mar '12

Mar '11 Mar '10 Mar '09 Mar '08

12


Application Of FundsGross Block 27.37 43.91 43.15 992.39 921.32Less: Accum. Depreciation

14.65 17.39 14.34 337.55 275.35

Net Block 12.72 26.52 28.81 654.84 645.97Capital Work in Progress

0.00 0.00 0.00 18.14 64.93

Investments 518.69 452.14 425.61 471.88 476.33Inventories 0.00 0.00 0.00 123.88 194.05Sundry Debtors 0.78 0.28 19.36 292.43 356.46Cash and Bank Balance

1.42 2.29 19.73 79.11 61.59

Total Current Assets

2.20 2.57 39.09 495.42 612.10

Loans and 9.98 4.36 10.78 215.10 402.00


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AdvancesFixed Deposits 68.35 67.00 0.00 0.01 0.01Total CA, Loans & Advances

80.53 73.93 49.87 710.53 1,014.11

Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 11.82 18.45 20.20 406.02 609.81Provisions 6.01 2.98 5.43 140.29 333.64Total CL & Provisions

17.83 21.43 25.63 546.31 943.45

Net Current Assets

62.70 52.50 24.24 164.22 70.66

Miscellaneous Expenses

0.00 0.00 0.00 0.00 0.00

Total Assets 594.11 531.16 478.66 1,309.08 1,257.89

Contingent Liabilities

4.37 4.34 10.30 212.84 232.01

Book Value (Rs) 611.93 547.10 493.01 49.44 47.12


KEC Unit 2. HUBLI


Profit & Loss account

------------------- in Rs. Cr. -------------------

Mar

'12Mar '11 Mar '10 Mar '09 Mar '08

12


IncomeSales Turnover 13.81 4.14 4.66 2,334.57 2,413.82Excise Duty 0.00 0.00 0.00 163.98 217.13Net Sales 13.81 4.14 4.66 2,170.59 2,196.69Other Income 64.28 64.73 45.99 20.77 11.68Stock Adjustments 0.00 0.00 0.00 -45.45 26.16Total Income 78.09 68.87 50.65 2,145.91 2,234.53ExpenditureRaw Materials 0.00 0.00 0.00 1,464.33 1,564.24Power & Fuel Cost 0.00 0.00 0.00 21.68 21.90Employee Cost 2.01 1.66 1.94 137.63 140.69Other Manufacturing Expenses

0.57 0.34 0.38 54.40 69.95

Selling and Admin Expenses

1.51 1.15 0.90 140.24 179.62

Miscellaneous Expenses

2.15 2.48 1.92 23.50 14.84

Pre operative Exp Capitalized

0.00 0.00 0.00 -0.62 -12.32

Total Expenses 6.24 5.63 5.14 1,841.16 1,978.92


KEC Unit 2. HUBLI

Mar '12

Mar '11 Mar '10 Mar '09 Mar '08

12


Operating Profit 7.57 -1.49 -0.48 283.98 243.93PBDIT 71.85 63.24 45.51 304.75 255.61Interest 0.00 0.00 0.18 37.60 19.71PBDT 71.85 63.24 45.33 267.15 235.90Depreciation 3.17 3.05 3.05 80.41 43.86Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax 68.68 60.19 42.28 186.74 192.04Extra-ordinary items

0.60 0.02 0.00 4.84 5.73

PBT (Post Extra-ord Items)

69.28 60.21 42.28 191.58 197.77

Tax 1.82 4.87 3.48 64.65 68.46Reported Net Profit 67.46 55.34 38.69 115.89 118.95Total Value Addition

6.25 5.63 5.15 376.83 414.68

Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 3.88 2.43 29.13 19.42 38.83Corporate Dividend Tax

0.63 0.39 4.95 3.30 6.60

Per share data (annualized)Shares in issue (lakhs)

97.09 97.09 97.09 1,941.72 1,941.72

Earning Per Share (Rs)

69.48 57.00 39.85 5.97 6.13

Equity Dividend (%) 40.00 25.00 75.00 50.00 100.00Book Value (Rs) 611.93 547.10 493.01 49.44 47.12


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Cash Flow ------------------- in Rs. Cr. -------------------

Mar '12

Mar '11

Mar '10

Mar '09 Mar '08

12

mths12

mths12

mths12 mths 12 mths

Net Profit Before Tax 69.22 60.20 42.17 180.54 187.41Net Cash From Operating Activities

-11.01 -15.86 3.67 65.68 204.31

Net Cash (used in)/fromInvesting Activities

-51.28 65.71 71.17 0.48 -363.18

Net Cash (used in)/from Financing Activities

-3.13 -0.24 -56.45 -48.65 179.16

Net (decrease)/increase In Cash and Cash Equivalents

-65.42 49.61 18.39 17.51 20.30

Opening Cash & Cash Equivalents

69.29 19.73 1.34 61.60 41.30

Closing Cash & Cash Equivalents

3.87 69.33 19.73 79.11 61.60


KEC Unit 2. HUBLI

Conclusio n

The KEC ltd is one of the renowned industrial units in the northern part of Karnataka. It is the

functioning successfully in the meeting of requirements of various industries like agriculture

industry, textile industry, and mining industry, and tool industry, petrochemical industry.

There is high-level of co-ordination among all departments that is one of the main reason for

efficient functioning of the company all departments are highly efficient and adhere to their

objectives it has also received ISO 9001 certificate.

Thus KEC is one the best examples for a better organizational set up amongst various industrial

units, functioning in the northern part of Karnataka.


KEC Unit 2. HUBLI

BIBLIOGRAPHY

Reports

Books (financial management by M Y KHAN & P K JAIN)

WEB SITES;

WWW.KIRLOSKAR ELECTRIC. COM


http://WWW.KIRLOSKAR/

Merlyn2 project

Business

Transcript of Merlyn2 project