A REPORT ON

“A STUDY ON INVENTORY MANAGEMENT IN LUCAS TVS AT PADI (T.N.)”

By: Karthikeyan M S

LUCAS-TVS PRIVATE LIMITED

PADI (T.N.)

Date: 22.07.2011

A REPORT ON

“(A STUDY ON INVENTORY MANAGEMENT IN LUCAS TVS AT PADI (T.N.)”

By: Karthikeyan M.S

Register No. 3511010320

Master of business Administration

A report submitted in partial fulfillment of the requirements of MBA(2010-2012)

SRM School of management

Chennai

Company Guide:

Mr. Prabhakaran Mr. Raman

Miss. Vijayalakshmi.

Lucas TVS, Padi

DECLARATION

I hereby declare that this project report “A STUDY ON INVENTORY MANAGEMENT IN LUCAS-TVS AT PADI (T.N.)” is my own work, to the best of my knowledge and belief. It contains no material previously published or written by another person nor materials which to a substantial extent has been accepted for the award of any other degree or diploma of any other institute, except where due acknowledge has been made in the text.

Karthikeyan M S

DATE: 22.07.2011 Register No. 3511010320

CERTIFICATE

This is to certify that student’s Name Karthikeyan M S, Reg. No.3511010320, a student of Master business business management from SRM School of Management, Chennai has done his summer training at Lucas-TVS from 14 june 2011 to 14 july 2011.

The project work entitled “A STUDY ON INVENTORY MANAGEMENT IN LUCAS TVS AT PADI (T.N.)” embodies the original work done by Karthikeyan M S during his summer project training period.

Mr. Raman. D

Company Guide

ACKNOWLEDGEMENT

I would like to express my gratitude to all those who gave me the possibility to complete this thesis. I would like to thank my college authorities and my H.O.D Mr. Balasubramanian first for providing me the opportunity to work one of the most prestigious organization. I want to thank the Head of training department Mr. Prabhakaran for giving me permission to commence thesis instance, to do the necessary research work and to use department data.

I have furthermore to thank the Company Guide Mr. D. Raman, who gave and confirmed this permission and encourage me to go ahead with my thesis.

I am deeply in debted to my Faculty Guide Miss. Kavitha whose help, stimulating suggestions and encouragement helped me in all the times of research for and writing of thesis.

This project report could not have been prepared, if not for the help and encouragement from various people. Hence, for the same reason I would like to thank my guide Miss. Vijaya Lakshmi.

My brother Mr. Shiva Prakasham looked closely at the final version of the thesis for English style and grammar, correcting both and offering suggestions for improvement.

Especially, I would like to give my special thanks to my parents, my brothers their love and blessing enabled me to completete this work.

LIST OF CONTENTS

Sl.No Title Page No

1 INTRODUCTION2 PROFILE

INDUSTRY PROFILE ORGANISATION PROFILE

3 STATEMENT OF OBJECTIVEOBJECTIVE OF THE STUDY

NEED OF THE STUDY SCOPE OF THE STUDY LIMITATIONS OF THE STUDY

4 RESEARCH METHODOLOGY5 DATA ANALYSIS AND INTERPRETATION6 FINDINGS7 SUGGESTION8 CONCLUSION9 BIBLOGRAPHY

ANALYSIS OF INVENTORY MANAGEMENT IN LUCAS - TVS

INTRODUCTION

INTRODUCTION

Inventory management involves the control of assets being produced/procured to be sold in the normal course of the firm’s operations. The general categories of inventories include raw material, work-in-process inventories and finished goods inventory. The three categories of inventories are taken into biggest component of current assets.

Inventory management is about determining and maintaining an optimal level of inventory, i.e., a level that is neither inadequate nor excessive.

Inventories constitute the most significant part of current assets for a large majority of companies in India. On an average, inventories are approximately 60 per cent of current assets in public limited companies in India. Because of the large size of inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is, therefore, imperative to manage inventories efficiently, in order to avoid unnecessary investment.

It is possible for a company to reduce its level of inventories to be considerable degree, eg., 10 to 20 per cent, without any adverse effect on production and sales, by using simple inventory planning and control techniques. The reduction in ‘excessive’ inventories carries a favorable impact on a company’s profitability.

MEANING OF INVENTORY

Inventory represents value locked up at both ends of the production system. For a typical manufacturing firm, this blockage is in the form of raw material at one end of the production system, WIP (or semi-finished) goods within it, and completely finished goods at the other end.

For example, in a trading or merchandise firm such as Big bazaar, inventory refers to the stock of finished goods for sale, while in the case of manufacturing business, the definition of inventory refers to raw materials, WIP (or semi-finished) goods, and finished goods. Thus the definition of inventories is specific to the nature of business.

All though spares and stores are also shown as a part of inventory for financial reporting purpose, they are excluded from the definition of inventory because they are procured to facilitate production/operations and not for sale.

DEFINITION OF INVENTORY MANAGEMENT

Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting.

NATURE OF INVENTORY

Inventories are stock of the product a company is manufacturing for sale and components that make up the product. The various forms in which inventories exist in a manufacturing company are:

Raw materials are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions.

Work-in-process inventories are semi manufactured products. They represent products that need more work before they become finished product for sale.

Finished goods inventories are those completely manufactured products which are ready for sale. Stocks are raw materials and work-in-process facilitate production, while stock of finished goods is required for smooth

marketing operations. Thus, inventories serves as a link between the production and consumption of goods.

The levels of three kinds for a firm depends on the nature of the business. A manufacturing firms have substantially high levels of all three kinds of inventories, while a retail or wholesale firm will have a very high level of finished goods inventories and no raw material and work-in-process inventories. Within manufacturing firms, there will be difference. Large heavy engineering companies produce long production cycle products; therefore they carry large inventories. On the other hand, inventories of a consumer product company will not be large because of short production cycle and fast turnover.

Firms also maintain a fourth kind of inventory, supplies or stores and spares. Supplies include office and plant maintenance materials like soap, brooms oil, fuel, light bulbs, etc. These materials do not directly enter production, but are necessary for production process. Usually, these supplies are small part of the total inventory and do not involve significant investment. Therefore, a sophisticated system of inventory control may not be maintained for them.

NEED TO HOLD INVENTORIES

inventories involves tying up the company’s funds and incurrence of storage and handling costs. There are three general motives for holding inventories.

Transactions motives, which emphasizes the need to maintain inventories to facilitate smooth production and sales operations.

Precautionary motives, which necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors.

Speculative motives, which influences the decision to increase or reduce inventory level to take advantage of price fluctuations.

A company should maintain adequate stock of materials for a continuous supply to the factory for an uninterrupted production. It is not possible for a company to procure raw materials whenever it is needed. A time lag exists between demand for materials and its supply.

The procurement of materials may be delayed because of such factors as strike, transport disruption or short supply. Therefore, the firms should maintain sufficient stock of raw materials at a given time or streamline production. Other factors which may necessitate purchasing and holding of raw materials inventories are quantity and anticipated price increase.

The firm may purchase large quantities of raw materials than needed for the desired production and sales levels to obtain quantity discounts of bulk purchasing. At times, the firm would like to accumulate raw materials in anticipation of price rise.

Stock of finished goods has also to be maintained for sudden demands from customers. In case the firm’s sales are seasonal in nature, substantial finished goods inventories should be kept to meet the peak demand. Failure to supply products to customers, when demanded, would mean loss of the firm competitors. The level of finished goods inventories would depend upon the coordination between sales and production as well as on production time.

Ordering costs:

Cost arise ordering/ acquiring goods regardless of the actual value of the goods. In both making to stock and marketing to order, stock acquisition cost are incurred. Replenishment and purchasing administration paid for. It may take a skilled operator an hour to set up equipment for a new order or schedule batch. Materials may be wasted in the set up process. On completion of the job, equipment must be cleaned and tools put away.

Requisition, placing of order, transportation, receiving, inspecting and storing and clerical and staff services. Ordering costs are fixed per order. Therefore they decline as the order size increases.

The purchasing order processing costs include receiving the goods, delivery for large or small orders and invoice processing. Precise costs per ordered unit are often elusive, but the staff and overhead costs are significant. It is expressed in terms of cost per order.

Adhoc purchasing must be compared with long-term contracts involving regular deliveries perhaps with just-in-time supply or amounts that the operation can “call off” from a supply a supply over, say, a quarter.

Carrying costs:

Warehousing, handling, clerical and staff services, insurance and taxes. Carrying cost vary with inventory holdings. As ordering size increases, average inventory holding increases and therefore, the carrying cost increase.

Expressed as a % of stock value and may be 15 – 30% per annum. Cost of capital tied up in inventory (the opportunity cost of money). Storage cost: Space, equipment, warehouse & stores staff, warehouse &

stores insurance, services, etc are often 5 – 10% of stock value per annum. Stock losses/wastage: Theft, accident damage, stock exceeding its shelf life

and obsolescence and wire-offs.

Inventory examplesWhile accountants often discuss inventory in terms of goods for sale,

organizations - manufacturers, service-providers and not-for-profits - also have inventories (fixtures, furniture, supplies, ...) that they do not intend to sell. Manufacturers', distributors', and wholesalers' inventory tends to cluster in warehouses. Retailers' inventory may exist in a warehouse or in ashop or store accessible to customers. Inventories not intended for sale to customers or to clients may be held in any premises an organization uses. Stock ties up cash and, if uncontrolled, it will be impossible to know the actual level of stocks and therefore impossible to control them.

While the reasons for holding stock were covered earlier, most manufacturing organizations usually divide their "goods for sale" inventory into:

Raw materials - materials and components scheduled for use in making a product.

Work in process, WIP - materials and components that have begun their transformation to finished goods.

Finished goods - goods ready for sale to customers. Goods for resale - returned goods that are salable.

OBJECTIVE OF INVENTORY MANAGEMENT The main objective of inventory management is to maintain inventory at appropriate level to avoid excessive or shortage of inventory because both the cases are undesirable for business. Thus, management is faced with the following conflicting objectives:

1. To keep inventory at sufficiently high level to perform production and sales activities smoothly.

2. To minimize investment in inventory at minimum level to maximize profitability.

Other objectives of inventory management are explained as under:-

1. To ensure that the supply of raw material & finished goods will remain continuous so that production process is not halted and demands of customers are duly met.

2. To minimize carrying cost of inventory.3. To keep investment in inventory at optimum level.4. To reduce the losses of theft, obsolescence & wastage etc.5. To make arrangement for sale of slow moving items.6. To minimize inventory ordering costs.

FUNCTIONS OF INVENTORY MANAGEMENT:

The most important functions of inventory management are

To meet anticipated demand. To smooth production requirements. To decouple components of the production distribution system. To protect against stock outs. To take advantage of quantity discounts. To hedge against price increase.

MAIN PURPOSE OF HOLDING INVENTORY:

Holding inventory is cost effective and helps achieve sales of competitive prices. The other objectives of holding inventories are

To ensure prompt delivery. To avail quantity discounts. To reduce the order cost. To avoid production shortage. To achieve efficient production runs.

PROFILE

INDUSTRY PROFILE

INDUSTRY STRUCTURE

The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue. The term automotive industry usually does not include industries dedicated to automobiles after delivery to the customer, such as repair shops and motor fuel filling stations.

The global automotive industry is a highly diversified sector that comprises of manufacturers, suppliers, dealers, retailers, original equipment manufacturers or OEMs, aftermarket parts manufacturers, automotive engineers, motor mechanics, auto electricians, spray painters or body repairers, fuel producers, environmental and transport safety groups, and trade unions

The automotive manufacturing sector consists of automobile and light truck manufacturers, motor vehicle body manufacturers, and motor vehicle parts and supplies manufacturers. This sector is engaged in manufacturing of automotives and light duty motor vehicles, motor vehicle bodies, chassis, cabs, trucks, automobile and utility trailers, buses, military vehicles, and motor vehicle gasoline engines.

The Top Automaking Nations United States, Japan, China, Germany and South Korea are the top five automobile manufacturing nations throughout the world. The United States of America is the world's largest producer and consumer of motor vehicles and automobiles accounting for 6.6 million direct and spin-off jobs and represents nearly 10% of the $10 trillion US economy. Automobile is one of the important industries in the world, which provides employment to 25 million people in the wold. IN the recent past, the auto parts, the auto parts manufacturing industry of Midwest lost 12.7% of its employment. The various factors behind this decline are unemployment recession, domestic relocation and foreign competition. This loss in employment has badly affected this industry.

MAJOR MANUFACTURING REGIONS

Northeastern United States and Southern Great Lakes Region, Northwestern Europe, Western Russia and the Ukraine, and Japan are the major manufacturing regions of automotive in the world. In North America, the prominent automotive manufacturing regions are New England, New York and the Mid-Atlantic, Central New York, Pittsburgh/Cleveland, Western Great Lakes, St. Lawrence Valley, Ohio and Eastern Indiana, Kanawha and middle Ohio Valley, St. Louis, the Southeastern region, Gulf Coast, Central Florida, and the West Coast. The European Union has the largest automotive production regions in the World. The key automobile manufacturing regions are United Kingdom, Rhine-Ruhr River Valley, Upper Rhine - Alsace - Lorraine region, and the Po Valley in Italy. In the Western Russian and Ukraine Region, the leading industrial regions are Moscow, the Ukraine region, the Volga region, the Urals regions, and the Kuznetsh Basin Region

MAJOR INDUSTRY PLAYERS:

The worldwide automobile industry is largely dominated by five leading automobile manufacturing corporations namely Toyota, General Motors, Ford Motor Company, Volkswagen AG, and Daimler Chrysler. These corporations have their presence in almost every country and they continue to invest into production facilities in emerging markets namely Latin America, Middle East, Eastern Europe, China, Malaysia and other markets in Southeast Asia with the main aim of reducing their production costs.

Global Automobiles and Components % Share, (By Volume 2010)

General Motors - 10.10 % Toyota - 7.90 % Ford - 7.70 % Others - 74.30 %

MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY:

Auto components amount to 31.5% share of the global automobiles and components industry group's value. The global automotive component industry is highly diverse and comprises of various product segments like engine parts, drive

transmission and steering parts, suspension & braking parts, electrical parts and other auto components parts.

Engine Parts segment in the automotive component industry comprises of different parts like engine parts, fuel delivery system and products such as pistons, piston rings, engine valves, carburetors, and diesel-based fuel delivery systems. Engine parts form one of largest product segment of the automotive components industry and have a production share of 31%. The latest trend in this sector is of outsourcing a part of the engine from vendors

Electrical Parts segment comprises of generators, starter motors and spark plugs. An important and relatively larger product segment - engine parts are gaining popularity at a faster pace in the global automotive parts & components industry. Electric start mechanism in different scooter and motorcycles is the latest concept in the automobile industry. Electrical parts sector contribute around

9% to the auto components industry. 

Drive Transmission and Steering Parts segment has sub segments like gears, wheels, steering systems, axles, and clutches. Having 19% share, this segment is considered the largest product segment after engine parts segment. The emergence of different leading automotive manufacturers is intensifying the competition in the sector especially for products like gears and clutches.

Suspension and Braking Parts segment comprises of automobile components like brakes, brake assemblies, leaf springs, shock absorbers, brake linings. Suspension and braking parts segment has around 12% share in the global auto component industry.

Body and Chassis Parts segment comprises of body and chassis, sheet metal components, and plastic-molded parts. The global sourcing of automotive components comprise of chassis, frames, brakes, steering and much more has reached to US $ 185 billion in 2008-09. This product segment has 12% share in the global automotive component and parts industry.

KEY INDUSTRY DRIVERS

The highlighting features of global automotive industry are: Offers support to other industries such as iron, steel, rubber, glass,

plastic, petroleum, textiles, oil & gas, paints & coatings, transportation industries.

Rising foreign investments have led to the rapid growth in terms of automobile production and exports. Overseas companies are making huge investments and are installing extensive production capacities in developing countries.

Continuous investment in research & development has resulted in increased productivity and better quality automobiles, automotive accessories and parts.

Increase in standards of living and purchasing power parity have resulted in the increase demand of automobiles especially four-wheelers in developing nations, mostly in South Asian region.

This sector provides employment to major chunk of human population in the world i.e. 25 million. This industry not only provides millions of jobs to the people, but also produces billions of dollars in terms of worldwide revenues.

Adequate infrastructural facilities in form of power supply, machinery, capital, ready availability of raw materials and labor help in the tremendous growth of this industry.

Market Forecasts:

With the upcoming marketing strategies of the manufacturers, the auto parts industry is expected to have reached a value of USD 586 billion by year 2009.

According to reports, the compound annual growth rate of this industry is 2.6% for the period of 2004 - 2009.

Global Auto Components Forecast Value - USD billion 2004 – 2009

Year USD billion % Growth

2004 515.5 2.30

2005 526.2 2.10

2006 538.9 2.40

2007 553.4 2.70

2008 569.1 2.80

2009 585.9 3.00

CAGR 2004 - 2009 2.6%

It is believed that by 2015, the global auto component industry would reach US$ 1.9 trillion. With different low cost countries emerging at a fast pace in this industry, it is also expected that around 40% of the money will be sourced from such countries. India is one of such low cost countries. At present, it has only 0.4% of the global auto components trade of US$ 185 billion. By the year 2025, it is expected that India might be among the top five auto component economies.

FUTURE OUTLOOK

The automotive industry is witnessing tremendous and unprecedented changes these days. This industry is slowly and gradually shifting towards Asian countries, mainly because of saturation of automobile industry in the western world. The principal driving markets for Asian automotive industry are China, India and ASEAN nations.

Low cost vehicles namely scooters, motorcycles, mopeds and bicycles have led to the massive growth of some of the fastest developing economies like China and India. The future of automotive industry in the Asian countries such as Thailand, Philippines, Indonesia, and Malaysia is bright and promising because of the ASEAN free trade area under which the export tariffs are very less.

On a global scale, the assets of the top ten automotive corporations accounts for 28% of the assets of the world's top 50 companies, 29% of their employment and 30% of their total sales. In the year 2006, the United States of America sold around 16 million of new automobiles, Western Europe sold around 15 million, while China and India sold 4 million and one million respectively. Latin America, Middle East, Eastern Europe, China, Malaysia and other South-Asian nations are now emerging as the dominant markets of the automotive industry.

Most of the major automotive players are shifting their production facilities in these emerging markets with the main purpose of gaining better access and reduction in their production costs. There is an estimation that the automotive markets in South America and Asia will witness a boom in the near future. The various factors such as cheap financing and prices discounts, rising income levels and infrastructure developments will assist in the growth and development of automotive sector in the majority of Asian nations.

ORGANISATION PROFILE

ORGANISATIONAL PROFILE

LUCAS – TVS was established in the year 1961 as a joint venture between Lucas industries, UK and the TVS group. It is a lending manufacturing of auto electrical products and diesel fuel injection equipment in India.

This is QS 9000 & ISO 140001 certified company. It produces all types of auto electrical for two wheelers. The TVS group is one of india’s largest conglomerates. T.V.Sundaram Iyengar and Sons Limited established in 1911 are the parent and holding company of TVS groups.

The combination of these two well-known groups has resulted in the establishment of a vibrant company, which has had a successful track record of sustained growth over the last four decades.

TVS is one of India’s twenty large industries houses with twenty five manufacturing companies and has a turnover in excess of US$ 1.3billion. The turnover of Lucas-TVS and its division during 2007-2008 is Rs.1842.43 crores.

This became the largest of its kind in the company, legendary for its punctuality and services. In fact the rules and regulation laid by them later became the blue print for the motor vehicle act.

HISTORY OF THE ORGANISATION

TVS Group was established in 1911 by T.V.Sundram Iyengar, one of the visionaries of the Indian industries. His ideas were years a head of their times. Three years before World War I. When the automobile was still seen as some kind of intimidating “horse-less carriage” he had the vision to set up South India’s first ever rural bus service and over the years, this transport company became the largest of its kind in the country, legendary for its punctuality and service. In fact, the rules and regulations laid down by him later became the print for the Motor Vehicles Act. The importance given by the founder of the TQM framework even today. T.V.Sundram Iyengar’s philosophy of business reflected the kind of man he was simple and stern. It was based rigidly on four concepts – Quality, service, reliability and a sense of Ethics. The TVS Group is the largest manufacturer and distributor of automotive components in India, with a turnover in excess of 2.7 billion US dollars and a family of over 25,000 members.

LUCAS-TVS was established in 1961 as a joint venture between Lucas Industries, UK and the TVS Group. It is a leading manufacturer of auto electrical products and diesel fuel injection equipment in India. It reaches out to all segments of the automotive industry such as passengers cars, commercial vehicles, tractors,

jeeps, two wheelers and off-highway vehicles, as well as for stationary and marine applications. Lucas-TVS was for sometime a part of UK and Varity Corporation of US. Now Lucas-TVS is fully owned by the TVS group

MISSION:

To be a respected supplier in the global auto industry, by developing innovative products and solution of value to customers through creative skill and involvement of employees, suppliers and dealers and use of contemporary technology.

VISION:

To be the supplier of choice of all leading vehicle manufacturing in India. To be a recognized Original Equipment Supplier in Asia Pacific and Middle

East markets. To achieve global recognition for innovative approach to products and

solutions. And, by 2010, to sell Rs.2000 crores (USD 430) of products and solutions.

The milestone in the journey of LUCAS-TVS as it has emerged today are listed:

Lucas-TVS today has emerged as a total automobile electrical system supplier, operating from four plants located at Chennai, Pondicherry, Pune and Rewari in Haryana.

The electrical division of Lucas-TVS manufactures a complete range of auto electrical products – namely starters, alternators, wipers, and distributors, making it a “one-stop shop” for the automotive industry.

Currently the company produces over 2.5 million starters and alternators per annum, and has plans to double the volume.

The Delphi-TVS Fuel Injection Equipment (FIE) division makes state-of-the-art rotary pumps, thus providing a competitive supply option for this vital component.

Lucas-TVS has grown hand in hand with the automobile industry in the country. The company’s policies have recognized the need to respond effectively to changing customer needs, helping to propel it to

a position of leadership. The company has raised its standards on quality, productivity, reliability, and flexibility by challenging its interests.

At present, there are five divisions:

Divisions Turn-OverCrores INR

During2008 – 2009Million USD

Auto Electrical L-TVS 958.29 239.75Fuel Injection Equipment(FIE)-DTVS 465.30 116.41Electronic Ignition System (INEL) 120.23 30.08Automotive Lighting (IJL) 132.92 33.25After Market Operations(LIS) 165.69 41.45

LUCAS-TVS GROUP OF COMPANIES:

» Delphi-TVS.

» Lucas India Service.

» Indian Nippon Electricals Ltd.

» Indian Japan Lighting.

Delphi TVS is a joint venture between Delphi Automotive Systems, USA and T.V.Sundram Iyengar and Sons, Indian manufacturing diesel fuel equipment for passenger and commercial vehicles. Lucas Indian Service was established in 1930 as a specialist organization in sales and service of “Lucas-TVS” Auto Electricals and “Delphi-TVS” Diesel Fuel Injection Equipment. LIS also manufacturers automotive products like ignition coils and solenoid switches in Chennai, marketed under the brand name Lucas. INEL is situated in the industrial town of Hosur, established in 1985 as a manufacturer of electric ignition systems for two wheelers and portable gensets, INEL is a joint venture of Lucas Indian Service, India and Kokusan Denki Co.Ltd., Japan. India Japan Lighting was incorporated in December 1996. It is joint venture between Lucas-TVS Limited,

Chennai and Koito Manufacturing Company Limited, Japan. IJL is a manufacturer of automotive lighting equipment.

TVS Group Companies:

The TVS Group, with turnover of over one billion dollars, is the largest manufacturers of automotive components in India. The group produces auto electrical, diesel fuel injection systems, automotive wheels and axle fasteners, powder metal components, radiator caps, two wheelers and computer peripherals. Backed by five service and distribution companies with an extensive network across the country, the group has the largest distribution network for automotive products in India.

COMPANY PRODUCTSManufacturing Companies Automotive AxlesAxles India Ltd. Automotive Axles.Brakes Ltd. Hydraulic brakes & clutch actuation

systems.India Nippon Electricals Ltd. Magnetos, Two/Three wheeler ignition

systems.India Japan Lighting Limited. Headlamps, Rear combination lamps

and various other signal lamps for automotive and Two wheelers applications.

Lakshmi Auto components Ltd. Engine/transmission components.Lucas-TVS Ltd. Auto electricalTVS Srichakra Ltd. Automotive tyres.Sundaram Brake Linings Ltd. Brakes linings & clutch facings.Delphi-TVS Ltd. Diesel fuel injection equipment.Sundaram Clayton Ltd. Air brakesSundaram Fasteners Ltd. High tensile fasteners, cold extruded

products, sintered components, intelligent system, radiator caps.

Sundaram Textiles Ltd. YarnTurbo Energy Ltd. Turbo chargesTVS Interconnected Systems Ltd. Electronic connectorsTVS Electronics Ltd. Computer peripheralsTVS Sewing Needles Ltd. Sewing needles.TVS Motor Company Ltd. Two wheelers.TVS cherry Ltd. Precision miniature, sub-miniature,

selector switches, hall effect sensors, key switches and advanced performance/special purpose keyboards.

Wheels India Ltd. Automotive wheelsDistribution CompaniesIndia Motor Parts & Accessories Ltd. Distributors of automotive components.Lucas India Service Ltd. Distributors of auto electrical and auto

components, Fuel Injection Equipment, LISPART & Batteries.

T V Sundaram Iyengar & sons Ltd. Distributors of passengers cars commercial vehicles, automotive spare parts.

Other companiesSouthern Roadways Ltd. Freight services.Sunco machines Ltd. Precure tyre retreading equipmentSundaram Industries Ltd. Tyre retreading, coach building, rubber

components.

QUALITY POLICY:

“Lucas TVS is committed to achieving ever increasing levels to customer satisfaction through continuous improvements to the quality of the products and services. It will be the company’s Endeavour to increase customer trust and confidence in the label “Made in Lucas TVS”.

Quality is no longer an option but as a basic requirement in today’s world. At Lucas TVS, quality in inbuilt in every phase of manufacture. The company’s quality assurance measures stand on the foundation of a solid belief – that quality and ends with the customer. This commitment forms the backbone of its approach to Quality Assurance.

Lucas TVS has adopted a prevention-oriented quality policy through ingrained with the traditional ideas of quality control. Everyone from the highest levels of the organization to the lowest practice quality control both as an individual and as a team.

An effective Quality Control System has resulted in the recognition of the company’s outstanding achievements in the various fields. Lucas TVS was awarded the ISO 9001 certified by BVQL in December 1993. The company reached a further milestone when it recently received a certificate of recognition from BVQL for ISO 9000 Auto Electricals.

Lucas TVS has bagged the Rajiv Gandhi National Quality Award for 2006. This award is for the category “large scale manufacturing industry”.

Lucas TVS is pioneer in manufacturing transformation in the Indian industry (since 1985-90) through a combination of methodology and technology implemented through a series of ‘change sessions’ done through the people and by the employees. In simple terms the change programs were focused on: process Lay-out to Product Lay-out (cellular concept)- Module system of shop floor (Customer

Centric). Decentralized organization structure with autonomy to machines controlling cycle time. Nagare cells in manufacturing areas with auto cycle machines controlling cycle programs were: Lead time reduction features like QCT (Quick Change Tooling), Chaku-Chaku (auto unloading), Single Piece Charging System (material feeding) dedicated containers, pull system (2 bin – C class for small parts and Kanban for A and B parts), e-Kanban (communication to suppliers to dispatch) are in place in all the modules. Quality initiatives like online maker control of Quality, CpK improvements, SPC, Measured Quality, Poka-Yoke (Fool Proofing), SOP (Standard Operating Procedure), enable to retain or improve Quality Performance. Productivity is the combined results of methodology and Low Cost Automation led by KMT (Kaizen Module Team) effort of employees.

We are committed to achieving greater levels of customer satisfaction through constan improvement to the product quality and service, by improving the effectiveness of the Quality Management System. Our endeavor is to increase customer trust and confidence in the label “Made by Lucas-TVS”.

As a responsible corporate entity, we are committed to protection, preservation and improvement of the environment by continually orienting our activities, products and processes and services so as to: Institutionalize adoption of environment friendly concept while designing our products and processes Conserve resources like copper, energy, varnish, oils, compressed air, and water by applying the concept of 3R (reduce, reuse and recycle). Minimize generation of inevitable waste like – waste oil, used coolant, and the like. Improve working environment through good house-keeping, taking pro activity measures for the health and safety of our employee and development of our greenery. Comply with all relevant legal and other requirements. Spread awareness about the importance of the environment protection throughout the organization as well as among our business associates such as suppliers, dealers and customers

A very unique in Lucas-TVS wherein employee voluntary organize themselves as teams and focus on 5S in shop floor, 5S in office, TPM, Sippliers, Safety, Energy and Environmental issues. They participate in these activities during their off time (holidays), select the are pertaining to them and implement functional team activity involving engineers and officers. The team takes up

problems of higher importance while also focusing on customer requirements and providing effective improvements. The department head reviews the progress the team.

FUTURE PLANS OF THE ORGANISATION:

Auto component manufacturer Lucas-TVS said it will invest up to Rs. 400 crore in the next two-three years to expand capacity and product development while planning to set up new manufacturing units in Indonesia and Thailand.

“We will invest up to Rs.400 crore over the next two-three years in R&D, manufacturing and capacity building,” Lucas-TVS vice-president (Business Planning) – Arvind Balaji.

The company, which at present has seven operational plants, including one in Iran, is also mulling over setting up new plants in Indonesia and Thailand. Mr. Balaji said the company had started production in the Iran plant through a joint venture with an investment of Rs.16 crore in which it was the majority partner.

To expand its presence, the company would launch its products in Germany in the next two years, besides looking for inorganic growth opportunities.”Lucas-TVS is looking out for domestic and international acquisitions,” company president (operations), N.Ravichandran.

On the domestic front, Lucas-TVS is about to set up a plant in Singur to supply parts to Tata Motors for its Rs. 1 lakh car. “We have acquired land in Singur for setting up a plant and will supply and alternators to Tata Motors’ Rs. 1 lakh small car,” – Mr.ravichandran.

The company, which had a turnover of $ 250 million in the last fiscal, was expecting to double the revenue in the next four years- Mr.Balaji.

LUCAS-TVS CUSTOMER NAMES:

1. CARS:

MARUTI UDYOG

TATA MOTORSHYUNDAI MOTORSFORD INDIAHINDUSTAN MOTORSWEST INDIA POWER EQUIPMENTFIAT INDIAGENERAL MOTORS

2. COMMERCIAL VEHICLES:

TATA MOTORSBAJAJ AUTOFORCE MOTORSTATA CUMMINS LTDASHOK LEYLANDM & M JEEPSWARAJ MAZDA

3. TRACTORS:

M & M PUNJAB TRACTOR LTDTRACTORS AND FARM EQUIPMENTSHMT LIMITEDESCORTSEICHER L & T

4. ENGINES:

KIRLOSKAR OIL ENGINESSIMPSONSTATA CUMMINS INDIA LTD

GREAVES COTTON INDIA LTDLOMBARDINI

5. TWO WHEELERS:

TVS MOTORS COMPANY LTDBAJAJ AUTO LTDSOORAJ AUTO LTDSCOOTERS INDIA LTDHERO HONDAHONDA MOTOR CYCLES AND SCOOTERS INDIAYAMAHA INDIA

DEPARTMENTATION:

Department can be defined as the process by which activities or function of the company of the company are grouped homogeneously into different groups’s departmentation is very important as it give ways for division of labor specialization and to have check on time which is very much needed for company.

Features Of Departmentation:

The following are the features of departmentation

Departmentation leads to specialization of jobs. As there are separated department for each job E.g. Sales, purchase, services etc. which enable to

focus his attention on a narrow aspect of the work more efficiently. Division-of-work enables specialization which results in early completion of

job and saves the time of the person. Each department has their heads that are accountable for the results so it

helps in easy supervision of the work done.

Various Department Of The Company:

Purchase Department Marketing Department Production Department Finance Department Personnel Department Secretarial Department

Function of Finance Department:

The following are the function of finance department,

To estimate the finance requirement of fixed and working capital To measure the earning and saving to the best advantage of the company. To take decision regarding borrowing of funds or utilization of own funds

for purpose of investment. To maintain the books of accounts the company. To prepare budget and financial statement of the company and control. To ensure the solvency position of the company.

This department has many sub-sections:

PAY ROLL BILLS RECEIVABLE BILLS PAYABLE CASH, BANKING AND LEGAL

TAXATION AND LEGAL COSTING, BUDGET AND CAPEX MATERIAL ACCOUNTING INTERNAL AUDIT M.I.S

PAY ROLL SECTION:

This section handles all matters relating to the payment made to the employees consisting of payroll, advances, PF trust, travelling and related allowance/claims, medical claims, personal taxation and canteen expenses. The type of payroll and distribution date is follows:

Supplementary payroll – 5th

Apprentice’s payroll – 7th

Casual payroll – 10th

General payroll – 30th

Executive payroll – 30th

Beside these OT payments and attendance bonus are made on 15 th of every month once an employees joins the organization, the data related to his pay roll is sent from personnel department to payroll is sent from personnel department to payroll section.

PF TRUST:

The company is exempted establishment as per PF Act and is maintaining a separate trust. The board of trustees consists of two each from union and management sides. The remittances are in the form of investments as per the pattern set out by government as given below

25% - State government 15% - Central government 40% - Public sector units 20% - Special Deposits account in nationalized Bank

Individual employee accounts are maintained and the interest is credited as on 31st march every year. Any short fall in meeting the interest commitment should be

borne by the employee. Any excess payments & short receipt affecting the fund is also be borne by the employer. All expenses in administering the trust are to be borne by the employees including PF inspection charges. The advances / withdrawals are for the following purpose as permitted.

Withdrawals – medical, marriage, housing, education Advances – pilgrimage & religious functions.

BILLS PAYABLE SECTION:

This section is responsible for supplier payments and maintenance of their accounts. The section divided into four areas dealing with the following

Raw materials Components (bought out) Sub components Indirect material

BILLS PASSING:

The purchase order master is maintained under POP system with details of items, rate, quantity and other terms and conditions. The system is linked with terminal at goods receiving Deck where goods inward in prepared. Once the items are received in GRD, GI raised with details of party Chelan NO., quantity received and the relevant purchase order details. Whenever there is a mismatch between the quantity as per supplier DC and the actual quantity received a discrepancy note is raised and sent to the party

BIBIOGRAPH

BOOKS:

I.M. Pandey, Financial Management, Vikas Publication, New Delhi, 10th Edition, 2003

Rajiv Srivastava, Financial Management, Oxford University Press, New delhi

WEBSITE:

www.lucas-tvs.com www.automotive-online.com/auto-industry.html