Organization study at tvs
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The document provides an overview of the two-wheeler automobile industry in India. It discusses the history and evolution of the industry from the 1950s onwards. The two-wheeler segment grew significantly in the 1990s and is now dominated by motorcycles, which account for around 78% of two-wheeler sales. The document also profiles TVS Motor Company, a major Indian manufacturer of two-wheelers, and summarizes its vision, mission, products, and areas of operation.
Organization study at tvs
- 1. Part -A INDUSTRY PROFILE 1.1. History of the Automobile Industry Automobile is one of the largest industries in global market. Being the leader in Product & process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well-directed efforts have been made to provide a new look to the automobile policy for recognizing the sectors full potential for the economy. Steps like abolition of licensing, removal of quantitative restrictions & initiatives to bring the Policy framework in consonance with WTO requirements have set the industry in a Progressive track. Removal of the restrictive environment has helped restructuring & Enabled industry to absorb new technologies, aligning itself with the global development & to realize its potential in the Country. The liberalization in line with the Global Standards as well as in substantial cut in prices. 1.2. Evolution of the Two-Wheeler Industry Two-wheeler segment is one of the most important components of the Automobile sector that has undergone significant changes due to shift in policy environment. The Two-Wheeler Industry has been in existence in the Country since 1955. It consists of three segments viz. Scooters, Motorcycles and Mopeds. According to the figures published by SIAM, the share of two- wheelers in automobile sector in terms of units sold was about 80 per cent during 2003- ¬04. This high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms, capacity expansion, choice of products including capacity mix and Technology, the State machinery effectively controlled all critical areas of functioning of - 1
- 2. an Industry. The lapses in the system had invited fresh policy options that came into being in late sixties. Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) were aimed at regulating monopoly and foreign investment respectively. This controlling mechanism over the industry resulted in: (a) Several firms operating below minimum scale of efficiency (b) Under-utilization of capacity and (c) Usage of outdated Technology. 1.3. Two-Wheelers Market Size & Growth In terms of volume 46,13,436 units of two wheeler sales of the Indian Industry accounted for around 77.5% of the total vehicles sold in the period mentioned. The Two-Wheeler sales have witnessed a spectacular growth trend since the mid nineties. Aggressive marketing by the auto finance co’s have also played a significant role in boosting automobile demand, especially from the population in the middle-income group. The Indian automotive industry consists of five segments: Commercial vehicles Multi-utility vehicles & passenger cars 2 wheelers 3 wheelers Tractors The composition of the Two-Wheeler industry has witnessed sea changes in the post- reform period. In 1991, the share of scooters was about 50 per cent of the total Two- Wheeler demand in the Indian market. Motorcycle and Moped had been experiencing almost equal level of shares in the total number of two-wheelers. In 2003-04, the share of motorcycles increased to 78 per cent of the total two-wheelers while the shares of scooters and mopeds declined to the level of 16 and 6 per cent respectively. - 2
- 3. National Council of Applied Economic Research (NCAER) had forecast two-wheeler demand during the period 2002-03 through 2011-12. The forecasts had been made using econometric technique along with inputs obtained from a primary survey conducted at 14 prime cities in the country. Estimations were based on Panel Regression, which takes into account both time series and cross section variation in data. A panel data of 16 major states over a period of 5 years ending 1999 was used for the estimation of parameters. The models considered a large number of macro-economic, demographic and socio-economic variables to arrive at the best estimations for different two-wheeler segments. The projections have been made at all India and regional levels. Different scenarios have been presented based on different assumptions regarding the demand drivers of the two-wheeler industry. The most likely scenario assumed annual growth rate of Gross Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per cent during 2011-12. The all-India and region-wise projected growth trends for the motorcycles and scooters are presented in Table1.1. The demand for mopeds is not presented in this analysis due to its already shrinking status compared to' motorcycles and scooters. It is important to remember that the above-mentioned forecast presents a long-term growth for a period of 10 years. The high growth rate in motorcycle segment at present will stabilize after a certain point beyond which a condition of equilibrium will set the growth path. Another important thing to keep in mind while interpreting these growth rates is that the forecast could consider the trend till 1999 and the model could not capture the recent developments that have taken place in last few years. However, this will not alter the regional distribution to a significant extent. Table 1.1 suggests two important dimensions for the Two-Wheeler industry. The region- wise numbers of motorcycle and scooter suggest the future market for these segments. At the all India level, the demand for motorcycles will be almost 10 times of that of the - 3
- 4. scooters. The same in the western region will be almost 20 times. It is also evident from the table that motorcycle will find its major market in the western region of the Country, which will account for more than 40 percent. 2-Wheeler Segment Regions South West North-Central East & North-East All India 2835 4327 2624 883 10669 Motorcycle (12.9) (16.8) (12.5) (11.1) (14.0) 203 219 602 99 1124 Scooter (2.6) (3.5) (2.8) (2.0) (2.08) Table.1.1 Demand Forecast for Motorcycles and Scooters for 2011-12 1.4. Present status of the Industry Manufacturers The Indian 2-wheeler industry is highly concentrated, with three players. 1. HHML – Hero Honda Motors ltd. 2. Bajaj Auto – Bajaj Auto ltd. 3. TVS – TVS motor co. ltd. All the above accounting for over 80% of the industry sales. The other key players in the Two- Wheeler Industry are: 1. KMCL – Kinetic Motor Co. Ltd. 2. KEL – Kinetic Engineering Ltd. 3. LML – LML Ltd. 4. Yamaha – Yamaha Motors India Ltd. 5. Majestic auto – Majestic Auto Ltd. 6. REL – Royal Enfield Ltd. 7. HMSI – Honda Motorcycle & Scooter India (p) Ltd. - 4
- 5. 2.2 COMPANY PROFILE 2.1. Origin of the Company TVS Motor Co. Ltd., a part of the TVS group is one of the India’s leading two wheeler manufacturers. It started as moped division of M/S Sundaram Clayton Ltd., in Hosur for the manufacturing of ungeared moped in 1979. Joint venture with M/S Suzuki Motor Corporation in 1983 it became Indian Motor Cycle Pvt. Ltd., for motor cycle manufacturing In 1984, it became the first Indian co. to introduce 100cc Indo-Japanese Motorcycles. The Moped & Motor Cycle were merged to form TVS-SUZUKI Ltd. in 1986. Through an amicable agreement two Companies has parted ways in Sep 2001 & TVS SUZUKI Ltd. was re-christened as TVS- Motor Co. Ltd. Background & Inception of company TVS Group is one of India's oldest business groups. It is a giant conglomerate with presence in diverse fields like automotive component manufacturing, automotive dealerships and Electronics. Today, there are over thirty companies in the TVS Group, employing more than 40,000 people worldwide and with a turnover in excess of USD 2.2 billion. TVS GROUP - 5
- 6. The TVS Group named after founder “Shri Trichur Venkgaruswamy Sundaram Iyengar”. At TVS, ‘T’ Stands for TRUST ‘V’ Stands for VALUE ‘S’ Stands for SERVICE. TV Sundaram Iyengar & sons Ltd. established in 1911 is the parent & holding Co. of the TVS Group. The largest automobile distribution Co. in India, TVS & Sons has an annual turnover exceeding US $450 Million (Over Rs16000million) with a work force of over 5000, TV Sundaram Iyengar & Sons Ltd. operates through the following divisions: *TVS *Sundaram Motors *Madras Auto Service TVS & Suzuki • The first Indo Jap 100cc bike - 1984 • Tried to establish power as a key choice factor • Later opted for reliability-Symbolized by the No-Problem Samurai • A partnership that lasted 17 years • Took separate ways on account of differing ambitions • TVS backed a vision that developed capability – Demonstrated in XL Super & TVS Scooty 2.2. Nature of Business carried. TVS Group originated as a transport company in 1911. TV Sundaram Iyengar and Sons Limited is the parent and holding company of the TVS Group. TV Sundaram Iyengar & sons ltd has the following three divisions: 1. TVS and Sons - 6
- 7. TVS and Sons is the largest automobile distribution company in India. It distributes Heavy Duty Commercial Vehicles, Jeeps and Cars. TVS and Sons represent premier automotive companies like Ashok Leyland, Mahindra and Mahindra Ltd., and Honda. The company is also one of the leading logistics solution providers and has set up state- of-the-art warehouses all over the country. TVS and Sons have also diversified into distributing a range of garage products. 2. Sundaram Motors Sundaram Motors distributes Heavy Duty Commercial Vehicles, Cars, and auto spare parts for several leading manufacturers. The company is also the dealer for Ashok Leyland, Honda, Fiat, Ford and Mercedes Benz. 3. Madras Auto Service Madras Auto Service distributes automotive spare parts for all leading manufacturers. Other major companies of TVS Group are as follows: TVS - Motor Company Limited TVS Motor Company Limited is one of the largest two-wheeler manufacturers in India. It manufactures Motorcycles, Mopeds, Scooterettes and Scooters. TVS Electronics Limited TVS Electronics was incorporated in 1986 in collaboration with Citizen Watch Co. of Japan. The company manufactures a complete range of computer peripherals. Axles India Limited Axles India was promoted by Sundaram Finance, Wheels India and Eaton Corporation for the manufacture of axles for medium and heavy duty commercial vehicles in India. - 7
- 8. Brakes India Limited Brakes India is a joint venture between TV Sundaram Iyengar and Sons Ltd. and Lucas Industries Plc., UK. The company manufactures braking equipment for automotive and non-motive applications. Sundaram Polymers Division Sundaram Polymers Division manufactures Engineering Plastic compounds for various applications. Harita Finance Limited Harita Finance Ltd is a Finance Company under the TVS Group. It deals in retail finance, hire purchase, leasing and bill discounting. India Motor Parts and Accessories Limited It is engaged in the distribution of automobile spare parts. India Nippon Electrical Limited It is a joint venture between Lucas Indian Service and Kokusan Denki Co Ltd., Japan. The company manufactures Electronic Ignition Systems for two wheelers and portable gensets Irizar TVS (P) Ltd Irizar TVS (P) Ltd. is a joint venture between Sundaram Industries Ltd, Ashok Leyland Ltd and Irizar S. Coop of Spain. The company builds bus bodies for export and domestic market. Lakshmi Auto Components Limited The Company is a subsidiary of TVS-Suzuki. It manufactures gears, crankshafts and connecting rods for TVS-Suzuki motorbikes and mopeds. Lucas Indian Service - 8
- 9. Lucas Indian Service is a wholly owned subsidiary of Lucas-TVS Ltd., engaged in the sales and service of auto-electrical and fuel injection equipment. Lucas - TVS Limited Lucas-TVS, a joint venture between Lucas Varity group, UK and TVS Group, is a leading manufacturer of auto electrical products and diesel fuel injection equipment in India. Sundaram Brake Linings Limited Sundaram Brake Linings is the leading manufacturer of brake linings in India. Sundaram-Clayton Limited Sundaram - Clayton Ltd manufactures complete range of air brake actuation system - compressors, actuators, valves, brake chambers, spring brakes, slack adjusters, couplings, hoses, switches and vacuum boosters for light/medium and heavy commercial vehicles and trailers. Foundry division manufactures aluminum, gravity and pressure die- castings. With steady growth, expansion & diversification, today TVS Commands a strong presence in various fields such as Two wheelers Automotive components Computer Peripherals Finance 2.3. Vision, Mission, Quality policy - 9
- 10. Vision statement “TVS Motor Co Ltd., aim to be one among the top 2– two wheeler manufacturers in India & one among the top five two wheeler manufactures in Asia”. TVS motor will by the customer requirements consonant with its core competence & profitability. TVS motor will provide total customer satisfaction by giving the customer the right product @ the right price @ the right time. *TVS - Motor committed to total – quality TVS Motor is committed to achieving a self- reviewing organization is perpetuity by adopting TQM as a way of life. TVS Motor believes in the importance of the process. People & Projects will be evaluated by both their results & the process adopted. Mission Statement To be highly profitable & socially responsible , leading manufacturer of high value for money , environmentally , friendly, life time personal transportation products under TVS brand for markets & to provide fulfillment & prosperity for employees, dealers & suppliers. Quality Policy TVS Motor Co. Ltd. is committed to achieving total customer satisfaction through excellence in TQC. We will continuously strive to provide the customer the best value for money by supplying quality products @ the right time & @ the right price. We shall provide superior after sales service to maintain & to re – inforce customer satisfaction. This objective will be achieved by continuous improvement through total employee involvement. 2.4. Product Profile - 10
- 11. Category Product Name I. Moped 1. TVS Champ 2. TVS XL 3. TVS XL Super II. Motor Bikes 1. TVS Max100 2. TVS Max100R 3. TVS Max150 4. TVS Samurai 5. TVS Victor 6. TVS Victor Refresh 7. TVS Victor GL 8. TVS Victor GX 9. TVS Victor GLX 10. TVS Fiero 11. TVS Fiero 2 12. TVS Sport 13. TVS Star 14. TVS Star DLX 15. TVS Star City 16. TVS Centra 17. TVS Apache III. Scooter 1. TVS Scooty KS 2. TVS Scooty ES IV. Scooterettes 1. TVS Scooty Pep 2. TVS Spectra KS 3. TVS Spectra ES - 11
- 12. 2.5. Area of operation Global TVS & Sons has Global operations. It has its overseas operations in two countries: o TVS Lanka - In Sri Lanka o TVS Automotive Europe ltd., UK. National operation TVS Motor Co. Ltd. has an exclusive exports warehouse, which is under the international business. This is located within the factor premises of TVS-Motor Co., Hosur Plant. They Export to nearly 15 countries 1. Sri Lanka 2. Bangladesh 3. Burundi 4. Nigeria 5. Angola 6. Honduras 7. Jordan 8. Australia 9. Ghana 10. Ethiopia 11. Panama 12. Guatemala 13. Congo 14. Djibouti 15. Guinea 2.6. Ownership pattern - 12
- 13. Board of directors There are 9 directors in TVS Motors Ltd., it is a private Ltd Co. The details of the shareholding are given in the table below: Share holding No. of shares % No. of % (Range) Members Upto 5000 1, 75, 76,695 7.4 33,103 98.58 5001-10,000 19, 71,940 0.83 263 0.78 10,001-20,000 11, 53,997 0.49 80 0.24 20,001-50,000 20, 22,132 0.85 61 0.18 50,001-1, 00,000 11, 56,608 0.49 17 0.05 1, 00,001& above 21,36, 61,386 89.94 56 0.17 Total 23,75, 43,550 100.00 33,580 100.00 Table 2.1. Details of the shareholding - 13
- 14. 2.7. Competitor’s Information. The competitors for TVS Motors are as follows: 1. Suzuki Motors Ltd. 1. Hero Honda motors Ltd. 2. Bajaj Auto Ltd. 3. Kinetic Motor Co. Ltd. 4. Yamaha Motors India Ltd. 5. Honda Motor Cycle & Scooter India (p) Ltd. Competitor Analysis Suzuki Motor Corporation Suzuki Motor Corporation has a wholly owned subsidiary in India-Suzuki Motorcycle India Private Limited. The Indian subsidiary employs about 650 people including the contract workers. Suzuki Motorcycle is a manufacturer of two-wheelers and has manufacturing facility at Gurgaon, Haryana. The company started its manufacturing operations in February, 2006. Hero Honda Motors Ltd. Hero Honda has a reputation of being the most fuel- efficient and largest selling Indian motorcycle. Its commitment of providing the customer with excellence is self- evident. A rich background of producing high value products at a reasonable price led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. Well-entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise. - 14
- 15. Over the years, the Company has received its share of accolades, including the National Productivity Council's Award (1990-91), and the Economic Times - Harvard Business School Association of India Award, against 200 contenders. Bajaj Auto Ltd. It is one of India's top ten companies in terms of market capitalization and among the top five in terms of annual turnover. Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. It then obtained a production license in 1959 and struck a technical collaboration with Piaggio of Italy in1960. Scooter production commenced in 1961. Three wheeler productions followed in 1962. Its collaboration with Piaggio expired in 1971 and since then the Company's scooters and three wheelers are sold under the "Bajaj" brand name. Yamaha Motor Ltd. Yamaha Motor India Private Limited is a 100% owned subsidiary of Yamaha Motors Company Limited of Japan. Yamaha Motor is located at Faridabad, Haryana with an employee strength of more than 3000 people. The company has opened "Yamaha One"- a branded dealership at Delhi and plans to open more in the future. Yamaha Motors Company, Japan has also set up another subsidiary-Yamaha Motors India Sales Pvt. Ltd.(YMIS) that deals with the sales and after sales services for Yamaha brand of bikes. YMIS is located at Surajpur, outside Delhi with employee strength of 120. - 15
- 16. 2.8. Infrastructure facilities Health & Safety policy: We, TVS Motors ltd. will always focus on health & safety of all the personnel by following safety rules & maintaining the systems beyond any compromise. We, commit ourselves to create awareness among all, on health & safety, across the plant & provide safe work environment. The aim is to provide safe working conditions at all the TVS Motors Ltd. locations. The safety & health of the employees is ensured by maintaining safe processes carrying out safe practices. Providing a safe environment imparting adequate & proper training issuing detailed instructions as regards to the area of operations & including safety awareness among all employees. Work Environment: The company believes that the working environment acts as the primary motivator. The quintessence of the organization lies in the people working here. It has been our constant Endeavour to achieve & provide an atmosphere of perpetual growth & shared learning to all. We closely tried to promote a team based culture & encourage a sense of innovation & positive thoughts. Area of the Company The TVS Motor Company Ltd., has a wide area for the purpose of manufacturing. The land utilized by the Company is as shown below. Land Utilization of TVS Motors Co. Ltd. (Hosur Plant) Total extent of land - 307.00 acres Total built up Area - 1, 33,000 sqm - 16
- 17. Lawn Area - 32,000 Acres Afforestation - 60.00 Acres Canteen Facility The company has a wonderful free canteen facility for all the employees of TVS Motors Ltd., Vegetarian food is provided with a self service system which is maintained in a very clean manner. They also provide milk, tea & snacks for all the employees. Transportation Facilities The Company provides free transport facility to the employees. The company has about more than 25 buses for the transportation of the employees & cars for the higher authorities. Environment health & Safety policy Safety management is integrated with the company’s overall environment, Heath and Safety (EHS) management system and “Achievement of Zero Accidents” is taken up as the company’s goal. In this direction, following specific measures are initiated. • Investigation of “Near Miss” incidents, so that accidents can be foreseen in critical areas and remedial measures are adopted. • Active involvement of workmen in hazard identification and rectification through joint bodies like Plant Safety Committees, Union Committees. Etc., besides, encouraging safety projects in forums like QCC and Employee suggestion scheme. • Imparting specific training programs in first aid, fire fighting and job related safety topics on a continuous basis. • Evolving an “Emergency preparedness plan” to minimize damage due to unforeseen Emergencies. • TPM implementation for achieving zero accidents and prevention of accidents. - 17
- 18. 2.9. Achievement/Award 1. TVS Motor Co. Ltd. is the only two-wheeler manufacturer in the world, outside Japan to get the highly coveted Deming medal for quality manufacturing. 2. Economic times & Harvard business school association of India award -1995 (TVS Pvt. Sector emerging giant-1995) 3. The analyst award – 1996 In recognition of its excellence record of accomplishment in rewarding the investors. 4. Late Prof. Y.K.Zamvar Trophy-1997 For excellent world-class manufacturing & productivity. 5. I place in second state level quality improvement team convention-1998 6. II place for quality improvement team convention-1999 7. TVS Motor Co. best CFT project of the year 2001-02 8. TVS Motor Company - Winner of National Award 9. Deming Application Prize - 2002 10. The MD / Chairman was declared as the “Star of Asia” by “business week International” USA, on May 2003 2.10. Workflow model. Raw materials consumed Inspection Stores Fabrication Unit - 18
- 19. Paint Shop Inspection Machine Shop Engine assembly & vehicle assembly Leak testing Final Inspection Dispatch Fig : 2.1 Work flow Model 2.11. Future growth and prospectus 1. Achieve rank one in customer satisfaction as measured by JD power score 2. Develop new products for Indian & international market 3. Develop advanced technology & multi project management capability 4. Build TVS brand in India & other countries , especially in Asia 5. Reduce cost aggressively 6. Use information technology as an enabler for business growth - 19
- 20. 7. Train leaders for key positions for supporting business growth New Projects rcecived by company in 2007 The ASEAN Two wheeler project in Indonesia with an installed Capacity of 3,00,000 vehicles per annum have been implemented by TVS Motor Company, Indonesia, and a wholly-owned Subsidiary of TVS Motor Company. The project has been completed according to schedule and has commenced Production. A new model called TVS NEO has been developed especially for the Indonesian market and it is scheduled to be launched in July 2007. The Three Wheeler project at Hosur with an installed capacity Of 90,000 vehicles per annum is on schedule, with product Development nearing completion. Commercial launch is planned in the second half of 2007. The Himachal Pradesh Two wheeler project with an installed Capacity of 4,00,000 vehicles per annum have gone into production in April 2007. Thus, the company has taken up three large new projects. Of these, one project has already gone into production and the other two are expected to commence production shortly. Once these projects achieve full production levels and stabilize their Operations, they will contribute significantly to the overall turnover and profits of the Company. CHAPTER - 3 MCKINSEY’S 7-S FRAME WORK - 20
- 21. SHARED VALUES STRATEGY SKILLS STAFF SYSTEM STRUCTURE STYLE Fig. 3.1. McKinseys’s 7’S Model There are many management approaches, which take about out of managing the things and operations in an organization. One of the famous models to analyze the pattern of management is McKinsey’s 7’s framework. The model is very much helpful in viewing the inter-relationship of strategy formulation and interpretation. The focus managers attention to a variety of activities that may effect the implementation of any strategy, as the model - 21
- 22. originally developed as a very of thinking more broadly about the problems of organizing effectively. It is a judge tool for implementation of strategies. The7’s model is mainly distinguished into hard S’s and soft S’s. The hard elements are feasible and easy to identify as they can be found in a strategy statement, corporate plans organizational charts add other documentation of the company. They include a) Strategy b) System c) Structure The soft elements basically feasible because of difficulty involved in describing them as capabilities, values and elements of corporate culture frequently developing and changing. They include a) Style b) Staff c) Skills d) Shared value 3.1. STRATEGY A Strategy is the determination on the basis of long term goals & objectives & of an enterprise & the adoption of the course of action & allocation of resources necessary for carrying out the goals.. Their business strategy emphasizes the following: Increase their market share in India’s Automobile Industry by following a disciplined growth, strategy & delivering high quality customer service. - 22
- 23. Open scalable systems to deliver more products to more customers & to control operating costs. Maintain their current high standards for service quality through disciplined risk management. Develop Innovative products & services that attract their targeted customers & address inefficiencies in the Indian insurance sector. Continue to develop products & services that reduce their cost of funds. Focus on high earnings & growth with low volatility. TVS Motors aim at total customer satisfaction. To become the number 1 company in India by 2008. To expand its market in India as well as abroad. 3.2. STRUCTURE Structure is the basis for a specialization and co ordination influenced primarily by strategy and by organization activities are divided grouped and coordinated the relationship between the personnel in the organization is the formalized intentional structure of roles and positions in the organization. It refers to hierarchical flow within the organization. It tells about the authoritative power in the organization. The design of organizational structure is a critical task of the top management of an organization. It is the skeleton of the whole organizational office. Organizational structure refers to the relatively more durable organizational arrangement & relationships. Organizational structure - 23
- 24. Board of directors Managing Director Executive V.P President Purchase Marketing Sa Sales Operations R&D Production Quality HRD& Industrial Business Finance Engineering Assurance TQC Relations planning Program Information Industrial Program Program Program Corporate Systems Business Scooty Motorcycle Moped Communication Fig . 3.2 Organizational structure of TVS Motors Ltd. (A) Sales & Service Departments Senior Vice President - 24
- 25. Vice President Sales Head National Mgr National Mgr National Mgr National Mgr Area Mgr Area Mgr Area Mgr Area Mgr Territory Mgr Territory Mgr Territory Mgr Territory Mgr Fig 3.3. Structure of Sales & Service Departments Functions of Sales & Service Departments Improved customer Satisfaction Customer relation Management Build the TVS brand Improve channel Management Expand dealer network (B) Finance Department Senior Vice President - 25
- 26. Vice President General Mgr General Mgr Asst General Asst General Asst General Asst General Mgr Mgr Mgr Mgr Manager 1 Manager 2 Other Staff Other Staff Fig 3.4. Structure of Finance Department Role of Finance department Commitment to produce a quality accounting system which will ensure safeguarding of the company finance & availability of timely & accurate information to the satisfaction of internal & external customers, achieving business results by effective cost management through total employee involvement & continuous improvement of processes. (C) Materials department Selecting global suppliers who will support the companies’ internal growth, - 26
- 27. Expectations by achieving the production & new product targets in quality, cost & Delivery by horizontal deployment of the best practices of the company at suppliers Factories. “Quality is like yoga you have to practice it every day to keep fit” - Venu Srinivasan. (D) Operations department Supplying products of required quality & quantity on time, through the most efficient use of resources & by promoting continuous improvement. Some of its functions are material procurement, production, quality control, engineering, plant maintenance, painting, machining, plating, assembling, spare parts servicing, etc. (E) Marketing department To establish “TVS” as a dominant brand between the powered two wheelers in India within 3 years. Functions • Sales • Service • Spare parts • Product Management • Training • Exports • Dealer Management 3.3. SYSTEM - 27
- 28. System in simple words is the formal & informal procedures including innovation system, compensation system, management information system, capital allocation system & inventory control system that govern every day activity. In other words it is the process and flows that show how an organization gets its day to day things done, this includes procedures and routines that characterized how an important work is to be done which is mainly looked by managers. Inventory control system Just in time & 2bin system are followed by the TVS Motors Ltd. to control the inventory. 2 bin systems is a pull system to replenish the materials: Do’s 1. Use material from first bin. 2. Keep empty bin in immersed position 3. Fill the material only Up to marked value 4. Use bins with right address for respective parts 5. Follow- FIFO 6. Inform to stores authority when the first bin becomes empty 7. Consume complete bin system Inventory control system is followed to see there is no wastage of materials. Waste elimination - 28
- 29. There are 7 wastes such as the following: 1. Over production waste 2. Inventory waste 3. Conveyance waste 4. Defect production waste 5. Processing related waste 6. Operation related waste 7. Idle time waste Dealer Management System The company has been using a SAP ERP system since two years. However, some mechanism was needed at the dealers end to monitor and meet customer needs. So TVS Motors stepped in to ease it Â’s dealersÂ’ burden by roping in Mind tree Consulting to customize a DMS for its 450 dealers countrywide, which will be implemented by Wipro. "Each dealer would have to cope up around a lakh and a half towards the project, which will include the charges for the hardware infrastructure, software, and the support”. The DMS will have finance management, inventory management, service, and customer analysis modules. It’s not just the dealers, but the parent company also stands to benefit in the long run. Issues like selection of vendors, hardware, and maintaining network availability for the dealers were typical challenges faced during the implementation. The company, which spends around Rs. 20-30 crores annually on IT, has put up its level 3 data center recently, which now includes a call center. Although the concept of implementing a DMS is a new concept in the industry, its inherent advantages are quickly bringing it in the limelight. 3.4. STYLE Style includes two things i.e. - 29
- 30. Management style Organization style TVS Motor Company Style In TVS Motors Ltd., there is decentralization of authority. The subordinates can take right decision without the prior approval of the superiors. If any uncertainty occurs, the management takes action to improve the quality of the product in consultation with the employee. The management follows open door policy. They always welcome suggestions from the employees & the best suggestion of the year will be considered & that particular employee will be rewarded for that. 3.5. STAFF Staff at TVS Motors Ltd. An Enterprise may have a comprehensive business plan, a sound Organization Structure, but it cannot accomplish result as per plan without effective staffing. So the TVS Motors Ltd., has maintained a good relationship amongst its staff providing all guidance & inspiration to people to work & carry out their assigned duties & responsibilities. The TVS Motors Ltd., consists of more than 5500 employees. These employees are categorized on the basis of permanent & contract, the level of management. These employees occupy the various positions created through the process of organization. Each position of the organization makes specific contribution to achieve organizational objectives. On the basis of level of management, they have been categorized as top, middle & low level management. The top level consists of about 10% of the total people employed, middle level consists of 30% of the total people employed, who are the managers or the heads of specific - 30
- 31. departments, low level consists of supervisors of a specific group or project & employees. 3.6. SKILL Skill is the distinctive capabilities or competences of personnel or of the organization as whole. In other words it is what the company does best in way of selecting capable persons and well-trained persons. Skills at TVS Motor Co. Ltd. TVS Motors limited emphasis on enhancing the skill of the employees by giving proper training, regular feedback, discussing the issues faced and deriving at the best possible solution to the problem. Skill Development Programs 1. Competency based training for process units o Consolidate the gaps Employee wise o Identify the training needs for particular groups o Plan the Program & execute 2. Total Employee Involvement projects based Training o Identify the key projects o Identify theme based suggestions o Identify the competency needs o Plan & Organize the training 3. New Products Training - 31
- 32. o Identify the new products & group of people o Plan & give assembly training at Workshop o Give training for other functions also Training Methodology is of three types • Off the job Off the spot Training • Off the job On the spot Training • On the job On the spot Training 3.7. SHARED VALUES These are values shared by the members of the organization. It is the super ordinate goal that is centrally responsible for providing a core mission to the organization used as an umbrella. This embraces all the other managerial activities. In short it says what does the organization stands for and what it is lives in. Shared Values at TVS Motor Limited The TVS Motors Ltd., has adopted TPM (Total Production Maintenance) as its shared value. TPM means……………….. Setting a goal to maximize equipment efficiency ( overall Efficiency) Establishing a total system for Production Maintenance for the entire life of the equipment. Participation by all departments including Equipment Planning, Operating & maintenance departments. Involving all personnel, including top personnel to first line operators. - 32
- 33. Promoting Production Maintenance by motivation Management, namely by autonomous small group activities. 8 Pillars of TPM are: 1. Increased productivity 2. Improved Product Quality 3. High Customer Satisfaction 4. Cost Reduction 5. Reduction in machine failure 6. Enhanced safety record 7. Improved Image and Reputation of the Company 8. Improved Employee Morale At TVS, ‘T’ Stands for TRUST ‘V’ Stands for VALUE ‘S’ Stands for SERVICE. CHAPTER - 4 - 33
- 34. SWOT ANALYSIS INTERNAL ASSESMENT OF THE ORGANISATION STRENGTHS WEAKNESS SWOT ANALYSIS OPPORTUNITIES THREATS EXTERNAL ASSESMENT OF THE ORGANISATION Fig 4.1 Swot Analysis A scan of the internal and external environment is an important part of the strategic planning process. Environmental factor internal to the firm usually can be classified as the strengths or weakness and those external to the firm can be classified as the opportunities or threats. Such an analysis of the strategic environment is referred as Swot analysis. The Swot analysis provides information that helpful in matching the firm’s resources and capabilities to the competitive environment on which it operates. As such, it is an instrumental in the strategy formulation and selection in and administration of the company. - 34
- 35. 4.1. Strengths • Market leader in mopeds • Third two-wheeler Co. in India with market share of 21%. • Production capacity of 1.2 million vehicle with an area of 40 acres • Exports to 32 countries • Turn over Rs.2600crores (expected) • Manufactures entire range of two-wheeler mopeds, motor cycles & scooters • 5500 strong manpower • Organization initiatives • research & Development • Effective distribution line • Best performer of automobiles • Resilience • Hard Work directed by logic • Courage • Grabbing Opportunity • All pervasive passion for being good • Good Brand Image • Product Quality • Customer service 4.2. Weakness • Failure of TVS Spectra due to improper market launch • Market penetration is less in north India - 35
- 36. 4.3. Opportunities • Can become market leader in motor cycles & scooters • Increase the product line & width • Venture into three wheeler & 4 wheeler • More expansion into international markets • The Co. has extensive sales & distribution networks in India 4.4. Threats • Heavy competition from Honda , Bajaj & Yamaha • Increasing Competition • Peoples preference towards 4 wheelers • The cost of marketing, advertising & after sales service are increasing - 36
- 37. CHAPTER – 5 SUMMARY OF ANNUAL REPORTS 5.1. PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30th MARCH, 2007 Rupees in Crores Particulars Schedule Year Ended Year Ended 31 . 03 . 2007 31 . 03 . 2006 Gross sales 4,473.44 3,731.75 Less: Excise duty 618.48 496.79 Net sales 3,854.96 3,234.96 Other income XVI 73.23 71.00 Raw materials and components XVII 2,903.37 2,321.09 consumed Salaries and wages, stores XVIII 812.41 707.67 consumed and other expenses Miscellaneous expenditure XIX 1.88 1.72 Profit before Interest, depreciation XX 210.53 275.48 and tax Interest (net) 32.08 13.12 Depreciation 87.60 93.91 Profit before tax 90.85 168.45 Provision for taxation 9.50 45.00 Provision for fringe benefit tax 4.75 5.95 Provision for deferred tax 10.00 0.50 Profit for the year (after tax) 66.60 117.00 Balance profit brought forward 35.50 38.21 Tax relating to earlier years -- 5.50 Profit for the year (after tax) 66.60 117.00 Total 102.10 160.71 Tax relating to earlier years 0.32 - Interim dividend paid 16.63 16.63 II Interim dividend payable — 14.25 Dividend tax paid 2.33 2.33 Proposed dividend 3.56 - - 37
- 38. Provision for dividend tax 0.61 2.00 Transfer to general reserves 49.56 90.00 Balance surplus carried forward to 29.09 35.5 Balance Sheet Total 102.10 160.71 Nominal value of each share in rupees 1.00 1.00 Earnings per share in 2.80 4.93 rupees on 23,75,43,557 shares Diluted earnings per share in rupees 2.80 4.93 Table 5.1 Profit & Loss Account of TVS Motor Co. Ltd. 5.2. Balance Sheet as at 31st March 2007 TVS MOTOR COMPANY LIMITED I SOURCES OF FUNDS Schedule As at 31-03-2007 As at No Rs in crores 31-03-2006 Rs in crores 1 Shareholders’ funds (a) Capital I 23.75 23.75 (b) Reserves and surplus II 785.52 742.37 TOTAL 809.27 766.12 2 Loan funds (a) Secured loans III 446.16 308.61 - 38
- 39. b) Unsecured loans IV 187.40 76.43 TOTAL 633.56 385.04 3 Deffered Tax Liability V 159.01 149.01 (Net of deferred tax asset) TOTAL 1601.84 1300.17 II APPLICATION OF FUNDS 1 Fixed asset (A) Gross block 1483.01 1378.41 B) Less: Depreciation 685.93 611.63 (C) Net block VI 797.08 766.78 (D) Capital work-in-progress 205.83 54.68 2 Investments VII 344.74 344.18 3 Current assets, loans and advances (a) Inventories VIII 396.56 357.90 (b) Sundry debtors IX 111.40 58.19 (c) Cash and bank balances X 86.56 24.35 (d) Other current assets XI 0.30 0.30 (e) Loans and advances XII 227.58 214.88 TOTAL (A) 822.40 655.62 Current liabilities and provisions (a) Current liabilities XIII 577.02 524.46 (b) Provisions XIV 49.73 62.44 Total (B) 626.75 586.90 Net current assets (A - B) 195.65 68.72 4. Miscellaneous expenditure to XV 58.54 93.51 the extent not written off or adjusted TOTAL 1601.84 1300.17 Table 5.2. Balance Sheet of TVS Motor Co. Ltd. - 39
- 40. 5.3. Ratio Analysis The ratio is the most powerful tool of the financial analysis. It is the process of establishing and interpreting various quantitative relationships between the figures & groups of figures. It is with the help of ratio analysis that the financial statements can be analyzed more clearly & decisions can be made. FINANCIAL RATIOS OF TVS MOTORS LTD. SL NO. RATIOS 2005-06 2006 – 07 1 CURRENT RATIO 1.117 1.312 2 LIQUID RATIO 0.507 0.679 3 NET PROFIT RATIO 3.616 % 1.727 % 4 GROSS PROFIT RATIO 5.207 % 2.356 % 5 TOTAL ASSET TURN OVER RATIO 2.488 2.4065 6 CURRENT ASSET TURN OVER RATIO 4.934 4.687 7 DEBT EQUITY RATIO 0.502 0.782 8 SHARE HOLDERS EQUITY RATIO 0.40 0.36 9 DEBT TO ASSET RATIO 0.030 0.0499 10 RETURN ON TATAL ASSETS 6.11 2.99 11 INVENTORY TURN OVER RATIO 9.04 9.72 12 PROPRIETORY RATIO 1.24 1.07 13 INTEREST COVERAGE RATIO 19.99 5.56 14 FIXED ASSET TURN OVER RATIO 0.713 0.695 15 DEBTORS TURN OVER RATIO 66.19% 45.46% Table 5.3 Financial ratios of TVS Ltd. - 40
- 41. Ratios & Interpretation Current Ratio It expresses the relationship between Current Assets and Current Liabilities. The company’s Current Ratio is 1.312 for the year 2006-07 & 1.117 for the year 2005-06.The Indian Standard Current Ratio is 3:1,though the Ideal Ratio is 2:1.Therefore,the Company doesn’t meet the Standard Ratio& doesn’t enjoy sufficient liquidity& there is shortage of working capital.. Quick Ratio The Ideal Quick Ratio is 1:1.The Company ‘s Quick Ratio is 0.507 for the year 2005-06, and 0.679 for the year 2006-07.The Company should increase its Liquid Assets Because the quick ratio is below the standard norms. The conclusion is that the company is not liquid & so it cannot pay of its short- term liabilities out of its liquid realizable assets. Net Profit Ratio The Net profit Ratio shows the Profit Position of the Company against sales during the year. TVS Motors had a Net Profit of 3.616 % in the year 2005-06 and has decreased to 1.727 % in 2006-07. While calculating net profit ratio the investment or capital of the firm is only in relation to sales. The net profit decreased may be due to decrease in net profit from that of the previous year. Gross Profit Ratio as the gross profit is found by deducting cost of goods sold from the net sales, higher the gross profit better the result. There are no standard norms for gross profit ratio. The Ratio discloses the Gross Result of trading or overall margin within which the business undertaking must limit its operating expenditure. The Company’s Gross Profit was 5.207 % in the year 2005-06 and has decreased to 2.356 % in the year 2006-07. - 41
- 42. Total Asset Turn Over Ratio It shows the Total Assets of the Company .In the year 2005-06 it was 2.488, whereas it decreased to 2.4065 in the year 2006-07. In the year 2006 the total asset turn over ratio is more than that of current year. By this we can conclude that the total asset turn over ratio has been falling in recent years. Current Assets Turn Over Ratio Current Asset Turn over Ratio has no standard value. It was 4.934 times for the year 2005-06, whereas it decreased to 4.687 times for the year 2006-07. In the year 2006 the total asset turn over ratio is more than that of current year. By this we can conclude that the current asset in proportionate to sales has been falling in recent years. Debt Equity Ratio The Standard Equity Ratio is 2:1 .The Company had 0.502 in 2005-06 and 0.782 in the year 2006-07 .Thus it doesn’t maintains a satisfactory Debt-Equity ratio. If the debt is two times less than the Equity , the logical conclusion is that the financial structure of the concern is sound & so the stake risk of the long term creditors is relatively less. The debt equity ratio is calculated to measure the extent to which debt financing has been used in a business. Fixed Asset Turn Over Ratio The ratio indicates the extent to which the total of fixed assets is financed by long term funds of the firm. Generally fixed assets should be equal to the total of the long term funds or it should be 100%.The ideal fixed asset turn over ratio is 5 times a year. The company has experienced a 0.713 times ratio in the year 2005-06 & 0.695 times in the present year. By this we can conclude that the fixed asset turn over ratio has been decreasing. Therefore the company should plan to increase its fixed asset turn over ratio in the next year. - 42
- 43. Interest Coverage Ratio It indicates the number of times interest is covered by the profits available to pay the interest charges. Higher the ratio safer is the long term creditors because even if the earnings of the firm fall the firm shall be able to meet its commitment. Debt to asset ratio TVS Motors had a debt to asset ratio of 0.030 during the year 2005-06 and has been increased to 0.0499 in 2006-07. This is due to the increase in the total debt in proportionate to the total assets. Return on Total Assets During the year 2005-06 the return on total assets ratio was 6.11 times whereas it has been decreased to about 2.99 times during the year 2006-07. This shows that the assets must be properly used to get a higher return on the total assets. Inventory Turn over Ratio It indicates efficient management of inventory because more frequently the stocks are sold, the lesser amount of money is required to finance the inventory. a low inventory indicates an efficient management of inventory . There is no standard ratio for inventory turn over. Proprietary Ratio There is no standard or ideal proprietary ratio. A variant to the debt equity ratio is the proprietary ratio which is also known as equity ratio to the shareholders. It is important to determine long term solvency of the firm. The proprietary ratio during the year 2005-06 was Debtors Turn Over Ratio - 43
- 44. It indicates the number of times the debtors are turned over during a year. How debtors turned over implies inefficient management of debtors over sales & less liquid debtors. CHAPTER – 6 Learning Experience 6.1. Exposure to the Industry This project helps me to get practical exposure that, how an organization works, how they are marketing their products , what are the different schemes they are going to introduce for both customers & dealers implementation of theoretical aspects into practically. About company strategies, their working style, systems like inventory control system, recruitment, training of the employees, performance appraisal, etc. which are learned theoretically in the classroom. I observed all these practically about how these theoretical aspects can be practically implemented in the company. 6.2. Exposure to the Company Firstly, I came to know how to approach the companies for getting the project work & to communicate with the higher officials regarding the project & convincing them how it is useful to the company & also how it is useful to me. Secondly. I learnt how the theoretical concepts in the classroom as apart of my degree were been implemented in the corporate world as their compulsory policies & procedures to carry out daily activities. Thirdly, I learnt how the company sets their vision & mission & the objectives & the policies to achieve the vision of the company in their journey to achieve the goals in their business processes. - 44
- 45. As a student of MBA, the in plant training at TVS Motors ltd. helped to gain exposure towards the actual functioning of a process based industry. I could also learn the concepts like: Operator himself maintaining the machine Elimination of losses Achieving zero break down Zero defects I could also find that the company is growing in faster rate, which is mainly due to good relation between the employees. Thus I could learn the relevance of team building in an organization. Through out my In-Plant training , I learned about the skills required , style of leadership, the strategies adopted by the Co. in order to face the tough competition, the inventory control system , waste elimination, clear management system & much more. The In – Plant training in TVS Motor Co. Ltd. Helped me to build my soft skills like meeting a deadline time management, team work & networking with fellow employees. The In- Plant training also helped me to understand the corporate culture & experience in a better way. I am happy that the employees in the Co. work like one big huge family. I also got to learn on how to work in a fast environment. The training has also given me an invaluable understanding of the internal business & culture that could never be attained through theory. 6.3. Exposure to the corporate culture Corporate culture is a broad term used to define the unique personality or character of a particular Co. Organization & includes such elements as core values & beliefs & - 45
- 46. corporate ethics , leadership style , internal communication reputation of M.D value of the organization & rules of behavior, corporate culture can be expressed in the companies mission statement & other communications, in architectural style or interior decoration of officers , by what people wear to work , by how people address each other , & in the titles given to various employees. To start with the TVS Motor corporate culture the Co. adopts a participative & democratic leadership style. It follows a bottom up approach. The employees in the Co. are given a great value; they are treated as an important part of the Co. & key assets of the Co. The Co. follows an open door policy, involves employees in decision-making & builds personal report with the employees. There is no hierarchy & every one is treated in equal manner. TVS Motor Co. deeply cares about customers, stockholders & employees. The Co. has a dress code to treat all the employees equally. All the employees including chairman wear the same kind of uniform. They also value people & process that can create useful changes. The managers of the Co. pay close attention to all their constituencies , especially customers & initiate changes when necessary to serve there legitimate interests even if that entails taking some risk. I essence all the resources of the Co. are human resources. The Co. provides a pleasant working environment with good infrastructure facilities that motivate the employees to work effectively. TVS Motor Co. provides both on the job training & off the job training to the employees as per the requirement of the job. 6.4. Exposure to the various departments Stores It is a place where materials are received & stored. Materials received will not be issued immediately it will be held in a stores & that is called inventory. A daily production schedule is prepared & the stock is kept available. The stock is issued on a need based system & is noted in the issue ledger once the stock is returned it is - 46
- 47. entered in the receipt ledger with the signature, time, and name of the employee. A study was made to find out whether the material issued was utilized efficiently or if there is any wastage once there is shortage in stores it is immediately reported to the stores manager and the stores manager will inform to purchase department. In stores it is always issued on a daily basis & if there is any loss of any equipment, the particular employee will be held responsible. The main activities of the stores are: Goods inwards Holding stores Scrap & surplus stores To receive raw material & account for them To receive the purchase requisitions Checking inspection letters Purchase Department: The purchase department of the organization takes care of the purchases to be made for the organization. So that there is the availability of the materials on time. As soon as the shortage in the stores department it is immediately informed to the purchase department. The purchase managerial will take care of the needed material & the material is preceded within a time. The function of the department is to prepare a proposal of the required material. The top management after discussion gives approval for the purchase order, specifying the quality, quantity & the date within which it is to be supplied. The main activities of purchase department are: Planning of materials Selection & evaluation of suppliers Assessment of suppliers Release of purchase orders Work order Inspection of materials - 47
- 48. Finance & accounts department: Finance is the main department of any organization & is also necessary to design this department because, finance is like food & water for human body , without finance other activities of the business cannot be undertaken. But in today’s business not only adequate finance is necessary but also it is necessary to manage it properly that is why the finance department is having very significant role in any business. The main activities of finance & accounts department are: Maintenance of statutory financial accounts Cash & bank management Payment of suppliers bill Maintenance of the sales accounts & the dealer ledger Costing & budgetary control Central excise / sales tax Material accounting Production Department It is like a heart in the human body. In Production Department an inspection of the raw materials received is done, once the raw material enters the firm an OK certificate is issued by purchase department. Then the raw materials undergoing following functions Grinding Bending Milling Drilling Boring Sorting - 48
- 49. Finishing Painting Assembling 6.4. Relating Theory to Practice In the four weeks of In-Plant training in TVS Motor Co. Ltd. i was able relate theory to practice to a large extent. I gained skills & experience that will be invaluable to my future career throughout my entire life. This In-Plant training has been an incredibly positive experience that was far more valuable to me than I had expected. I explored the relationships between theory & practice which I had learnt in the class room such as purchase of materials, human resource management, marketing management, organizational behavior, production process from raw material stage into finished goods,etc which was a great experience. I was able to know the structure of the organization, the various forms of skills adopted for training the employees, the leadership style, the hiring strategy adopted by the company, various training methods, and the system of performance appraisal, the duties & responsibilities of the staff. Overall I had a great experience while undergoing In-Plant training in TVS Motor Co. Ltd. The experiences I have gained by me will stay with me for a life time. I think it was very important for me to be exposed to the work place. I have gained invaluable international perspectives that will surely be of great advantage to me in future. Their training has matured my ideas towards the world, the people & me. - 49