EXECUTIVE SUMMARY

SPRING TIME ENTERPRISES in India has traveled are less, now India is
one of the main cotton manufacturing & exporting cotton in the in India. The
cotton in India is with major players and gadag co operative mill Ltd is one of
largest manufacturer of cotten in India.
Inventory is a central process in Manufacturing Unit. This Inventory is
concerns to all departments i.e., from Planning Department to Selling Department
in which it passes though Production Department, HR Department, Logistic
Department, Finance Department, Costing Department, and Commercial
Department etc. So managing of Inventory is having wide Scope in manufacturing
Company.

INVENTORY MANAGEMENT
Statement of the problem
Inventory management and its effects on working capital
Management problem
Management is feeling that their huge amount of working capital is held up,
so the management wants to know whether they can reduce it through inventory
management.
Research problem
As above stated management problem the study was carried to know how
inventory management helps in proper maintenance of working capital, so the title
of this study is inventory management and its effect on working capital
Objectives of the study
1. To study the inventory management based on the ratios
2. To find out the impact of inventory on working capital.
3. To study the inventory management and its effective control through various
techniques.
4. To suggest the measures for improving the inventory level.
Scope of the study
Inventory management being a very important concept in all the companys
having a void coverage often calls for the managerial attention. In the modern

times inventory management has become the integral part of the all companies. So
all the firm gives special importance for inventory management. The major
objective of the study is to examine the effectiveness of inventory management
system adopted by Akash industry; the study mainly focuses on the techniques
used by the company to control the inventory. The study also covers other areas
like the financial ratios for the period of 2004 to 2007.
SUB OBJECTIVES:
1

To study the different accepts of Inventory Management.

METHODOLOGY
Primary Data:
1.

Interaction with personnel of the company

2.

Direct Observation in Inventory

Secondary Data:
1.

Balance Sheet

2.

Turnover Statements

3.

Monthly Inventory Statements

4.

Company Records

5.

Internet

Tools Used:
MS-Excel has been used for calculations.

INDUSTRY PROFILE
INTRODUCTION TO THE ORGONIZATION
INTRODUCTION:
Spring Time Limited is a part of Sprint Time Group of companies involved
in the manufacture of valves and train components for various engine
applications. Incepted in the year 1959, it is one of the oldest engine valve
manufacturers with latest manufacturing facilities to pace up with the
technological advancements that caters in the auto industry. The company is
headquartered in Chennai and has five manufacturing locations with 2 plants
in Chennai, 2 in Hyderabad and a plant in Vellore. It is the largest
manufacturer of engine valves in India with an 85% market share.
The company offers its products to companies engaged in the manufacture
of passenger cars, utility vehicles, light commercial vehicles, medium and
heavy commercial vehicles, farm tractors, and two and three wheelers.
The

major

customers

of

the

company

include Maruti

Suzuki, Tata, Mahindra, Hyundai, Yamaha, Volkswagen, Deutz. It recently

inaugurated its dedicated Lean Manufacturing Practices LPS line for
Mahindra and Mahindra's Farm Equipment Sector in its Chennai plant. It

also has a dedicated line for manufacturing valves for kappa engines of
Hyundai motor.
The company has an excellent export market. About 30% of its turnover
comes from export and the export markets include Europe, North America,
and the Far East. The company was all ready to set up an Export-oriented
unit EOU near Visakhapatnam, but the plan was dropped later.
HISTORY OF SPRING TIME ENTERPRISES:
Enterprises India of companies was originally founded by Shri T. R. Ganapathy
Iyer in the year 1999 and the group was originally named as Enterprise Madras
Ltd. It started off as a distributor of automobiles and parts. After his death,
the business was taken over by his son-in-law Lakshminarayan, popularly known
as LN, among friends and business circles. Under the leadership of LN, the
company was shaped into an auto-component business house. LN remained as
the founder chairman of the group for over three decades.
Early History:
The company was incorporated in 2001 in Chennai. The main objective of the
company is to manufacture of valves for internal combustion engines and ATE
valves for Mercedes Benz. It started with a technical collaboration with
Farnborough Engineering Company Ltd. that lasted for over a decade till 2003.
The valves are to be marketed under the trade name "EVL". In 1999, it established
the first IC engines valve plant in Chennai. In the year 2000, the company entered
into a technical collaboration agreement with Kar Valves Ltd. formerly Cochin
State Power & Light Corpn. Ltd., for the export of technical know-how and
assistance for the manufacture of valves for internal combustion engines.
Recent:

Sprint Time Engine Valve Limited was formed after Engine Valves Limited EVL
was merged with its 100% subsidiary Engine Components Ltd ECL in the year
1999. The reverse merger, effective from FY99 is expected to benefit the new
entity, reducing its tax liability, because of the carry forward losses of ECL. Sprint
Time Engine Valve Limited now has a more diversified product portfolio,
absorbing the products of the 2 merging companies. It manufactured guides for
internal combustion engines, engine camshafts and tappets, all catering to
the automobile industry. The Company is the largest manufacturer of engine valves
in India with an 85% market share. With its multiple plants, the company has been
able to meet the requirements of several customers as well as meet stringent quality
and delivery schedules. The Company was taken over by SPRINT TIME
HOLDINGS LIMITED and it was delisted from Bombay Stock Exchange on 15
February 2008.
Today,

the

company

has

five

plants.

The

plants

in Alandur Chennai, Medchal Hyderabad, Aziz Nagar Hyderabad and Vellore are
involved in the manufacture of Engine Valves and the plant in Ponneri Chennai is
involved in the manufacture of Guides and Tappets.

PROFILE:
The Company manufactures steering & suspension linkage products,
steering gear products and high precision aluminum Die Casting products

 Holds 39% market share in Steering Gear Products SGP, 72% market share
except PC segment in Suspension & Steering Linkage Products SSLP in
India
Ventured into hydraulic products
A new division Sprint Time Auto Parts has been formed which focuses on
After market segment
The Company manufactures engine valves, valve guides and tappets for
passenger cars, commercial vehicles, farm tractors and two/three wheelers
Caters to all segments such as PC, LCV, UV, SCV, M&HCV, Tractor,
2W/3W etc.
Latest manufacturing

practices

to

keep

abreast

of

technological

advancements
Market leader in Indian OEM and replacement markets
Customers spread across Europe, North America, and the Far East markets
Kar Mobiles Limited which is engaged in the production of medium and
large valves for internal combustion engines was merged with the Company
during the year
MISSION:

Provide superior products and services to our customers

Evolve as an institution that serves the best interests of all stakeholders
Pursue excellence through Total Quality Management
Ensure the highest standards of ethics and integrity in all our actions

VISION:

The Vision of the Spring Time Enterprises to maintain market

leadership and achieve sales of Rs. 1,000 Crones by 2017 18.

TECHNOLOGY AND PRODUCTION:

 Technology collaboration with top global players in the automotive sector

such as TRW, NSK and Nisshinbo.
Expanding lean manufacturing processes, the company has steadily invested
into robotics and technology up gradation over the last couple of years
Successfully installed state of art Dynamometer test facility with advanced
features of Environment chamber and Noise measurement
Established new R&D centre for manual steering with state of the art test
equipment facility
Launched several new products in Hydraulic Steering Gear and Occupant
Safety division
Commissioned in house CoP testing facility for Air bags

SALES:
Achieved a turnover of Rs 755.3 crores, a growth of 7.1% over the previous
year Rs 709.8 crores
Export business has grown by 13.6%, whereas domestic sales grew by 4.4%
In the After Market segment, the company introduced several new products
which helped it register a growth of 20% over the previous year
Secured business in new Passenger Car platforms and M&HCV segments
for the Steering products andwas able to grow significantly in the Die
Casting products in the current year due to new products

OPERATIONS
To enhance the engineering capability, a new R&D centre for Steering has
been established in Pondicherry.

 To meet the significant high volume global demand in Die Casting, the
second Die Casting plant has been initiated in Sangareddy District, near
Hyderabad
Established a separate division Sprint Time Auto Parts to focus on
aftermarket sales of new products which will offer an important line of
revenue for the Company in future
AWARDS
Six awards were won by the Company for the year out of which two awards
were from customers
Best Supplier Award for Delivery from Tata Motors Limited
Quality Achievement Award from Polaris
Sprint Time Madras Limited, Varanavasi team won Excellence in
Environment, Health and Safety
Systems conducted by CII.
The Company expects to grow through new businesses won in Passenger
Car segment and
Hydraulics.
After Market and Exports will continue to be a focus area to offset the
fluctuation in the domestic OE business.

KEY INITIATIVES FOR THE FUTURE ARE:

In addition to North America, expanding the die casting portfolio to Europe
New products and customers in Hydraulics

 Pursuing Export opportunities with new customers for Steering Gear

Expanding the After Market product range beyond its current product
portfolio
Getting nomination in tractor segment ESCORTS/TAFE
New business opportunity with TML on Tata ACE
New business opportunity with Renault for supply of Rack & Pinion Gears
to Export Markets
SOP supplies of Pump to Isuzu Thailand
Government of India officially mandating the Safety regulations, we expect
a significant increase in the
content per vehicle of safety products viz: airbags and seatbelts with
pretensioner post October 2017
We have also been able to secure a significant export order to South Korea
for Seatbelts

INTRODUCTION TO AUTOMOBILE INDUSTRY

INTRODUCTION
Automobile, self-propelled vehicle used primarily on public roads but
adaptable to other surfaces. Automobiles changed the world during the

20thcentury, particularly in the United States and other industrialized

nations. From the growth of suburbs to the development of elaborate road
and highway systems, the so-called horseless carriage has forever altered the
modern landscape. The manufacture, sale, and servicing of automobiles have
become key elements of industrial economies. But along with greater
mobility and job creation, the automobile has brought noise and air pollution
and automobile accidents rank among the leading causes of death and injury
throughout the world.
But for better or worse, the 1900s can be called the Age of the Automobile
and cars will no doubt continue to shape our culture and economy well into
the 21st century. Automobiles are classified by size, style, number of doors,
and intended use. The typical automobile, also called a car, auto, motorcar,
and passenger car, has four wheels and can carry up to six people, including
a driver. Larger vehicles designed to carry more passengers are called vans,
minivans, omnibuses, or buses. Those used to carry cargo are called pickups
or trucks, depending on their size and design. Minivans are van-style
vehicles built on a passenger car frame that can usually carry up to eight
passengers. Sport-utility vehicles, also known as SUVs, are more rugged
than passenger cars and are designed for driving in mud or snow.
In 2007 manufacturing plant in more than 25 countries produced 73.2
million passenger cars .The automobile is built around an origin various
systems supply the origin with fuel, cool it daring operation, lubricate its
moving parts and remove exhaust gases it creates. The origin produces
mechanical power that is transmitted to the automobiles wheels through
adverting which includes a transmission. One or more dive shafts, a
differential gear and axles. Suspension system which includes sparing and
shock absorbers, customs the ride and help protect the vehicle from being

damaged by bumps heavy loads and other sherries. Wheel and tares support
vehicles on the road way and when rotated by powered axles, propel the
vehicle forward or backward. Steering speed. An electrical system start and
operate the engine monitor and control many aspects of the vehicle operation
and powers such components as head light and radios. Safety features such
as bumpers air bugs and seat bells help protect occupants in an accident.

AUTOMOBILE INDUSTRY IN INDIA:

Demographically and economically, Indias automotive industry is wellpositioned for growth, servicing both domestic demand and, increasingly,
export opportunities. A predicted increase in Indias working-age population
is likely to help stimulate the burgeoning market for private vehicles. Rising
prosperity,

easier

access

to

finance

and

increasing

afSpring

Enterprisesability is expected to see four-wheelers gaining volumes,

although two wheelers will remain the primary choice for the majority of
purchasers, buoyed by greater appetite from rural areas, the youth market
and women.
Domestically, some consolidation or alliances might be expected, driven by
the need for access to better technology, manufacturing facilities, service and
distribution networks.The components sector is in a strong position to cashin on Indias cost-effectiveness, profitability and globally-recognized
engineering capabilities. As the benefits of collaborations become more
apparent, super-specialists may emerge in which the automobile is treated as
a system, with each specialist focusing on a sub-system, akin to the IT
industry. Though this approach is radical, it could prove an important step in

reducing complexity and investment requirements, while promoting

standardization and meeting customer demands.
Manufacturers are already planning for the future: early advocates of
technological and distribution alliances have yielded generally positive
results, enabling domestic OEMs to access global technology and
experience, and permitting them to grow their ranges with fewer financial
risks.
This exciting outlook for the industry is set against a backdrop of two
potentially game-changing transportation trends the gradual legislative
move towards greener, gas-based public transport vehicles, and a greater
requirement for urban mass mobility schemes to service rapidly-expanding
cities.
GREEN REVOLUTION VEHICLES:
In a price-conscious economy such as Indias, the shift towards green
vehicles will be slow unless spurred by government mandates. Although the
major players are already equipped with the necessary capabilities to
develop cleaner vehicles, they do not see much merit in commercializing
these technologies until the green revolution gains momentum most likely
through changes in political legislation and it achieves the market scale
required for commercial viability.
Manufacturers are placing greater faith in dual-fuel technologies than in
battery-powered alternatives because the necessary support infrastructure,
such as recharge stations, is not yet in place for the widespread adoption of
the latter. The launch of electric motorcycles could have a significant impact
on the market, given that motorcycles account for the majority of twowheeler sales in India.

 Manufacturers of four-wheelers and commercial vehicles in particular stress

the importance of optimizing conventional combustion engines before
experimenting too radically with costly new technologies.
MOBILITY REVOLUTION:
Use of public transport in India has waned as private vehicle ownership has
boomed, but increasing strain on the road infrastructure in major cities
means public investment is likely in Urban Mass Mobility Schemes such as
metro systems and buses. The automotive industry is unlikely to lose much
of its customer base in the near-term, even as these schemes become more
prevalent, because the socio-economic statement of car ownership will
continue to make private vehicles desirable.
At present there is a lack of clarity in the automotive industry over the role it
will play in any mobility revolution. Although some industry experts believe
the impact of the mobility revolution will be minimal in the short-term, there
may be opportunities for manufacturers to become involved with the public
sector in areas such as improving links between different modes of transport.

AUTOMOBILE INDUSTRY:
The automobile industry has seen interesting dynamics in recent times with the
effect of the global downturn, followed by recovery in domestic demand. The
future of the industry in the medium term based on current trends, is analyzed here
along two broad themes in the global automobile industry:
Growth
Consolidation

As discussed below, the nature of demand in the Indian automotive industry and
the associated drivers are likely to take it along a path, which is different from the
evolving global automotive landscape.
GROWTH
Automobile market has grown steadily over the last seven to eight years,
with the exception of the previous two years where the effects of the global
downturn were felt, primarily in sales of commercial vehicles. However,
even during the downturn, the two-wheeler and three-wheeler segments,
which were until then experiencing low growth or losing volumes, bucked
the trend.
Vehicle demand is quite different from other top automobile markets with
the exception of China in that two-wheelers constitute a significant portion
of vehicle demand more than 3/4th of the Indian market is in two-wheelers.
In the context of the unique characteristics of the Indian automobile market,
growth is expected to be driven by the following:
AFSPRING ENTERPRISESABILITY
FUEL ECONOMY
ALTERNATIVE
NICHE PRODUCTS
RURAL MARKET

1.AFSPRING ENTERPRISESABILITY
While quite a few new vehicles launched in the Indian market have been
developed locally, vehicle afSpring Enterprisesability remains a significant
concern as seen in. Although the price of an average motorcycle in India
about USD 900 is comparable to the average per capita income, the prices of
passenger cars have a long way to go. Although the entry level car Nano is

priced at around USD 2,500, the passenger car market could grow multi-fold
if there is a break-through of another price level in the years to come.
John Flintham, global CEO of Amtek Auto, believes four-wheelers are
particularly wellplaced to take advantage of these changing trends. If you
look at the Tata Nano, people buying two-wheeler bikes who have a bit more
disposable income and can now afSpring Enterprises to buy a car instead. I
think youre going to see a doubling of sales over the next three to four years
and I think thats going to be driven by both domestic demand and by India
becoming a small car export hub.
Spring Enterprises India Managing Director, Michael Boneham, believes
changing demographics in India will see auto sales scale new heights. He
argues that the increasing number of educated people entering the working
age bracket will provide a fertile environment for a buoyant economy and
healthy demand for private light transport. The Indian auto industry should
have double digit growth levels for the next five years and beyond,
depending on taxation, legislation, infrastructure and global conditions, he
says.
2. FUEL ECONOMY
The volume leaders across two-wheelers and four-wheelers in India are companies
which have been able to offer products with the globally acknowledged best-inclass fuel economy rates, as well as afSpring Enterprisesable total cost of
ownership. For example, while the US is setting norms for cars to achieve 35 mpg1
on petrol 2, a majority of Indian cars already offer that much3 , while the leading
class bikes offer up to 200 mpg3 and more in some cases. This performance
expectation will only increase in the future. Fuel economy will also be an
important factor in the truck sector, with Marc Llistosella, CEO and Managing
Director of Daimler India Commercial Vehicles, noting that a vehicles mpg rating

will become an increasingly important purchasing factor. No one buys a truck for
leisure, he says, greater efficiency means better fuel consumption and this is in
our interest. Some 65 percent of the total cost of ownership of a truck is fuel
consumption. This goes directly to the profit and loss of the customer.
3. ALTERNATIVE
Fuels Vehicles based on alternative fuels remain another area of interest for both
consumers and companies. Reva4 , a pioneer in electric cars, remains an exception
in the area of electric vehicles in India, although in two wheelers there are multiple
offerings, none of which have as yet taken off in terms of volume. Although both
commercial vehicles and passenger vehicles running on CNG are gaining
popularity among transport service providers and consumers due to their lower cost
of operation, much more needs to be done to improve the fuelling infrastructure
before CNG vehicles become more mainstream. This report explores this theme in
detail in the section on Green Revolution.
4. NICHE PRODUCTS:
While India remains predominantly a cost conscious market, profitable
niches are available for the products which address specific needs. One
example is the growth in the sales of gearless scooters, as seen in. Of these,
most of the scooters are in the 75-125cc sub-segment 5, often targeted at
young people and women in particular. The growing population, a
significant proportion of which will be of working age over the next decade,
is another source of demand to most automobile companies.
The luxury car segment 6 has taken off substantially in the last three years
and current data suggests that the demand will be sustained in the medium
term. While the luxury car volumes are only about one percent of the total
passenger vehicle sales in 2009-10, the cumulative annual growth rate in

volume of nearly 40 percent over the last two years suggests that this share
is bound to grow.
5. RURAL MARKET:
The automobile industry has yet to fully tap into demand from rural areas.
Previously, consumers from these areas would need to go to automobile
dealerships in towns and cities for their vehicle purchases. However, in recent
years, market players have made overtures to rural consumers, with encore aging
sales. shows a gradual but steady growth in demand for passenger vehicles from
rural areas, accompanying the growth of the overall segment. While the Indian
automobile industry seeks to double total sales on the back of steady growth over
the next decade, these relatively under tapped demand segments rural markets,
youth, women and luxury cars are expected to play a significant role.
CONSOLIDATION
As India seeks to become one of the worlds largest automobile markets, it is
interesting to look at its evolution over the years. Indias attraction as a destination
for automobile manufacturers has been underscored by the number of new
manufacturers entering the country over the last two decades. Unlike in several
markets, the number of manufacturers has continued to grow in India over the
years across vehicle segments. Global consolidation is a natural process of
business alignments based on technologies and market opportunities, says
Daimlers Marc Llistosella. The Indian market is evolving as the next big
opportunity and players from across the world see it as a natural extension of their
business domain. And Indian players in the automotive component sector are now
viewing the entire global market as an opportunity. With high skill levels and a
competitive environment, they are no longer restricted to viewing India alone.

GREEN VEHICLES IN INDIA

As with conventional automobiles, the Indian industry has taken a path
different from that of the global industry in the development of green
vehicles. The development of cleaner vehicles in India began with a
regulatory push for CNG buses and three-wheelers in New Delhi more than
a decade ago. In all other segments of the automobile market, demand has
grown largely based on customer awareness and a pull for products
motivated largely by perceived economic benefits. For instance, LPG kits
were available in the market more than a year before the first entrant in the
field, Maruti Suzuki, introduced factory-fitted vehicles in 2004. In recent
times, electric two wheelers have ridden on the back of customer demand for
vehicles with lower running costs, as well as some incentives to users in the
form of little or no duties on electric vehicles and parts in areas such as New
Delhi.
This lack of technological consensus may be hindering the creation of an
adequate green infrastructure, according to Ashok Taneja, Managing
Director of Shriram Pistons. Each OEM currently seems to be pursuing
multiple technologies such as CNG, bio-fuel, hybrids, hydrogen, fuel cells,
Plug-ins or EVs, he says. It is like hedging bets, not knowing which
technology will eventually prove successful. When there is consensus it
will have to be a public-private partnership because the government alone
doesnt have the capacity to build the infrastructure. He argues that the
government must bring manufacturers on board and finalize a 10-20 year
blueprint for the introduction of greener vehicles. Nevertheless, the Indian
auto industry today seems to be evaluating two paths in its move towards
greener vehicles:
CNG/ Dual Fuel 4 Vehicles

 Electric/ Hybrid Vehicles

CNG/DUAL FUEL VEHICLES

This part of the industry has developed largely based on legislative and judicial
activism and the subsequent availability of CNG fueling outlets across major parts
of the country. As shown in Figure 15, the government ordered the conversion of
existing diesel/petrol-based public transport vehicles buses, taxis, and autorickshaws to CNG in several cities including New Delhi and Mumbai, in response
to growing concerns over emissions.
While there is debate over the effectiveness of CNG in reducing pollutant
emissions, there seems to be support for CNG-based vehicles in New Delhi 5 , and
sustainable urban transport in other cities Mumbai, Ahmadabad, and Surat 6 .
Furthermore, other theoretical studies also support the introduction of CNG buses
in place of diesel as an effective method in reducing emissions7 . India has the
worlds fifth largest number of natural gas vehicles8 , amounting to a little less
than a million vehicles.
It is believed that at least 5 percent of new car buyers opt for a CNG variant where
available. This could grow in the future as the demand increases for vehicles with
lower running costs, although currently most LPG/CNG variants of passenger cars
cost about INR 15,000 to 50,000 more than their conventional counterparts9. The
higher purchase price of dual-fuel cars is normally compensated in less than two
years based on cost per km, because dual-fuel cars offer up to 50 percent savings10
based on current prices of petrol and CNG. The increasing availability of fueling
stations in cities and on major highways is also encouraging sales. The state of
Gujarat is a case in point on CNG, accounting for about a fourth of all CNG

vehicles in India in 2009, while having only about a third of the 560 CNG
refueling stations11 .
ELECTRIC/HYBRID VEHICLES
Battery powered/plug-in hybrid electric vehicles BEV/PHEV have continued their
steady growth worldwide, despite accounting for only about 1percent of all
vehicles sold in 200912 . In India, electric vehicles have just begun making some
inroads into the market. In passenger cars, there is only one established domestic
manufacturer, Reva, whose sales account for less than 1 percent of all passenger
cars sold in India. However this could change soon with Mahindra &Mahindras
M&M acquisition of a majority stake in Reva.
Electric/hybrid commercial vehicles are mostly in the experimental stage at the
time of writing so it is not yet clear how this industry will shape up in India.
Daimlers Marc Llistosella suggests the move towards greener commercial
vehicles is currently limited to the major metropolises because consumer activism
is still gaining momentum. Post hybrid, there are trials and errors in the industry
because no one knows what will happen, he says. Theres no blueprint, which
makes it both interesting and challenging. There are different theories but nobody
has the one solution. In discussions at the start of the century, hybrid was called a
bridge technology, in other words it was never the final destination. 5, 10, 15, 20
years, how long will the next stage take? The industry still has to define a clear
path.

OTHER FUELS:
As in Brazil, where more than 90 percent of new vehicles sold can run on
either ethanol or gasoline15, India has been exploring the prospect of reducing its
dependence on crude oil. There are mandatory blending requirements for ethanol
and the government has announced a policy for biofuels such as biodiesel/biopetrol
from various sources. However, none of these have taken off in a sustainable
manner. As with any developing market trend, greener vehicles face several
challenges to their growth in India. Addressing them would help expand the market
multifold.
In the context of fuelling/charging infrastructure being a significant hurdle to the
growth of greener vehicles not just in India but also globally, the following case
study of Better Place, one of the promising start-ups in the electric vehicle sector,
illustrates how the green sector can be encouraged to grow.

HISTORY OF AUTOMOBILE INDUSTRY

INTRODUCTION

 The early history of the automobile can be divided into a number of eras,
based on the prevalent means of propulsion. Later periods were defined by
trends in exterior styling, size, and utility preferences. In 1768, the first
steam-powered automobile capable of human transportation was built
by Nicolas-Joseph Cugnot. In 1807, Franois Isaac de Rivaz designed the
first car powered by an internal combustion engine fueled by hydrogen.
In 1886, the first petrol- or gasoline-powered automobile was invented by
Karl Benz. This is also considered to be the first "production" vehicle as
Benz made several other identical copies. At the turn of the 20th
century electrically powered automobiles appeared but only occupied a
niche market until the turn of the 21st century.
(a) EARLY AUTOMOBILES

17th and 18th centuries:

Ferdinand Verbiest, a member of a Jesuit mission in China, built the
first steam-powered vehicle around 1672 as a toy for the Chinese Emperor. It was
of small enough scale that it could not carry a driver but it was, quite possibly the
first working steam-powered vehicle 'auto-mobile'.

Steam-powered self-propelled vehicles large enough to transport people and cargo

were first devised in the late 18th century. Nicolas-Joseph Cugnot demonstrated
his fardier a vapor "steam dray", an experimental steam-driven artillery tractor, in
1770 and 1771. As Cugnot's design proved to be impractical, his invention was not
developed in his native France. The center of innovation shifted to Great Britain.
By 1784, William Murdoch had built a working model of a steam carriage
in Redruth. The first automobile patent in the United States was granted to Oliver
Evans in 1789, and in 1801 Richard Trevithick was running a full-sized vehicle on
the roads in Camborne.

1) 19th Century:
Many vehicles were in vogue for a time, and over the next decades
such

innovations

as

hand brakes,

multi-speed transmissions,

and

better steering developed. Some were commercially successful in providing mass

transit, until a backlash against these large speedy vehicles resulted in the passage
of the Locomotive Act 1865, which required many self-propelled vehicles
on public roads in the United Kingdom to be preceded by a man on foot waving
a red flag and blowing a horn. This effectively halted road auto development in the
UK for most of the rest of the 19th century; inventors and engineers shifted their
efforts to improvements in railway locomotives. The law was not repealed until
1896, although the need for the red flag was removed in 1878.
Among other efforts, in 1815, a professor at Prague Polytechnic, Josef Bozek, built
an oil-fired steam car. Walter Hancock, builder and operator of London steam
buses, in 1838 built a four-seat steam phaeton.

What some people define as the first "real" automobile was produced by French in
1873, who built self-propelled steam road vehicles to transport groups of
passengers. The American George B. Selden filed for a patent on May 8, 1879. His
application included not only the engine but its use in a 4-wheeled car. Selden filed
a series of amendments to his application which stretched out the legal process,
resulting in a delay of 16 years before the US 549160 was granted on November 5,
1895.

2) 20th Century:
Pre WWII
Steam-powered road vehicles, both cars and wagons, reached the peak of
their development in the early 1930s with fast-steaming lightweight boilers and
efficient engine designs. Internal combustion engines also developed greatly during
WWI, becoming simpler to operate and more reliable. The development of
the high-speed diesel engine from 1930 began to replace them for wagons,
accelerated by tax changes in the UK making steam wagons uneconomic

overnight. Although a few designers continued to advocate steam power, no

significant developments in production steam cars took place after Doble in 1931.
Post-WWII
Whether steam cars will ever be reborn in later technological eras remains
to be seen. Magazines such as Light Steam Power continued to describe them into
the 1980s. The 1950s saw interest in steam-turbine cars powered by small nuclear
reactors this was also true of aircraft, but the dangers inherent in nuclear fission
technology soon killed these ideas.

(ii)

ELECTRIC AUTOMOBILES:

In 1828, Anyos Jedlik, a Hungarian who invented an early type of electric motor,
created

tiny

model

car

1834, Vermont blacksmith Thomas

powered

by

Davenport,

the

his
inventor

new
of

motor. In
the

first

American DC electrical motor, installed his motor in a small model car, which he
operated on a short circular electrified track.[16] In 1835, Professor Sibrandus
Starting of Groningen, the Netherlands and his assistant Christopher Becker
created a small-scale electrical car, powered by non-rechargeable primary cells.
[17]

In 1838, Scotsman Robert built an electric locomotive that attained a speed of 4

miles per hour 6 km/h. In England, a patent was granted in 1840 for the use of rail
tracks as conductors of electric current, and similar American patents were issued
to Lilley and Colten in 1847. Between 1832 and 1839 the exact year is
uncertain Robert Anderson of Scotland invented the first crude electric carriage,
powered by non-rechargeable primary cells.

Electric cars enjoyed popularity between the late 19th century and early 20th
century, when electricity was among the preferred methods for automobile
propulsion, providing a level of comfort and ease of operation that could not be
achieved by the gasoline cars of the time. Advances in combustion technology,
especially the electric starter, soon rendered this advantage moot; the greater range
of gasoline cars, quicker refueling times, and growing petroleum infrastructure,
along with the mass production of gasoline vehicles by companies such as
the Spring Enterprises Motor Company, which reduced prices of gasoline cars to
less than half that of equivalent electric cars, led to a decline in the use of electric
propulsion, effectively removing it from important markets such as the United
States by the 1930s. However, in recent years, increased concerns over
the environmental impact of gasoline cars, higher gasoline prices, improvements in
battery technology, and the prospect of peak oil, have brought about renewed
interest in electric cars, which are perceived to be more environmentally friendly
and cheaper to maintain and run, despite high initial costs, after a failed
reappearance in the late-1990s.

(iii)

INTERNAL COMBUSTION ENGINES

Early attempts at making and using internal combustion engines were

hampered by the lack of suitable fuels, particularly liquids, therefore the earliest
engines used gas mixtures. Early experimenters used gases. In 1806, Swiss
engineer Franois Isaac de Rivaz built an engine powered by internal combustion
of a hydrogen and oxygen mixture. In 1826, Englishman Samuel Brown tested his
hydrogen-fuelled internal combustion engine by using it to propel a vehicle
up Shooter's Hill in south-east London. Belgian-born Etienne Lenoir's Hippo
mobile with a hydrogen-gas-fuelled one-cylinder internal combustion engine made
a test drive from Paris to Joinville-le-Pont in 1860, covering some nine kilometers
in about three hours. A later version was propelled by coal gas. A Delamare
Deboutteville vehicle was patented and trialed in 1884.

About

1870,

in Vienna,

Austria

then

the Austro-Hungarian

Empire,

inventor Siegfried Marcus put a liquid-fuelled internal combustion engine on a

simple handcart which made him the first man to propel a vehicle by means of
gasoline. Today, this car is known as "the first Marcus car". In 1883, Marcus
secured a German patent for a low-voltage ignition system of the magneto type;
this was his only automotive patent. This design was used for all further engines,

and the four-seat "second Marcus car" of 1888/89. This ignition, in conjunction
with the "rotating-brush carburetor", made the second car's design very innovative.
(b)
(c) VETERAN CAR:

He first production of automobiles was by Karl Benz in 1888 in Germany

and, under license from Benz, in France by Emile Roger. There were
numerous others, including tricycle builders Rudolf Egg, Edward Butler,
and Lon Bolle. Bolle, using a 650 cc 40 cu in engine of his own design,
enabled his driver, Jamin, to average 45 kilometers per hour 28.0 mph in the
1897 Paris-Trouville rally. By 1900, mass production of automobiles had
begun in France and the United States.
The first motor car in Central Europe was produced by Czech company
Nesse

lsdorfer

Wagenbau

later

renamed

to Tetra

in

1897,

the President automobile. The first company formed exclusively to build

automobiles was Pan hard et Leaser in France, which also introduced the
first four-cylinder engine. Formed in 1889, Pan hard was quickly followed
by Peugeot two years later. By the start of the 20th century, the automobile
industry was beginning to take off in Western Europe, especially in France,
where 30,204 were produced in 1903, representing 48.8% of world
automobile production that year

(i)

Brass or Edwardian Car:

This period lasted from roughly 1905 through to 1914 and the beginning of
World War I. Generally referred to as the Edwardian era, but in the United States
often known as the Brass era - from the widespread use of brass in vehicles during

this time. Within the 15 years that make up this era, the various experimental
designs and alternate power systems would be marginalized. Although the
modern touring car had been invented earlier, it was not until Panhard et
Levassors System Panhard was widely licensed and adopted that recognizable and
standardized automobiles were created. This system specified front-engined, rearwheel drive internal combustion engined cars with a sliding gear transmission.
Traditional coach-style vehicles were rapidly abandoned, and buckboard
runabouts lost favor with the introduction of tonneaus and other less-expensive
touring bodies.

Throughout this era, development of automotive technology was rapid, due in part
to hundreds of small manufacturers competing to gain the world's attention. Key
developments included the electric ignition system by dynamotor on the Arnold in
1898, though Robert

Bosch,

1903,

tends

to

get

the

credit, independent

suspension actually conceived by Bollee in 1873, and four-wheel brakes by the

Arrol-Johnston Company of Scotland in 1909. Leaf springs were widely used
for suspension, though many other systems were still in use, with angle steel taking
over from armored wood as the frame material of choice. Transmissions and
throttle controls were widely adopted, allowing a variety of cruising speeds, though
vehicles generally still had discrete speed settings, rather than the infinitely

variable system familiar in cars of later eras. Safety glass also made its debut,
patented by John Wood in England in 1905. It would not become standard
equipment until 1926, on a Rickenbacker.

(d) VINTAGE CAR:

The vintage era lasted from the end of World War I 1918, through
the Wall Street Crash at the end of 1929. During this period, the front-engined car
came to dominate, with closed bodies and standardized controls becoming the
norm. In 1919, 90% of cars sold were open, by 1929, 90% were closed.
Development of the internal combustion engine continued at a rapid pace,
with multi-valve and overhead camshaft engines produced at the high end,
and V8, V12, and even V16 engines conceived for the ultra-rich. Also in
1919, hydraulic

brakes were

invented

by Malcolm

Longhead co-founder

of Lockheed, they were adopted by Duisenberg for their 1921 Model A. Three
years later, Hermann Rieseler of Vulcan Motor invented the first automatic
transmission, which had two-speed planetary gearbox, torque converter, and
lockup clutch; it never entered production. Its like would only become an available
option in 1940. Just at the end of the vintage era, tempered glass now standard
equipment in side windows was invented in France. In this era the revolutionary
pontoon design of cars without fully articulated fenders, running boards and other
non-compact ledge elements was introduced in small series but a mass production
of such cars was started much later.

Many of today's modern innovations have branched from a man named Preston
Tucker, who designed the Tucker 48 . Preston Tucker posed his idea of an
American-made vehicle in the 1920s and was the man who inspired the idea of a
rear-motor, and individual torque converters and went on designing a safety car
with innovative features and modern styling. Despite the competitors he was
facing, he went on making a water cooled aluminum block, flat-6 rear, disc brakes,
four-wheel independent suspension, fuel injection, the location of all instruments
within reach of the steering wheel, seat belts, and a padded dashboard. Preston
Tucker was the first man to make an eight-cylinder sedan that would reach an
average of 20 miles per gallon. Preston Tucker had introduced his innovative car to
the market at a low based price of $4,000 one of his goals being that the "big
three": Chevrolet, Chrysler, and Spring Enterprises; were pricing their vehicles at
an unreasonable price and yet not giving concern to the needs and desires of the
consumers. Preston Tucker was the basis of many automotive innovations in the
1920s and had only succeeded in making 50 of these vehicles.

(e) PREWAR CAR:

The pre-war part of the classic era began with the Great Depression in 1930,
and ended with the recovery after World War II, commonly placed at 1946.
It was in this period that integrated fenders and fully closed bodies began to
dominate sales, with the new sedan body style even incorporating a trunk or
boot at the rear for storage. The old open-top runabouts, phaetons,
and touring cars were phased out by the end of the classic era as wings,
running boards, and headlights were gradually integrated with the body of
the car.
By the 1930s, most of the mechanical technology used in today's
automobiles had been invented, although some things were later "reinvented", and credited to someone else. For example, front-wheel drive was
re-introduced by Andr Citron with the launch of the Traction Avanti in
1934, though it had appeared several years earlier in road cars made
by Alvis and Cord, and in racing cars by Miller and may have appeared as
early as 1897. In the same vein, independent suspension was originally
conceived by Amedee Bollee in 1873, but not put in production until
appearing on the low-volume Mercedes-Benz 380 in 1933, which prodded
American makers to use it more widely. In 1930, the number of auto
manufacturers declined sharply as the industry consolidated and matured,
thanks in part to the effects of the Great Depression.

 Automobile design and production finally emerged from the military

orientation and other shadow of war in 1949, the year that in the United
States saw the introduction of high-compression V8 engines and modern
bodies

from General

Motors' Oldsmobile and Cadillacbrands. Hudson introduced the "step-down"

design with the 1948 Commodore, which placed the passenger compartment
down inside the perimeter of the frame, that was one of the first new-design
postwar cars made and featured trend-setting slab-side styling. Theunibody
strut-suspended 1951 Spring Enterprises Consul joined the 1948 Morris
Minor and 1949 Rover P4 in the automobile market in the United Kingdom.
In Italy, Ferrari was beginning his 250 series, just as Lancia introduced the
revolutionary V6-powered Aurelia.
Throughout the 1950s, engine power and vehicle speeds rose, designs
became more integrated and artful, and automobiles were marketed
internationally. Alec Issigon is Mini and Fiat's 500 diminutive cars were
introduced in Europe, while the similar car class became popular Japan.
The Volkswagen Beetle continued production after Hitler and began exports

to other nations, including the U.S. At the same time, Nash introduced
the Nash Rambler, the first successful modern compact car made in the
U.S., while the standard models produced by the "Big Three" domestic
automakers grew ever larger in size, featured increasing amounts of chrome
trim, and luxury was exemplified by the Cadillac Eldorado Brougham. The
markets in Europe expanded with new small-sized automobiles, as well as
expensive grand tourers like the Ferrari America.

(f) MODERN CAR:

The modern era is normally defined as the 25 years proceeding the

current year. However, there are some technical and design aspects that
differentiate modern cars from antiques. The modern era has been one of
increasing standardization, platform sharing, and computer-aided design. Some
particular contemporary developments are the proliferation of front- and all-wheel
drive, the adoption of the diesel engine, and the ubiquity of fuel injection. Most
modern passenger cars are front-wheel-drive monologue anybody designs,
with transversely mounted engines.

Body styles have changed as well in the modern era. Three types,
the hatchback, sedan, and sport utility vehicle, dominate today's market. All

originally emphasized practicality, but have mutated into today's high-powered

luxury crossover SUV, sports wagon, two-volume Large MPV. The rise of pickup
trucks in the United States, and SUVs worldwide, has changed the face of
motoring, with these "trucks" coming to command more than half of the world
automobile market. There was also the introduction of MPV class smaller noncommercial passenger minivans, among the first of which were the French Renault
Espace and the Chrysler minivan versions in the U.S. The modern era has also seen
rapidly

rising fuel

efficiency and

engine

output.

The automobile

emissions concerns have been eased with computerized engine management

systems.

COMPANY PROFILE
Spring Time Limited is a part of Sprint Time Group of companies involved
in the manufacture of valves and train components for various engine applications.
Incepted in the year 1999, The company

CEO M.Mohamed Javeeth,

Managing Director M.Abthul Jakir it is one of the oldest engine valve

manufacturers with latest manufacturing facilities to pace up with the technological
advancements that caters in the auto industry. The company is headquartered
in Chennai and has five manufacturing locations with 2 plants in Chennai, 2
in Hyderabad and a plant in Vellore. It is the largest manufacturer of engine valves

in India with an 85% market share. The company offers its products to companies
engaged in the manufacture of passenger cars, utility vehicles, light commercial
vehicles, medium and heavy commercial vehicles, farm tractors, and two and three
wheelers.

ABOUT SPRING TIME ENTERPRISES GROUP:

Spring Time Enterprises Group was started in the year 1989 as a
trading house
Strategic Technical Alliance
It is access to best technology
Spring Time Enterprises Group had turnover of 375 million USD for the
year 2009 10- Spring Time Enterprises Group is the preferred supplier to
major OEMs in India and abroad
Spring Time Enterprises Group serves a variety of industry segments:
Passenger Cars, Multi Utility Vehicles, Light Commercial Vehicles, Medium
& Heavy Commercial Vehicles, Farm Tractors, Three-wheelers, Twowheelers and Stationary Engines.

MISSION & VALUES:

Provide superior products and services to our customers and maintain
market leadership Evolve as an institution that serves the best interests of all
stakeholders.
Pursue excellence through total quality management.
Ensure the highest standards of ethics and integrity in all our actions.

 Provide superior products and services to our customers and maintain

market leadership.
Evolve as an institution that serves the best interests of all stakeholders.
Pursue excellence through total quality management

FINANCIAL PERFORMANCE:
The financial highlights for the year under review are as follows Cores

Key Performance indicators, operational performance and balance sheet summary

are furnished in Page No 4 of this annual report.
The Company recorded a turnover of Rs. 646.86 crores from its steering and
linkage products showing a marginal increase of 2 % over previous year. The
company achieved a turnover of Rs. 95.48 crores from die casting business
showing an increase of 31% over previous year. The company also achieved a
turnover of Rs. 12.98 crores from its auto parts division, which was formed during
the current financial year.

The total turnover of the company was Rs. 755.32 crores, registering an overall
growth of 6% over the previous year. The Company also incurred an exceptional
expenditure of Rs. 3.24 crores towards voluntary retirement scheme. The Company
earned a PBT of Rs. 16.84 crores representing 2% of the turnover. Earnings per
share for the year 2014- 15 were Rs. 11.20 as against Rs. 15.35 in the previous
year.
There was no material change or commitment, affecting the financial position of
the Company between the end of the financial year of the Company and the date of
the report other than those disclosed in the financial statements.
There was no change in nature of business during the year. The Company is a
subsidiary company of Spring Holdings Limited SHL / holding company. The
Company does not have any subsidiary, associate or joint venture. During the year,
Spring Engine Valve Limited SEVL, a fellow subsidiary of the Company,
amalgamated into itself, Kar Mobiles Limited KML an associate company of the
holding company.

SWOT ANALYSIS
STRENGTH:
The purchasing power of the Indian middle class has increased due to rising
disposable income.
This is likely to fuel consumption in the future, especially in the passenger
vehicle segment.
Inexpensive labor and the abundance of engineers makes India a suitable
destination for foreign companies to set up manufacturing bases.
A young population is an advantage, as it boosts the demand for
automobiles.
Other strengths include increased government spending on R&D and road
development, as well as a burgeoning auto component base
WEAKNESSES
The Indian auto industry currently faces a challenge with the availability of
skilled manpower.
India is one of the poorest-performing auto industries globally in terms of
labor productivity.
Further, interest rates are expected to stay high, which does not augur well
for the industry, as the bulk of purchasing is done on credit.
Delays in infrastructure development due to land acquisition problems and
frequent labour conflicts are other issues hampering this sector.

OPPORTUNITIES:
India has one of the least vehicle penetration in world, which is expected to
increase in the times to come. Quicker replacements of vehicles would help
in boosting demand of vehicles.
Although still in initial stage, there is a trend of keeping multiple cars in
upper-class and upper middle-class. Increase in productivity is helping the
companies to stay profitable.
The use of industrial automation in OEM is going to increase which is
expected to increase margin at the OEM level.
The government has allowed 100 percent FDI in this segment, which has
helped in garnering INR44880 cores of FDI in the last 10 years and is
expected to continue its impetus at the policy level, including reduction in
excise duties and boosting of road network.
Further, the number of automobile and engineering SEZ is expected to go
up.
THREATS
The Automobiles industry is expected to face intense competition from
competing nations, such as China, Thailand and Indonesia.
Further, increasing vehicles in roads is causing heavy traffic congestions,
which will increase the usage of public transport.
Increasing and volatile rate of interest is also affecting purchase decision.
Moreover, many manufacturers depend on temporary manpower who are
unable to provide the same quality and productivity as provided by a
permanent workforce

SWOT ANALYSIS
STRENGTH:

 The purchasing power of the Indian middle class has increased due to rising
disposable income.
This is likely to fuel consumption in the future, especially in the passenger
vehicle segment.
Inexpensive labor and the abundance of engineers makes India a suitable
destination for foreign companies to set up manufacturing bases.
A young population is an advantage, as it boosts the demand for
automobiles.
Other strengths include increased government spending on R&D and road
development, as well as a burgeoning auto component base
WEAKNESSES
The Indian auto industry currently faces a challenge with the availability of
skilled manpower.
India is one of the poorest-performing auto industries globally in terms of
labor productivity.
Further, interest rates are expected to stay high, which does not augur well
for the industry, as the bulk of purchasing is done on credit.
Delays in infrastructure development due to land acquisition problems and
frequent labour conflicts are other issues hampering this sector.

OPPORTUNITIES:
India has one of the least vehicle penetration in world, which is expected to
increase in the times to come. Quicker replacements of vehicles would help
in boosting demand of vehicles.
Although still in initial stage, there is a trend of keeping multiple cars in
upper-class and upper middle-class. Increase in productivity is helping the
companies to stay profitable.

 The use of industrial automation in OEM is going to increase which is

expected to increase margin at the OEM level.
The government has allowed 100 percent FDI in this segment, which has
helped in garnering INR44880 cores of FDI in the last 10 years and is
expected to continue its impetus at the policy level, including reduction in
excise duties and boosting of road network.
Further, the number of automobile and engineering SEZ is expected to go
up.
THREATS
The Automobiles industry is expected to face intense competition from
competing nations, such as China, Thailand and Indonesia.
Further, increasing vehicles in roads is causing heavy traffic congestions,
which will increase the usage of public transport.
Increasing and volatile rate of interest is also affecting purchase decision.
Moreover, many manufacturers depend on temporary manpower who are
unable to provide the same quality and productivity as provided by a
permanent workforce

ORGANIZATION STRUCTURE

Managing Director
General
Manager

Production Planning &

Control Manager

Finance Manager

CEO

Human Resources
Assistant General
Manager

Production
Assistant General
Manager

Administration Assistant

Supply
Chain Mgmt
Head

Production
department
Head

Quality
Assurance
Head

Machine
Department
Head

Store
Supervisor

Production
Supervisor

Assistant
Q. A

Machine
Operators

Subordinate
Members

Workers

Helpers

1.

Personnel Department
This department is almost like a human brain, since it is the human beings

that operate it. This department is concerned with implementation of the plans,
with the welfare of the plant, with the industrial relations and above all safety and
security of the plant and the work force is its prime concerns. This department
looks after the subsidiaries like recruitment selection training and induction,
canteen, community development disciplinary actions etc., welfare, security,
guesthouse, medical facility etc., (As per Indian Factories Act 1948.)
Team Apex Professionally managed with a rich blend of experience and
enthusiastic youth, Engineers, Diploma Holders, draft men, ITI welders and fitters,
Gas cutters, workers and Fabrication Experts.
Lets go through the process of the Recruitment in Apex Auto Ltd Unit II.
Recruitment is process of searching the prospecting candidate, stimulating
and encouraging them to apply for the job. The above meaning says that every
organization want skilled workers so Apex Auto Ltd Unit II also recruit candidates
as follows , they firstly check the organization culture which type of employees
needed in organization and they also check employment condition in unit.
They are searching the candidates in two ways one is Advertisement and the
other is manual searching. In advertisement they give firstly the adzs like Draft
Adv, Client review adv and Place adv, and then they receive the calls then access
their CVs. In manual searching process they search the employee in plan search,
identity search, and contact search, then they check the candidates interest after
that they arrange meeting for selection process

Selection process Selection is a process of checking the candidates knowledge,

behavior, Skills, experience, and qualifications etc to select and place the candidate
their correct position.

2. Stores Department
The raw materials are stored separately under material cell in production
department; as per the demand this department does the work of receiving and
issuing of materials.
3. Purchase Department
Against the approved purchase requisition the department purchases of raw
Material indenting

per customer
material semi finished goods(Asand
Accessories and other needs of the various

departments.

schedule)

In order to make the work efficient it has the system of sub

contractors. So the purchase department does the creation of sub contractors and
vendors.

Quotations request to one or more

vendors according
to requirement
This department
is guided
by the main motto the plant and other

departments working. Lets have a look on the flow chart of the purchase of raw
Quotations Comparisons

materials in Apex Unit II

Best Negotiation

Purchase Order
creation
Purchase Order send to
vendor (supplier)

Follow Up and procure the

material for production

4. Dispatch Department
The dispatch of materials and finished goods is done in a very efficient way.
5. Production Department
This department entrusted with the task of the production of Dozer
Blade, Loader Bucket, Narrow Bucket, Back Hoe Main Frame, Boom, Arm,
Counter Weight, Heavy Duty Bucket, Revolving Frame and Track Frame. From
our very inception at Jamshedpur in 1996 and at Dharwad in 1999, our
infrastructural facilities have been meticulously planned out with an eye towards

satisfying the exacting standards of world class players in the Earth Moving
Industry.
Lets have a look on the process of manufacturing process in Apex Unit II,
basically this company is heavy fabrication company, they are manufacturing
BACK HOE LOADER COMPONENTD & EXCAVATOR COMPONENTS.
Following are the components. JHON DEER (JD) Boom, Arm, Loader Arm and
EXCAVATORS 70, 110, 120, Boom and EXCAVATORS 70, 110,120 Arm. The
below showing is the manufacturing process of Excavators-70 Boom.

Flow chart of Excavator 70

BOOM END BRACKET

ASSEMBLY
TC 00558/01(RH), TC
00558/02(LH)
BEVELING OF PLATES
TA 00233/01, TA22033/07,
TA 00233/08

IN FIXTURE
SUB ASSEMBLY 1ST STAGE
TA 01164/00, TA 00233/27,
TA 00233/01, TA00233/08,
TA00233/05, TA00233/06
TA00233/07
OUT OF FIXTURE
1 STAGE WELDING
ST

2ND STAGE ASSEMBLY

TE 20789, TE 20790
TA 00233/03
CONTINUE

CONTINUE
OUT OF FIXTURE
2 STAGE WELDING
ND

IN FIXTURE
TA 00233/09, TA 00233/10
TA 00233/04
LUG FITTING
TA 00233/14, TA 00233/15,
TA 00233/16, TA 00233/17,

INSPECTION
Total length 3720+/- 4mm
Top lug distance WRT Boom
End Bracket, Bottom lug
distance

Rejection/
Rectification

ASSEMBLY OUT OF
=
FIXTURE
TA 00233/02
ROBOT WELDING
LEFT OVER WELDING
TA 0233/26
FIT AND WELD
SETTING

CONTINU
E

Not Ok

OK

CONTINU
E

Not OkREJECTION/

INSPECTIO
N

RECTIFICATION

MACHINING

OK
REJECTION/
RECTIFICATION

INSPECTIO
N
DRESSING

INSPECTIO
N
UT
TESTING
DESPATCH

Not Ok
RECTIFICATION

OK
Not Ok
OK

Manufacturing process of Ex-70 Boom

Manufacturing process of Ex- 70 Boom is having several steps
already you know in the flow chart now below showing manufacturing process in
detail
1. RAW MATERIALS
In every manufacturing process raw materials must required there for
APEX AUTO LTD (UNIT II) purchase raw materials from its main branch at
JAMSHEDPUR and form Apex Auto Ltd (Unit I). Some materials directly comes
to Unit II but some materials firstly comes to Unit I and after some process it is
send to Unit II. Then the stores department sends materials to production
department for production
2. BOOM AND BRACKET ASSEMBLY
In this process Boom and Bracket assembled or produced. Here firstly
they join 20mm Bkt Plate (RH) (TC 00558/01) and TA00233/22 according to the
diagram. Then they join 20mm Bkt Plate (LH) (TC 00558/02) and TA 00233/11.
After that back up bars are join at the bottom of both 20mm Bkt plates. Then these
two jointed by the plate Back up plate (TA 00233/19), then they join one square
plate for maintaining required dimensions after welding of all this parts this
complete the manufacturing of Boom And Bracket Assembly.

3. BEVELING OF PLATES
Some plates beveled by Unit I and those plates are Top rolling plate(TA
00233/01), Side bend plate LH(TA 00233/07) and side bend plate RH(TA
00233/08)
4. IN FIXTURE SUB ASSEMBLY 1ST STAGE
In this process one sub assembly will be done in this stage BOSS
(TD01164/00) is joined to Top rolling plate (TA 00\233/01) at one side then at the
top of the BOSS they join Side bend plate LH (TA 00233/07). After that inside of
the BOSS they join BOSS Back up Plate (TA 00233/27). Then in the middle of Top
rolling plate and Side bend plate they join Gasset plate(TA00233/05) and near to
that Bend Gasset plate is joined with required dimension, after that Side bend plate
RH(TA 00233/08) is joined according to diagram so this complete Sub assembly
first stage.
5. OUT OF FIXTURE FIRST STAGE WELDING
After completion of Sub assembly first stage each part is manually weld
in this process.
6. SECOND STAGE ASSEMBLY
In this process Back up bar (TE20789) 03 Back up bar(TE20790) are
attached in the inside part of Bottom rolling plate (TA00233/03) at the right side
with required dimension according to diagram
7. OUT OF FIXTURE
In this process second stage welding process is done manually.
8. IN FIXTURE

In this process firstly prepared Boom and Bracket is joined by using

plates such as Cover plate 6mm (TA00233/09) and Cover plate 8mm
(TA00233/10), after that there is some place which is empty so that place is been
filled by plates Taper side Plate(TA00233/04) 2 plates according to diagram. So
this process finishes boom and bracket assembly.
9. LUG FITTING
In this process Lugs are fitted to the prepared component which are Top
lug and bottom lugs and Top washers lugs and Bottom washer Lugs. Firstly bottom
lugs are joined to each other and then those lugs are attached to the bottom of the
prepared component. After joining the bottom lugs the top lug is joined to the top
of prepared component with required dimension or space so as to complete this
process.
10. INSPECTION
This is an important stage in manufacturing process. In this stage they
check total length of the component. Total length should be 3720mm if there less
difference of 4mm then there is no problem it must not exceed 4mm, then they also
check centre point of the component and top lug distance to the boom and bracket,
and bottom lug distance of the components if there is any problem found then they
go for rectification of the component.
11. ASSEMBLY OUT OF FIXTURE
In this process they join one Top cover plate (TA00233/02) to the boom
or prepared component according to the standard diagram and they also join M
plate (TA00233/28) attach to the top lugs so this completes the process of
assembly.

12. ROBOT WELDING

Robot is a programmable multiplication, manipulate design to material
part, tools or specialized devices are t
o carry out specific task.
In Robot welding processed components are weld by Robot machine.
Firstly they set the programs to the robot for welding the components. Every
component has is its own welding program according to the standard drawing of
the components, after installation of the Ex 70 program the welding process of
EX- 70 boom starts, Mig welding wire is been used by the robot to weld the
component.\
13. LEFT OVER WELDING
After completion of the Robot welding there are some spaces left which
are weld manually by welders. In this process they also join BOSS Reenforcement
plate (TA00233/26) at the top and bottom side of the BOSS according to the
diagram.
14. SETTING
In this process they maintain required dimension in various parts of the
components through the gas heating which includes Organ and Co
15. INSPECTION
In this process they measure the components by using measuring scale,
try square, Vernier and gauges etc.
16. MACHINING

Machining process means removing the rough face as per the standard
drawing. In machining process they have two type of jobs one is milling and the
other is boring, in this process they are using two type of machines one SHW that
means hidden control machine and the other is Fanuc control machine. To reduce
heat in the process they are using coolant oil because it helps to reduce the heat for
insert ware and tear and it helps to smooth milling and boring of the component in
machining they are having there stages
1. Rough stage
2. Semi finish
3. Finish Stage
In Ex- 70 boom components are having mainly four bores boss bore must have the
size of 75mm and lug bore must have the size of 55mm and bracket must have
60mm.
17. INSPECTION
In this process they use the following instruments to check weather the
machining process is properly done or not
1. Bore dial gauge
2. Micrometer
3. Vernier
4. Measuring scale etc
18. DRESSING
Dressing is the very important stage in manufacturing process in this
process they clean the components by using grinding machine and sander machine
to remove spatters chips etc, here they also fit some items to prepare components
to according to standard diagram.

19. INSPECTION
In this process they are checking welding defects in the components by
using Ultrasonic Technique (UT) machine, the following are the defects we can
find by using UT machine.
1. Blow Holder area
2. Proper penetration
3. Porsity etc
20. DISPATCH
After completion of all this processes the quality assurance department
checks the quality of the component and after checking they finally dispatch the
product so this complete the manufacturing process of EX-70 boom model.
Apex Auto Limited is in the service of gaints in the field of Excavator
manufacturing Co. TELCON for 6 Years by maintaining a high QUALITY &
SKILL. And for its efforts, it has been certified by TELCON, and other quality
maintain institutions.

INVENTORY MANAGEMENT
Management of inventory assumes importance due to the fact that
investment in inventory constitutes one of the major investments in current assets.
The term inventory refers to the stockpile of the products a firm is offering
for sale and the components that make up the product. The assets which firms
store as inventory in anticipation of need are:
(i) Raw Materials:
These represent inputs purchased and store to be converted into finished
products in future by making certain manufacturing process on the same.
(ii) Work in Process:
These represent semi-manufactured products which need further processing
before they can be treated as finished products.
(iii) Finished Goods:

These represent the finished products ready for sale in the market.
(iv) Stores and Supplies:
These represent that part of the inventory, which does not become a part of
final product but are required for production process. They may be in the form of
cotton waste, oil and lubricants, soaps, brooms, light bulbs etc. Normally, they
form a very minor part of total inventory and do not involve significant investment.
Let us have a look on Different Inventory Management Views. Means
emphasis role of Inventory Management in different Sectors.

INVENTORYMANAGEMENT
MANAGEMENT
INVENTORY
3

Physical Inventory
Management

V
I
E
W
S

Financial Inventory
Management

Logistic Inventory
Management

Inventory Management is consisting of 3 hands. The first hand as shown in

the diagram is that Physical Inventory Management, Second one is Financial
Inventory Management and the last one (third one) is Logistic Inventory
Management.
The reason behind of dividing these views is: to gather the information very
easily and for easy to understanding of each view thoroughly. Let us see the
Meanings of each view one by one.

Physical Inventory Management

Meaning:
Keeping of goods is also a type of management. Whenever requirements
comes from the production department, providing of those required materials in a
proper manner & providing those at the specified period, is the main motto of
Physical Inventory Management.
Benefits for Holding Inventory:
Benefits in Purchasing
Benefits in Production
Benefits in Work-in-Process
Benefits in Sales

Objects of Inventory Management:

Usually, the company is faced with the following conflicting objectives in
the area of inventory management:
1.

To carry maximum inventory in order to facilitate efficient and smooth

production and sales operations.

2.

To minimize investment in inventory for maximize the profitability.

Both over-investment and under investment in inventories is undesirable as

both involve the consequences.
The over-investment involves the consequences like:
i)

Unnecessary blocking of funds in inventory and hence loss of profit.

ii)

Excessive storage and Insurance Cost.

i. Risk of liquidity. The inventories once purchased and stored are normally
difficult to dispose off at the same value.

The under-investment involves the consequences like:

b. If sufficient stock of raw material and work in process is not available, it
may result into frequent interruptions in production.
c. If sufficient stock of finished goods is not available it may not be possible
for the company to serve the customers properly and they may shift to the
competitors.

Thus, it can be said that the objective of inventory management is to

minimize the investment in inventory without affecting production or sales
operations.
Inventory, as a current asset, differs from the other current assets because
only financial managers are not involved. Rather, all the functional areas, finance,
Marketing, Product & Purchasing are involved.
The job of the financial manager is to reconcile the conflicting viewpoints of
the various functional areas regarding the appropriate inventory levels in order to
fulfill the overall objective of maximizing of owners wealth.
Two-Bin System:
Under this system, the inventory items are grouped into two categories. In
one group or bin, sufficient quantity is kept to meet the current requirements over a
designated period of item. In another group or bin, a safety stock is maintained to
meet the requirements of inventory at times when the stock in the first bin is
exhausted and re-ordering occurs.

Financial Inventory Management

Meaning:
Recording, maintaining and evaluating of stocks in a value terms is known
as Financial Inventory Management. In other words valuation of stocks, and
controlling of ordering and holding costs and also maintaining of sufficient valued
stocks in Inventory is known as Financial Inventory Management.
Financial Inventory Management is again divided into three different categories.
1)

Based on Valuation

2)

Based on Cost Analysis

3)

Based on Financial Statement

1)

Based on Valuation
There are number of generally accepted methods of determining the cost of

inventories at the close of the accounting period. The selection of a suitable

method assumes significance in view of the fact that it has a direct bearing on the
cost of goods sold and consequently on profit. Therefore, the method should be
selected in the light of probable effects on profits over a period of years.
Note:

It may not be out of place to mention that once a method is selected, it must
be used consistently and cannot be changed from year to year.
The discussion here of the methods to value inventory should, therefore be viewed
in this perspective.
First In First Out (FIFO) Method:
The FIFO method of valuation of inventory is based on the assumption that
the inventory is consumed in chronological order, that is, those received first are
issued/consumed first and value fixed accordingly. The merit of FIFO method is
that the physical flow of materials matches the flow of cost.
Last in First Out (LIFO) Method:
Under the LIFO method, the cost of goods sold and the value of closing
inventory can be determined only after the final lot of the year has been received.
This is because of the assumption underlying the valuation of inventory, according
to this method. As the name LIFO suggests, the use of inventory is valued on the
basis of the inverse sequence of receipts. Since the LIFO method assumes that the
latest item in is the first item out, the current cost of materials are matched with the
current selling price/current revenues. This matching of current costs with current
revenues is the essence of the argument for the LIFO method.
Average Cost Method:
According to average cost method, each purchase is added to inventory and
an average cost determined. Materials are charged into cost of sales at this average
until another lot is received, when a new average unit inventory cost is calculated.

Note: There are so many other than these above methods but most wide usefully
methods are these three so here we discussed those three methods only.
2)

Based on Cost Analysis

Cost of Holding Inventory: One operating objective of inventory management is to minimize cost.
Excluding the cost of merchandise, the costs associated with inventory fall into two
basic categories: (i) Ordering or Acquisition or Set-up Costs, and (ii) Carrying
Costs. These costs are an important element of the optimum level of inventory
decisions.

1)

Ordering Cost:

It is the fixed cost of placing & receiving an inventory order. Like (a) Preparing
a purchase order or requisition form & (b) receiving, inspecting & reordering
goods received to ensure both quantity & quality. It is also called as setup cost.
2)

Carrying Cost:

The second broad category of costs associated with inventory is the carrying
costs. They are involved in maintaining or carrying inventory. The cost of holding
inventory may be divided into two categories.

1.

Those that Arise Due to the Storing of Inventory: The main components
of this category of carrying costs are (i) storage cost, that is, depreciation,
insurance, maintenance of the building and utilities; (ii) insurance of
inventory against fire and theft; (iii) deterioration in inventory because of
pilferage, fire, technical obsolescence, style obsolescence and price decline;
(iv) serving costs, such as labour for handling inventory, clerical and
accounting costs.

2.

The Opportunity Cost of Funds: This consists of expenses in raising funds

(interest on capital) to finance the acquisition of inventory. If funds were not
locked up in inventory, they would have earned a return.

This is the

opportunity cost of funds or the financial cost component of the cost.

Linking of Costs based and Physical Based Inventory Management:

The carrying costs and the inventory size are positively related and move in
the same direction. If the level of inventory increases, the carrying costs also
increase and vice-versa.

Total Cost:
The sum of inventory increases, the carrying costs represent the total cost of
inventory. This is compared with the benefits arising out of inventory to determine
the optimum level of inventory.
Economic Order Quantity (EOQ):

How much inventory should be bought in a lot? Should the quantity to be

purchased be large or small? Should the requirements of material during a given
period (say 6 months or 1 year) be acquired in one lot or should it be acquired in
installments or in several small lots? Such inventory problems are called Order
quantity problems.
Therefore EOQ is that level of inventory at which total cost of inventory
comprising ordering cost & carrying costs is the minimum
Formulae for calculating Economic Order Quantity:

EOQ =

2AO
C

Where,
A= Annual Quantity
O= Ordering Cost
C= Carrying Cost

Assumptions:

1.

The firm knows with certainty the annual usage (consumption) of a

particular item of inventory.

2.

The rate at which the firm uses inventory is steady over time.

3.

The orders placed to replenish inventory stocks are received at exactly

that point in time when inventories reach zero.

Order Point:
Reorder Point:
This is the point at which to order inventory-expressed equation-ally
as:
Lead Time in days X daily usage.
Lead Time:
It is the time normally taken in receiving delivery after placing orders with
suppliers.
Safety Stock:
It implies extra inventories that can be drawn down when actual lead-time
and/or usage rates are greater than expected.
3)

Based on Financial Statement

For having assistance by banks, bankers should first evaluate the followings:
1.

Collateral Strength.

2.

Inventory Position

3.

Some Financial Ratios

4.

Payment of all requirements like Income Tax, Wealth Tax, Interests on

debt etc.,

5.

Agreement papers of all authorized persons like Debenture holders,

Shareholders etc.,

6.

All required documents.

7.

Who is the Buyer and his Countrys relationship etc,

The main requirement for Banker is the Financial Statements of 3 to 5 years.

From this statement it can judge the financial strength of the Company. While
analyzing of Financial Strength of the Company, Inventory is also having its own
emphasis role. Because if company is having less inventory than its requirement
then company will get less finance from Banks and visa-versa. So here high
inventory means, high in the sense company should have sufficient inventory
according to its order. Not more than its order.
Let us have a look on some Inventory related Ratios and also some
important financial ratios those, which are related to Inventory. From evaluating of
these Financial Ratios, company can judge the stocks/goods level in Inventory, so
that company can get loan from Banks.
The financial statement provides a summarized view of the financial
position and operations of a firm. Therefore, much can be learnt about a firm from
a

careful

examination

of

its

financial

statements

as

invaluable

documents/performance reports. The analysis of financial statement is, thus an

important aid to financial analysis.
The analysis of financial statements is a process of evaluating relationship
between component parts of financial statements to obtain a better understanding
of the firms position and performance.
Tasks of Financial analyst is to:

1)

Select the information relevant to the decision under consideration from

the total information contained in financial statement.

2)

Arrange the information in way to highlight significant relationships.

3)

Interpretation and drawing of inferences and conclusions.

In brief, financial analysis is the process of selection, relation and evaluation.

Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing relationships between the items of
the balance sheet and the profit and loss account. Financial analysis can be under
taken by management of the firm, or by parties out side the firm, viz., owners,
creditors, investors and others. The nature of analysis will differ depending on the
purpose of the analyst.
Management of the firm would be interested in every aspect of the financial
analysis. It is their overall responsibility to see that the resources of the firm
are used most effectively and efficiently, and that the firms financial
condition is sound.
Trader creditors are interested in firms ability to meet their claims over a
very short period of time.
Investors, who have invested their money in the firms shares, are most
concerned about the firms earnings.
Suppliers of long-terms debt, on the other hand are concerned with the firms
long-term solvency and survival. They analyze the firms profitability over
time, its ability to generate cash to be able to pay interest and repay principal
and the relationship between various sources of funds.

2.Ratio Analysis related to Inventory

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as
the indicated quotient of two mathematical expressions and as the relationship
between two or more things. In financial analysis ratio is used as a benchmark for
evaluating the financial position and performance of a firm.

Ratios help to

summarize large quantities of financial data and to make qualitative judgment

about to form a qualitative judgment the focus of financial analysis is on the key
figures in the financial statements and the significant relationships that exist
between them.
Types of Ratios:

A.

a.

Liquidity Ratios

b.

Activity Ratios

c.

Profitability Ratios
Liquidity Ratios:
Liquidity refers to the ability of the firm to meet its obligations in the Short

run, usually one year. Liquidity ratios measure the ability of the firm to meet its
current obligations. Liquidity ratios by establishing a relationship between cash
and other Current assets to Current obligations provide a quick measure of
liquidity. A firm should ensure that it does not suffer from lack of liquidity, and
also that it does not have excess liquidity.
Therefore it is necessary to strike a proper balance between high liquidity
and lack of liquidity. Following are some of the important liquidity ratios:

1. Current Ratio
2. Quick Ratio
3. Net working Capital Ratio
B.

Activity Ratios:
Activity ratios are concerned with measuring the efficiency in asset

management. Sometimes, these ratios are also called efficiency ratios or asset
utilization ratios. The efficiency with which, assets are converted into sales. The
greater the rate of turnover or conversion, is the more efficient the utilization. For
this reason, such ratios are also designated as turnover ratios. Turnover is the
primary mode for measuring the extent of efficient employment of assets by
relating the assets to sales. An activity ratio may, therefore, be defined as a test of
the relationship between sales and various assets of a firm. Several activity ratios
can be calculated to judge the effectiveness of asset utilization.
1.

Inventory Turnover

2.

Assets Turnover

3.

Fixed Assets and Current Assets Turnover

Asset Measurement for different methods of inventory valuation:

FIFO Method:
Under this method, as noted earlier, inventory is valued on the assumption of
chronological cost flow. This implies that the unused/unsold inventory consists of

the most recent purchases and, therefore, can be assumed to be valued at current
cost. The vale of inventory as show in the balance sheet would reflect the current
cost, if FIFO method were used.
LIFO Method:
According to this method, obviously, the inventory figure would not appear
in the balance sheet at the Current Cost. It will reflect rather the cost of raw
materials purchased in the past year. Assuming rising prices, the inventory value
based on the LIFO method would tend to be undervalued. For example inventory
purchased as early as six years or more. In that situation, the inventory figure
included in the balance sheet would be actually the price paid on the purchase of
inventory six years ago. In a period of rising prices, this value would naturally be
grossly out of line with the currently prevailing price. This would imply that the
balance sheet would not reflect the current worth of the inventory. That the
inventory value will not be correct is another way of saying that the balance sheet
will present a distorted picture of the affairs of the firms.
A possible solution to correct the above distortion in the balance sheet
implicit in the under-valuation of inventory with the LIFO method is a
modified/adjusted LIFO method.
The modified method will, thus, serve the needs of correct income
determination as well as correct asset measurement. However, this is subject to a
qualification, namely, the current years purchase (units) should exceed the current
years consumption (units). If for reasons such as strike/lockouts, transportation
problems, and so on, the current consumption exceeds the current purchases,

profits will rise. The increase will depend upon the extent of liquidation of the
previous years inventory. This increase in profit is termed as liquidation profit,
which is equal to the difference between the current cost of inventory and the cost
of inventory purchased in the past.

Logistics Inventory Management

Meaning of Logistics:
Logistics is the Organization of Services and Supplies. In other words,
logistics is making and taking the permission for sell/exporting the companys
products in foreign countries.
In fully export-oriented business this is one of the main department, where
this department gets an approval to sell their goods in foreign countries. And also
their main intention is to maintain all documents of those that are related to the
exporting of their products.
Logistics Inventory Management:
Yes, already we have observed about the meaning of Inventory Management
in the Organization. But in fully export oriented business; Inventory Management

is a very important concept. Because every exporter or importer, they do not know
about each other who are staying in other countries.
So every company, which are exporting or importing of materials, they
should communicate each other through banks only. These banks are listed by
Central Bank of that Nation.

In our Country RBI is lists some banks for

intermediating purpose and every year RBI declare some listed Banks as a
mediator.
For producing of materials and selling of those materials, every
company/business should need a Working Capital. This Working Capital can also
financed by Banks. While in export oriented business it is slightly different task.
Here Banks can acts as financial assistance for Pre-Shipment and for Post
Shipment of Goods.
For having an assistance by banks they should first evaluate followings:
1.

Collateral Strength.

2.

Inventory Position

3.

Some Financial Ratios

4.

Payment of all requirements like Income Tax, Wealth Tax, Interest etc.,

5.

Agreement

papers

of

all

authorized

persons

Shareholders etc.,
6.

All required documents.

7.

Who is the Buyer and his Countrys relationship etc,

like

Debentures,

Before going to detail decision on Banks let us have a look on Commercial Papers.
Which are also parts of financing the working capital requirements of the
Companies.
Commercial Papers (CPs):
In the recent past, Commercial Papers (CPs) have become one of the best
methods for financing the working capital requirements of the companies.
The companies trying to raise the funds by issuing the CP are regulated by
Guidelines for issue of Commercial Papers (CP), 2000 issued by Reserve Bank of
India on October 10, 2000. These guidelines apply to the companies trying to raise
the funds by issuing the CPs. As per these guidelines, a a company means a
company as defined in section 45-I(aa) of Reserve Bank of India Act, 1934.
Section 45-I(aa) of Reserve Bank Act, 1934 defines a company as the company as
the company as defined in section 3 of the companies Act, 1956.
In the Indian circumstances, banks play a very major role in financing the
working capital requirement of the organizations. We will consider the bank as a
source for financing the working capital requirement of the organizations under the
following heads:

Amount of Assistance

To obtain the bank credit for financing the working capital requirements, the
company is required to estimate the working capital requirement properly. To
estimate the requirement of working capital requirement properly, the company
will be required to estimate its level of current assets and current liabilities
properly, as working capital is the difference between current assets and current
liabilities.
For this, the techniques like ratio analysis, trend analysis etc., can be used by
the company. More accurate the estimation of the level of current assets and
current liabilities, more accurate the estimation of level of current capital. Then,
the company will have to approach the bank along with the necessary supporting
data. On the basis of estimates submitted by the company, the bank may decide the
amount of assistance that can be extended. While extending the working capital
assistance, the bank may prescribe the margin money requirement. The margin
money stipulation is made by the banks in order to ensure that borrowing
companys own stake in the business and also to provide the cushion against the
possible reduction in the value of security offered to the bank. The percentage of
margin money stipulation may depend upon the credit standing of the borrowing
company, fluctuations in the price of security and the directives of RBI from time
to time. The general principle applicable will be, more dicey the nature of
security, higher of security, higher will be the margin money stipulations.
Form of Assistance:
After deciding the amount of overall assistance to be extended to the company, the
bank can disburse the amount in any of the following forms:

1.

Non-Fund Based Lending

2.

Fund Based Lending.

Non Fund Based Lending:

In case of Non-Fund Based Lending, the lending bank does not commit any
physical outflow of funds. As such, the funds position of the lending bank remains
intact. The Non-Fund Based Lending can be made by the banks in two forms:
a.

Bank Guarantees

b.

Letter of Credit

Fund Based Lending:

In case of Non-Fund Based Lending, the lending bank commits the physical
outflow of funds. As such, the funds position of the lending does not affected. The
Fund Based Lending can be made by the banks in following forms:
a.

Loan

b.

Overdraft

c.

Cash Credit

d.

Bills Purchased/Discounted

e.

Working Capital Term Loans

f.

Packing Credit

Security for Assistance:

The bank may provide the assistance in any of the modes as stated above. But
normally no assistance will be available unless the company offers some security
in any of the following forms.
1)

Hypothecation.

2)

Pledge

3)

Lien

4)

Mortgage

Process of Physical Inventory Maintenance in Apex Auto Ltd

Each unit of Apex auto ltd has its own store department that we can call it as
Work-in-process inventory.
This inventory process is fully computerized and here paper work is very
less. Only maintaining of documents, which were sent by suppliers as like challans
etc., are only here to maintain as paper documents. Otherwise it is fully
computerized. Through computers only Store Department receives Purchase Order
and by computer only they send documents of issuing of materials to
manufacturing unit.
For easy to communicate and planning of production activity, Apex Auto
Ltd Unit II has having only one Godown in Procedures involved in receiving and
issuing of materials are as follows:
1)

Godown will first get Purchase Order No..

Purchase Order Number:

This PO is comes from Purchase Department. This Purchase Department

gives a number for the each order made by Purchase Department only.
Before placing any order to suppliers they first checks the materials in
inventory as to know about whether materials are available in Inventory or not. If
not available in Inventory then only they will place an order according to the
requirement.
In Apex Auto Ltd (Unit II), it is very important to note that: purchase
department always places an order to those materials which have ordered by
Customers/buyers of Apex Auto Ltd (Unit II).
So, normally it does not have any stocks in its inventory. For every order
from customers they make a fresh Purchase Order for purchasing of materials. It
means whatever the materials are requiring for present orders, those materials are
only they kept as stocks in Inventory.
In some cases, materials may be in Godown, which they call it as Buffer
Stock. If these old stock is matches the requirements of product which has
ordered now by its customers, then purchase Department will sent a notice to
Inventory for issuing of those materials. These old stock may be in form of Raw
Material or in form of finished goods. Apex Auto Ltd (Unit II) always produces
more than its requirements. For example if Telcon has ordered for 20 EX- 70
boom then Apex produces 25 EX 70 i.e., 20% more than its requirements. So the
remaining or excesses material they call it as Buffer Stock.
2)

Receiving of Materials

Any materials comes-in or goes-out from the Godown it should be enter in

the Gate that is they call it as Gate Entry, which is maintained by security
Guard. Guard is not an employee of an organization. He is a contact-based
employee.
When Inventory receives materials it first inspects some samples, so for it,
they call up as Spot Inspection. Here they inspect the following points:
a)

Is it our supplier only and is this parcel is for us only?

d. Are these received materials according to the Purchase Order? Like
i. Quantity
ii. Date, etc.,
e. Is it having all required Challans or Invoices and also does it approved by
authorized person?
f. Is it having all required documents like Octroi etc.,
g. Is that Challan consisting the correct information of materials?
After approval of materials by sample inspection, inventory department put

these details in manual book, this documentation is called as Day Book. This
daybook is consisting of information like Challan No., P.O. No., Style No.,
Description of Materials, Suppliers Name, transporters Name, and Quantity.
After completing of these processes, materials will send to inspection
department. In this inspection department they inspect in-details of materials.
After approval by inspection department, this inventory department makes one
document, which is they call it as Goods Received Document.

This Goods Received Document is consisting of GR No., Date, GRN Type

(In-store), Mode of Transport, Challan No., Challan Date, Status, Gate Entry No.,
Gate Entry Date, Priority No., all Details of Materials and received quantity and
actual quantity also enters there.
3.

Issuing of Materials
Merchandising Department will send one card called Job Card which it

consisting of all details of materials requires to produce a product. According to

that Card Inventory department should send the materials to manufacturing
department.
After receiving of materials by manufacturing department from inventory
department they issue one document about received of materials, quantity,
description of materials etc. Manufacturing Department uses these materials for
manufacturing purpose. In manufacturing process sometimes it may happens like
some materials get damages and some are not fully matches with requirements.
Then those materials will be return to inventory.
After utilizing of all these materials by manufacturing department they will
send one document called Order Completion Report (OCR).

This report

consists the information of Percentage of Utilized Materials for particular order

and percentage of wastage of materials. This report will send to inventory and also
to Merchandising Department.
4.

Return Back Materials from Manufacturing Units:

Inventory takes those materials, which are return back from manufacturing
units because of excess or surplus occurs while manufacturing of products. This
excess or surplus exists because of purchase department, they always orders 20%
more than its requirement to meet the requirement of next month.

So these

materials are kept in Inventory as name it as Buffer stock.

These Buffer Stocks will be utilize when company get the same type of
Order. Inventory issues these materials (Buffer Stock) only when it receives
instruction from Merchandising and purchasing Department.
5.

Rejected Materials:
Inspection department make the rejection of materials, when materials are

not as per requirements and not as per the order. These rejected materials are kept
in separate section by Inventory Department.
Inventory department inform to Purchase Department and also notice to
Suppliers about rejection of materials. That is called Rejection Card. In this
card it involves Name of Supplier, Description of Materials, Challan No., Challan
Date, Gate Entry No. & Date, No. of Quantity rejected, Reason for rejection etc.,
Some times supplier may issue new materials in place of rejected materials.
Or he may give some compensation for wrong supply and that is after paying of
full payment of materials.
Sections in Inventory:

Inventory is again divided into 5 sections. Each is section handling by only

one persons, with the help of 3 to 4 assistants, who helps in maintaining of
materials at specific area. Five sections are as follows:

Sections in Inventory
D201
All bought out items are been stored here and processed to the manufacturing as
when required
D202
All consumables and tools and maintenance accessories are been stored in this
section
D203
All raw materials like direct, semi finished goods are stored in this section and
processed to the manufacturing as when required and old stock and rejected items
are also stored in this section.
D204
Gas tank and cylinders is stored in this section.
D205
All finished goods are stored in this section

Purchasing Procedure of Materials

In Apex they purchase materials at from a multiple Suppliers. There is a
reason for purchase materials from multiple suppliers. The reason is if one supplier
delays to fulfill the supply then there must be alternative supplier for it to fulfill the
requirement. So there must me no stock outs in the production process
Apex always purchases at bulk but by schedule wise. In other words they
purchase materials at a time for specific order. They make the agreement of
supplying materials only at once. And they negotiate the price only at once that is
before supplying of materials and once their agreement is over then they provide
schedule to supplier to supply the materials at a specific time and at a specified
quantity.

So it reduces the spaces, which occupies in the Godown. So this method is

suitable for this type of industry because of same orders from customers.
WIP Store
Now we come to the WIP Store. As we have already seen that this Apex is
having only one Godown and every unit is having its own Store Departments. As
we know that Work In Process Store means Semi-finished Goods, here goods are
not completed yet and not these are in fully raw materials form.
So in valuation matter it is having slightly different way. And in Apex it is
as follows: Yes, these goods are includes some labour cost, some other costs. So in
valuation of WIP they valuate at Raw Material Price of that goods PLUS incurred
cost to produce till now.

Finished Goods
Valuation of Finished Goods in Apex is at 10% less than Selling Price of
those finished goods. Finished Goods are in the sense these goods should be ready
to dispatch.

There is no separate Godown for Finished Goods/Products. Every unit is

having its own Finished Goods Godown. In that Godown only they store these
Goods. And dispatching of these products is directly by each unit. They do not
consolidate these goods; they dispatch these finished products directly by each
unit.
Apex auto ltd (Unit II) has only one customer that is Telcon. So they
directly supply finished products to its customers. So it is not necessary to have
another Godown for Finished Goods.

Logistics Inventory Management

There is a department called Logistic Department in Apex Auto Ltd, which
is concerning about selling of goods and maintaining of all documents related to
exporting of products and also taking the permission from banks to sell specific
products in specific countries. So Logistic Department is one of the important
front-office Departments, like Marketing Department.
Marketing Department is one, which takes the orders from its customers.
And this is entirely different from Logistic Department. Logistic Department is
one, which sells its products and maintains all documents.

But Marketing

Department is comes into picture before production process starts. And Logistic
Department comes into picture only after the production process completes.
Logistic Department is not only taking the approval for selling its products,
but also it will concern for taking loan for its working capital. Banks will provide
these working capital requirements in two senses: one is on Pre-Shipment Loan
and another one is Post-Shipment Loan.
There are so many ways to get loan for working capital requirement. Apex
get loan for Working Capital requirement either through Commercial Papers or
through Letter of Credit. Apex is taking loan for Working Capital Requirements
from Axis Bank.
Who can issue the CP:
A company will be eligible to issue the CP provided:

the tangible net worth of the company as per latest audited balance sheet is
not less than Rs. 4 Crores.
Note:
Tangible net worth means share capital plus free reserves duly reduced by
intangible assets like accumulated losses, deferred revenue expenditure etc. Free
Reserves include share premium and debenture redemption reserve but do not
include revaluation reserve.
Company has been sanctioned working capital limits by banks.
Borrowed amount of company is classified as a standard asset by the bank.
Commercial Paper is an unsecured promissory note issued at a discount.
The rate of discount is required to be decided by the issuer and is not regulated.
Before the company issues the CPs it is required to obtain satisfactory credit
rating from an approved credit rating agency. Presently, following credit rating
agencies have been approving by RBI for this purpose.
Credit Rating Information Services of India Ltd., (CRISIL)
Investment Information and Credit Rating Agency of India Ltd., (ICRA)
Credit Analysis and Research Ltd., (CARE)
FITCH Rating India (P) Ltd.,

The minimum credit rating required is P-2 of CRISIL. If the rating is given
by any other agency, equivalent minimum rating will be required. The rating so
obtained by the company should be current and should not have fallen due for
review.
Who can invest in CP:
Following persons can invest in the CP
1. Individuals
2. Banks
3. Corporate Bodies incorporated in India
4. Unincorporated Bodies
Non-resident Indians
Foreign Institutional Investors
Nature of a CP:
h. A CP can be issued for the maturity period of 7 days to one year.
i. A CP has the denomination of Rs. 5 Lakshs and every single investor should
invest minimum Rs. 5 Lakhs in CP.
j. Every issue of CP, including the renewal, will be considered to be the fresh
issue.
k. The amount of CP shall be within the overall limit sanctioned by the Board of
Directors. It can be issued a stand alone product. Banks will be free to
adjust the working capital limits after considering the CPs issued by the
Company.
It will not be out of place to mention here that CP is not treated as deposit as per
the provisions of Section 58-A of the Companies Act, 1956.
Procedure for issuing the CPs:

Every company issuing the CP should appoint a scheduled bank as the

Issuing and Paying Agent (IPA). It will satisfy it-self that company has obtained
satisfactory credit rating. It shall also verify the documents submitted by the
issuing company and issue a certificate that the documents are in order. IPA should
also certify that it has valid agreements with the issuing company.
The issuing company shall arrange to place the CPs on private placement
basis with the inventors. The issuing company shall disclose to the potential
investor its financial position. After the deal is confirmed, the issuing company
shall issue physical certificates to the investor. Investors shall be given a copy of
IPA certificate to the effect that the issuing company has a valid agreement with the
IPA and documents are in order. Every issue of CP should be reported to RBI
through the IPA within three days from the date of completion of issue.
Apex Auto Ltd (Unit II) has setup in Telcon Premises so as we know earlier
that Apex Unit II is having only one customer that is Telcon so for short distance
there is no need of logistic department in Apex Unit II it is handled by Purchase
department incharge is Parmod Singh.

Financial Inventory Management

Already we saw about Logistic Inventory Management. Let us see how
Apex valuates the old and rejected stocks in financial terms and also have a look
on the inventory ratios.

Valuation method for Old and Rejected Stocks:

Old Stock:
This old stock means excess of materials from specific order. As already
viewed in Physical Inventory Process that, always purchase department purchases
20% more than its order. So that remained or excess materials are said to be
Buffer Stock
These Old stock are in the form of Raw Materials then valuate it according
to purchasing of those materials.

If these old stock are after Finishing of

production process. Then these are valuating on selling price of same products to
the customer.
In easy words it can be said that if materials are Raw, then taking as
Purchasing value for valuation purpose. If materials are Finished Goods then
taking Selling Price as a value for valuation of Old Stock in Godown.
Rejected Stocks:
Again these are divides into three parts. Rejection of Raw Materials i.e.,
before sending to Production Process.

Rejection of Materials during the

Production Process and Rejection of Materials after the Production Process that is,
Rejection of Finished Goods.
Rejection of Raw Materials is valuating on Purchase value of those
materials. Rejection of WIP Materials then valuate as Purchase Value Plus its

partly incurred Costs like Labour, Overhead Costs etc., And for Rejection of
Finished Goods valuate at Purchase Value and Fully incurred Costs as said now.
Holding or Ordering Cost
These costs are every important in manufacturing companies to minimize
the cost.

This is not applicable to Apex by virtue of its Business activities.

Because, let us have a broad view on statement by following points:

In Apex, they purchase the materials only from multiple supplier.
Because to fulfill the requirements in required time limit.
Apex orders the materials to suppliers only at once and according to the
schedule supplier will supply the materials.
Yes, Depending on Shorter order cycle Apex can hold entire stock well before
order starts and also Apex can have a full stock at a time before starting process of
product of that specific order.
EOQ
EOQ applicability due to the nature of Business as above said is not
possible.
Reorder Point:
This is the point is also not having much importance because of nature of
Business.

Lead Time
Apex purchases materials from multiple supplier and by on schedule basis to
supply materials. So this is also not applicable in this type of business.

FINANCIAL RATIOS RELATED TO INVENTORY

Raw material turnover ratio:
Raw material turnover ratio is velocity at which raw material converted into
goods ready for sale. If raw material turnover ratio is high then company is
efficiency converting into finished goods.
Formula:

Material consumed / Average raw material

Raw Material Turnover Ratio
Raw material consumed
Year (Rs)
2015
2014
2013

Avg R.M
Ratio
576,484,922 53,608,082
10.75
371,223,873 36,137,266
10.27
230,779,236 132,002,490
1.74

Ratio
12
10
8
6

Ratio

4
2
0
2015

2014
Years

2013

Form above graph we come know that raw material turnover ratio is increased
rapidly in 2007 from 1.74 in 2006 to 10.27 for 2007. Indicates that company is
converting raw material into finished or semi finished goods very quickly
Holding period of raw material:
It refers to the number of days taken for the production unit to convert
raw material to finish goods.
Formula:

360 /Raw material turnover ratio

Holding period of raw material
Year
Total Days
Ratio
Days
2015
360
10.75
33
2014
360
10.27
35
2013
360
1.74
206

Raw material holding Period

250
200
150
RHP

D
A
Y
S

100
50
0
2015

2014
Years

2013

As the raw material turnover ratio is increasing form to 10.27 for 2007 it indicates
that firm is taking less days for conversion as compared to 2013. In 2013
conversion period was 206 days but in decreased to 35 days for 2014. This is
shown in above graph.
Before 2014 there was no production process they were converting semi
finished goods into finished products hence to start their own production process
they hold the raw material in 2013

Work in Process Turnover ratio:

Work in process turnover ratio is velocity at which W.I.P converted into
goods ready for sale. If W.I.P turnover ratio is high then company is efficiency
converting into finished goods.
Formula:
Cost of production
Average W.I.P

W.I.P turnover ratio

Year Cost of production
Avg W.I.P Ratio
2015
849,054,442 36,720,702 23.12
2014
555,094,500 15,010,347 36.98
2013
361,110,197
9,755,839 37.01

Work in Process Turnover ratio

40
35
30
25
20

Ratio

D
A
Y
S

15
10

5
0
2013

2014

2015

Years

Form above graph we came to know that Work in process turnover ratio is
decreasing from 37.01 in 2013 to 23.12 2015. The ratio was high in 2013 as
compared to 2014 and 2015. The ratio was 37.01. Indicates that company is
converting semi finished into finished goods quickly

Holding period of W.I.P:

It refers to the number of days taken for the production unit to convert semi
finished goods into finish goods.
Formula:
360

W.I.P turnover ratio

Holding period of W.I.P
Year
Total Days
Ratio
Days
2015
360
23.12
15.57
2014
360
36.98
9.73
2013
360
37.01
9.72

Holding period of W I P
18
16
14
12
10
8
6
4
2
0

D
A
Y
S

Ratio

2013

2014
Years

2015

As the work in process turnover ratio is increasing form 9.72. in 2013 To 15.57 for
2008 it indicates that firm is taking less days for conversion. Which shown in
above graph

Finished goods turnover ratio:

Finished goods turnover ratio is velocity at which finished goods converted
into for sale. If finished goods turnover ratio is high then company is efficient.

Formula:
Cost of goods sold
Average finished goods
Finished goods turnover ratio
Year cost of goods sold

Avg F.G

Ratio

2015

849,054,442

26,243,339

32.35

2014

555,094,500

19,858,482

27.95

2013

361,110,197

10,940,008

33.01

Finished Goods Turnover Ratio

34
33
32
31
30
29

Ratio

D
A
Y
S

28
27
26
25

2013

2014

2015

Years

Form above graph we came know that finished goods turnover ratio is decreasing
from 33.01 in 2013 to 27.95 for 2014. Indicates that company is selling goods little
slowly as compared to 2013 but it is bit fast as compared to 2015. Where the ratio
for that particular period was 32.35
Decreased to 11.20 for 2015 it is satisfactory. Which shown in above graph.

Inventory to capital employed:

This ratio indicates the relationship between the total capitals employed and
inventories it shows how much capital utilized to invest in the inventories other
than the other assets. The normal manufacturing firms have low ratio of inventory
total capital employed in the organization.
Formula:

Inventory / Total capital employed

Inventory to capital employed
Total capital
Year
Inventory
employed
Percentage
2015
197,465,069
301,443,215
65.50
2014
121,558,000
145,492,599
83.54
2013
67,994,623
98,333,324
69.14

Inventory to capital employed

90
80
70
60
50
40
30
20
10
0

P
E
R
C
E
N
T
A
G
E

ICE

2013

2014
Years

2015

By observing above graph we can say that the firm investing huge amount in
inventories compared to other assets. It invested 83.54% of its capital in inventory
in 2014 where as it reduced to 65.50% in 2015

Inventory to current asset ratio:

This ratio indicates the relationship between the inventory and current
assets. It shows the percentage of inventory to current assets, which helps the
organizations in deciding the current assets policy which also affect the liquidity
position of the organization.
Formula:

Inventory / Current assets

Inventory to current asset ratio

Year
Inventory
current assets
Percentage
2015
197,465,069
331,314,504
59.60
2014
121,558,000
237,687,684
51.14
2013
67,994,623
117,022,625
58.10
Inventory to current asset ratio
62
60
58
56
54

Ratio

52
50
P
E
R
C
E
N
T
A
G
E

48
46

2013

2014
Years

2015

The inventory to current assets ratio in the year 2013 was 58.10% and it decreased
to 51.14% in the year 2014 but again it increased to 59.60% in 2015. It shows that
the firm investing 59.60% of its investment is for inventory only.

Inventory to total assets:

This ratio indicates the relationship between the inventory and total
assets. The significance of this ratio is it reflects the portion the inventory as a
percentage of the total assets, which helps the management deciding the utilization
remaining resources profitably, since the inventory will lock up the huge funds and
reduces the profitability of the organization
Formula:

Inventory / Total assets

Inventory to total assets
Year
Inventory
Total assets
Percentage
2015
197,465,069
990,329,087
19.93
2014
121,558,000
540,916,088
22.47
20
13

67,994,623

414,901,234

16.38

Inventory to total assets

25
20
15
Ratio

10

P
E
R
C
E
N
T
A
G
E

5
0

2013

2014
Years

2015

During the year 2006 the rate of inventory to total assets was 16.38% it increased
to 22.47% in 2007. But again it reduced to 19.93% in 2008. It indicates that firm
investing only 19.93% in inventory out of total assets.

Inventory to working capital:

This ratio indicates the relationship between inventory to working
capital and it also indicates the amount to inventory tied up in the working capital
and it also shows the efficiency of inventory management.
Formula:

Inventory
Working capital
Inventory to working capital
Year

Inventory

Working capital Percentage

2015

197,465,069

199,345,123

99.05

2014

121,558,000

146,097,210

83.20

2013

67,994,623

46,338,277

146.45

Inventory to working capital

160
140
120
100
80

Ratio

60
40
P
E
R
C
E
N
T
A
G
E

20
0

2013

2014
Years

2015

In the year the ratio was 146.45% in 2006. It decreased to 83.20% for 2007 but it
increased it to 99.05% in 2008. It indicates that firm investing huge amount in
inventory

FINDINGS:
1. Raw material turnover ratio is increased rapidly in 2007 from 1.74 in 2006
to 10.27 for 2007.
2. As the raw material turnover ratio is increasing form to 10.27 for 2007 it
indicates that firm is taking less days for conversion as compared to 2006.

3. Work in process turnover ratio is decreasing from 37.01 in 2006 to 23.12

2008. The ratio was high in 2006 as compared to 2007 and 2008.
4. As the work in process turnover ratio is increasing form 9.72. in 2006 To
15.57 for 2008 it indicates that firm is taking less days for conversion
5. Finished goods turnover ratio is decreasing from 33.01 in 2006 to 27.95 for
2007. Indicates that company is selling goods little slowly as compared to
2006
but it is bit fast as compared to 2008.
6. Company is selling goods little slowly as compared to 2006 but it is bit fast
as compared to 2008. Where the ratio for that particular period was 32.35

7. The inventory to current assets ratio in the year 2007 was 58.10% and it
decreased to 51.14% in the year 2008 but again it increased to 59.60% in
2008. It shows that the firm investing 59.60% of its investment is for
inventory only.
8. During the year 2007 the rate of inventory to total assets was 16.38% it
icreased to 22.47% in 2008. But again it reduced to 19.93% in 2009. It
indicates that firm investing only 19.93% in inventory out of total assets.
9. In the year the ratio was 146.45% in 2006. It decreased to 83.20% for 2007
but it increased it to 99.05% in 2008. It indicates that firm investing huge
amount in inventory.

10.As the finished goods turnover ratio is increasing form 10.87 in 2007 to
12.86 for 2008 it indicates that firm is taking less days for sale. In 2008
conversion period was 12.86 days but in decreased to 11.20 for 2008 it is
satisfactory.
SUGGESTIONS:
a) From the findings it is came to know that in the year 2006 the number
of days for holding Raw

material is more, it is not good for the

company because it eats unnecessary investment. To avoid this problem

the following points will help.
Purchase Raw Materials at the time when the stock reaches the
minimum level.
The purchases should not cross the Maximum limit otherwise the stock
kept in stores idle.
Quantity should be ordered as per the demand. We can assume the
demand for the goods from past experience.
We can have more Raw materials which are imported from other
countries but carry reasonable stocks which are available locally.
b) If we purchase less quantity of materials at a time it will reduce the
carrying cost but increases the ordering cost and vise versa. Therefore
optimum ordering quantity is necessary, which minimizes the cost.
c) The company should maintain a safety level and also reordering point
so that they come to know at what time they should order for the supply
of material and need not to suffer from short fall of required material.

CONCLUSION
After the study, we can came to a conclusion that, effectiveness of inventory
management should improve in all the aspects, hence the industry can still
strengthen its position by looking into the following.
The inventory should be fast moving so that warehouse cost can be
reduced.
The finished goods have to be dispatched in feasible time as soon as
manufacturing is completed.
Optimum order quantity should be maintained, hence cost can be
minimized.
Proper inventory control techniques are employed by the inventory
control organization within the framework of one of the basic models
like ABC, HML and VED etc.

BIBIIOGRAPHY
BOOKS
Financial Management : I.M.Panday
Production Management : K. Ashwatappa

WEBSITES
www.apexautoltd.com
www.google.com