“CONDUCTING METHOD STUDY FOR COST REDUCTION OF

CDI PRODUCTION LINE WITH BENDING AND CUTTING

MACHINE AT VARROC ENGINEERING PVT. LTD.PUNE
PLANT-III”

Dissertation submitted to Savitribai Phule Pune University, in partial fulfillment of

requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

NITIN PATIL

Under the guidance of

PROF. Dr. MANOJ GADRE

S.B.PATIL INSTITUTE OF MANAGEMENT

NIGDI, PUNE-18

2015-2017

1
 DECLARATION

I NITIN PATIL, hereby declare that the “Conducting Method Study For Cost
Reduction of CDI Production line with Bending and cutting Machine at Varroc
Engineering Pvt. Ltd. Pune Plant-III” written and submitted by me to the University
of Pune, in partial fulfillment of the requirements towards the award of degree of
Master of Business Administration under the guidance of Prof. Dr. Manoj Gadre, is
my original work and the conclusions drawn therein are based on the material
collected by me.

Place:

Date:

NITIN PATIL

2
 ACKNOWLEDGEMENT

The success of any project depends largely on the encouragement and guidelines of
many people. I take this opportunity to express my gratitude to the people who have
been instrumental in the successful completion of this project. I would like to extend
my sincere thanks to all of them.

The following Dissertation on “CONDUCTING METHOD STUDY FOR COST

REDUCTION OF CDI PRODUCTION LINE WITH BENDING AND
CUTTING MACHINE AT VARROC ENGINEERING PVT. LTD.PUNE
PLANT-III” is an honest and sincere effort on my part to put into practice the
concepts learned in the classroom.

This Project would not have been possible without the guidance and support of my
project guide Prof.Dr. Manoj Gadre, S. B. Patil Institute of Management, who with
her technical know-how and experience guided me from the very start. It is by virtue
of her valuable suggestions and mentoring that this dissertation has materialized into
concrete form.

I am thankful to, Dr Daniel Penkar (Director)of S.B. Patil Institute of Management

for their kind support.

I am grateful to Mr.Arun kumar.for having given me the opportunity to carry out

my project at Varroc. I am also thankful to all the employees as well as all other
sources of encouragement who gave their valuable time and support towards the
completion of this Dissertation

NITIN PATIL
M.B.A (2016-17)
S. B. PATIL INSTITUTE OF MANAGEMENT
PUNE
3
 TABLE OF CONTENTS

TITLE PAGE
NO.

Declaration

College certificate

Acknowledgement

List of Tables 5

List of Abbreviations 6

Chapter I Research Design & Methodology 9

Chapter II Theoretical Background& Review Of 18

Literature

Chapter III Growth & Development Of the field 22

Chapter IV Analysis & Interpretation of Data. 42

Chapter V Conclusion & Suggestion 53

4
 LIST OF TABLES
Serial Table No Title Of Table Page
No No

1 Table 1.2.1 Quotation of Machine 15

2 Table 4.3 Result table 49

5
 LIST OF FIGURES
Serial Figure No Title Of Figure Page
No No

15 Fig.1.2.1 GA layout of machine 10

16 Fig. 1.2.2 Bending and cutting areas 11

17 Fig. 1.2.3 Actual Model of Bending and Cutting 13

Machine

1 Fig 3.5.1 Digital Instrument Cluster 34

2 Fig 3.5.2 34
CDI and TCI units

3 Fig 3.5.3 34
Regulator Rectifier (RR)

4 Fig 3.5.4 Starter Motor 35

5 Fig 3.5.5 35
Wiper Motors

6 Fig 3.5.6 Magneto 35

7 Fig 3.5.7 Catalytic Converter 36

8 Fig 3.5.8 Handlebar Assembly 36

9 Fig 3.5.9 Switch 36

10 Fig 3.5.10 LED Head lamps 37

11 Fig 3.5.11 Blinkers 37

6
12 Fig 3.5.12 Tail Lamps 37

13 Fig 2.5.13 Rear Blinker Assembly 38

14 Fig 3.8.1 41
Customers

18 Fig. 4.5.1 Manual Operation of bending and cutting 47

19 Fig. 4.5.2 Automatic Operation of bending and cutting 48

7
 LIST OF ABBREVIATIONS

1 M Meter

2 Mm Millimeter

3 Hrs Hours

8
Chapter I
1. Research Methodology & Data Analysis

1.1 Objectives:

The main objective is to developed or Make a machine which reduced rejection of

capacitor in bending & cutting process. This will turn to reduced one operator also
because it is semi automatic (Only loading manually). The findings from the
undertaking will be used for up coming demands or meet customer demands in lower
cost for future design & development project, This will help in reduced quality of
rejection And improve Productivity.

1.2 Methodology :

This chapter gives detailed information of the procedure in which the project work is
carried out. The step by step implementation of project work includes:

 Problem Identification
 Problem Definition
 General Assembly (GA) Layout Design
 General Assembly Layout Communication
 Conceptual Design
 Detailed Design
 Communication of Detailed Design
 Selection of Materials and Processes for the Machine
 Procurement of Brought outs
 Manufacturing
 Primary Assembly of the Machine
 Trials
 Dismantling the Machine
 Finishing on required parts
 Final Assembly

9
  Inspection
The complete design and development of Special Purpose Machine for combined
bending and cutting operations on capacitor can be achieved by implementing the
abo1ve mentioned steps.

From above mentioned steps problem identification and problem definition are
discussed in earlier chapters. The remaining steps are explained in further topics.

1.2.1 General assembly layout of the machine:

Existing problem is understood clearly by considering all the positive and
negative things. According to customer requirement the availability of space and
surrounding environment of the shop is studied. General assembly layout is the
rough design of the machine which will clear out:

 The concept of Working

Fig.1.2.1 GA layout of machine

General assembly layout is designed in Solid Edge ST8 by considering all the
mentioned parameters. It was decided to perform all the operations on a single unit
having same base plate and square tube frame. Arrangement and position of all the

10
parts is not final, the representation is generalized hence called general assembly
(GA) Layout.

1.2.2Conceptual design:

Conceptual design of machine consist a 3D model generated in CAD software which

clearly represents the final concept of the machine. This design describes how a new
product will look and meets the required performance. A hypothetical functionality is
focused by using the concept of conceptual design. It is subset of concept art, wherein
a novel idea or product is created instead of a visual representation which would
directly be used in the final product

1.2.3Bending and cutting operations devided in single machine

Before designing the machine all the operations are divided in Single stages, this
means all the operations are to be done on one stations. operations divided in single
stations as follows

 Bending:

1) Bend leads of capacitor at 90 degree

Fig. 1.2.2 Bending and cutting areas

11
All the listed areas are required to be bend and by using punches of required strength.

 Cutting-

1) leads to be cut at desired legth10mm

1.2.4 Selection of materials for various parts of the machine:

The combined trimming and drilling and trimming machine consist of various
mechanical parts which need to be manufactured for various purposes. Each part has a
its specific importance in the machine and hence a careful selection of material is
required in order to develop the machine with enough strength and with more life.
Certain parts in the machine requires strength and some parts need to be soft in
nature. Various materials required in the machine are listed below:
 Mild Steel
 D-2
 EN-8
 Chrome plated shaft
 Aluminium
 20MnCr5
 High Carbon High Chromium Steel
 Stainless Steel

12
 1.2.5 Fabrication (development) of the machine:
After design of complete machine fabrication was the major task to be done.
Fabrication of complete project took almost 3 months of duration.
Machines like semi automatic milling machines, lathe machines, distance reading
operation M1TR machines are majorly used in the manufacturing of various parts
of both the stations. Step by step manufacturing of machine is explained in
following sub chapters.

Fig. 1.2.3 Actual Model of Bending and Cutting Machine

1.2.6 Working of machine:

 The operator switches on the control button which starts the machine
 operator will manually load the capacitor in the magazine Offline
 Job presence sensor known as laser sensor will sense the existence of
component at its location (Poka Yoke). The cycle will not start until the
laser sensor senses the component.
 After pressing bi-manual start button, cylinder will actuate and transfer
capacitor to the operation station
 Top cylinder actuates and bend capacitor 90 degree

13
  Horizontal cylinder actuates and cuts the leads at 10mm from Center of
Lead by the punches
 when operation is completed then next capacitor will come from magazine
and push the capacitor to the bin . In this way the cycle of machine is
completed.

1.2.7 Costing of the machine
The costing of complete project includes 5 major parameters as explained below:
 Mechanical material cost for the machine:
Mechanical material cost includes the costs of all the materials required for
developing the machine. It includes costs of certain mechanical parts like linear
motion guideways, bearings, chrome plated shafts, polycarbonate sheets, springs,
leveling foot mounts, aluminium extrusions and material such as mild steel,
aluminium, high carbon high chromium steel, tool steel and stainless steel.

 Pneumatic cylinders:
Hydraulic power packs consumes huge amount in lacks of rupees. These power
packs include costs of pump, motor, reservoir, cooling system, bell housing, various
types of hydraulic valves, pressure gauges. Cost of hydraulic cylinders depends on its
bore size and type of mounting required.
 Hardware cost:
It includes all the bolts, nuts, washers, o rings which are useful in increasing the
strength of machine. Rigid and strong joints can be obtained by using quality hard
wares.

14
1.2.8 Quotation of Machine

PIONEER ENGINEERS
C252/04,V-13, MIDC WALUJ, AURANGABAD-431136,
Email-pioneer_engineers@yahoo.co.in

Quotation No,: - PE
To, 54247
M/S-VERROC ENGG PLANT-3
M.I.D.C CHAKAN PUNE
Date: 3/7/2016
Kind Attention:
CAPACITOR BEND AND CUTTING T03
179 009

BASE PLATE 5633

VERTICAL PLATE 1 1778
TOP PLATE 2291
VERTICAL PLATE 2 1727
SLIDING BLOCK 3438
CAPACITOR MNTG BLOCK 730
CUTTING PUNCH 1091
PUSHER 280
VERTICAL CYL MNTG PLATE 1208
STRIPPER PLATE 368
SPRING LOCATOR 400
GUIDE 1732
PUNCH 926
STOPPER PLATE 496
TOP PUSHER 80

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CAPACITOR MNTG RAIL 2425
RISER BLOCK 1432
CAPACITOR PUNCH 495
CAPACITOR RAIL 638
STOPPER BLOCK 420
L GUIDE 586
LEG 1336
LEAD CUTTER 652
BOTTOM L GUIDE 1354
L GUIDE 1 617
STOPPER BLOCK 100
COVER GUIDE PLATE 834
WASTE BIN 850
SETTING PIN 297
CAPACITOR LOADER 943
CYL MNTG BRACKET 1095
Compression Spring 400
Pnuematic Cylinder SMC CDM3FZ20-125
M9BW 8500
Pnuematic Cylinder SMC CDQ2F25-30
DMZ-M9BW 6200
Pnuematic Cylinder SMC CDQ2F50-30
DMZ-M9BW 8125
HARDWARE AND ASSLY CHARGES 1500
60977

TERMS AND CONDITION

PAYMENT TERMS :-
Delivery: 1WEEK AFTER CONFIRM P.O.

16
 TAXES :- 12.5 % EXTRA

Thanking You For Pioneer

Engineers
Table 1.2.1 Quotation of Machine

 Machine total cost: RS 60,977

1.3 Limitations:

 Component feeding Manually in Magazine

 Machine required pneumatic connection its consume high cost
 No manual operation except feeding of component is manually
 Wastage of remaining raw material increases cost
 Wastage of rejection increase cost of rejection
 Rejection affect into the productivity decreases

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Chapter II

2.Theoreticle Background & review of Literature .

2.1 Introduction of the Project :

In VEPL III there are electrical division & electronics division where Magneto,
Starter motor, Regulator Rectifier, Capacitive Discharge induction, Dashboard etc.
products is running. And improvement project is to be carried out in CDI line. Main
motive of carried out improvement project in CDI Line

Cycle time of few operations is more than takt time.

The new product having the different process flow as compare to the old one.design is
also made for the manufacturability.
This new product having the high volume as compare to the old model

 Capacitor : capacitor is child part of CDI A capacitor (originally known as

a condenser) is a passive two-terminal electrical component used to
temporarily store electrical energy in an electric field. The forms of practical
capacitors vary widely, but most contain at least two electrical
conductors (plates) separated by a dielectric (i.e. an insulator that can store
energy by becoming polarized). The conductors can be thin films, foils or
sintered beads of metal or conductive electrolyte, etc. The non conducting
dielectric acts to increase the capacitor's charge capacity. Materials commonly
used as dielectrics include glass, ceramic, plastic film, paper, mica, and oxide
layers. Capacitors are widely used as parts of electrical circuits in many
common electrical devices. Unlike a resistor, an ideal capacitor does not
dissipate energy. Instead, a capacitor stores energy in the form of
an electrostatic field between its plates.

 CDI in 2 wheeler
Earlier there was Riveting type product category was running & now welding type
product category is added. As most of the operation was similar to existing line. And
18
takt time is the pace at which each product should produce. Takt time is calculated by
ratio of Available time to production demand. Demand of line is increased so takt
time is reduced. Therefore cycle time of most of the operation exceeds takt time.

2.2 Theoretical background:

An organization faces problem of Quality of Capacitor Lead, It will affect wave

soldering since reduced quality of CDI & Product rejected. We as an organization
are faced with the same challenges to reduced rejection & improve productivity
This process was Manually, So Chances of rejection are more since productivity
is less By understanding need & future upcoming projects, developed a new
automatic or semi automatic machine to reduced human fatigue as well as meet
customer demand. (Every day has plan of manufacturing of CDI are 2000 no’s &
Each CDI need 2 no’s Capacitor so demand are 4000 per day) since meeting those
need to design & developed A SPM which reducing cost of rejection, Manpower
and Improve productivity.
An industrial organization needs sustainable design analysis and process
optimization in manufacturing and service for controlling production cost. There
is always demand for quality improvement with product price drop from end
users. Share and stock holders also anticipate excellent rate of returns against
investments. Thus, cost has become a residual. The challenge is to manufacture or
provide service within the stipulated cost frame work. Thus, cost management has
to be an ongoing continuous improvement programme. Today the market leaders
are even pursuing cost reduction as strategic imperative. They want to stay ahead
of the market by continuously widening the gap between their cost and that of
their competitors and redeploy the recourses for profitable growth. The project
will focus on impact of cost control and cost reduction techniques in present
scenario. A business enterprise must survive, grow and prosper only if the
unwanted cost must control and reduced necessarily. There is now a cut throat
competition from various concerns of the world. As a result there is now a raise to
secure a place for survival. This has increased the importance of cost control and

19
cost reduction. Hence it is required to study the different tools and techniques
used for the same. We can classify the cost according to their nature, behavior
then we can easily know the cost which can be controlled or reduced. Here more
emphasis is on the controllable and non- controllable cost, because this
classification of the costs helps us understanding what and how we can control. If
the cost can be controlled then what steps should be taken for controlling purpose;
if cannot be controlled, what should be done. It totally depends up on the
managerial decisions and it is the activity of management accounting. The study
identifies the scope in manufacturing industry by means of conventional
methods/techniques like TQM, TPM, Kaizen, Lean manufacturing, Value analysis
&Value engineering, JIT etc. in different areas. The interview sessions are
conducted to get the opinion about modern methods for reducing cost in their
organizations.
 Literature Review
There are some techniques/concepts is being studied to benefitting different areas
of the organizations, also Identify the process which can reduce their cost and
improve working environment. 2.1 What is Cost and Cost Reduction “An amount,
that has to be paid or given up in order to get something. In business, cost is
usually a monetary valuation of effort, material, resources, time and utilities
consumed, risk incurred, and opportunities for gone in production and delivery of
a goods or service” “Cost Reduction is to be understood as the achievement of
real and permanent reduction in the unit cost of goods manufacture or services
rendered without impairing their suitability for the use intended”. What is TPM In
1971, Nippon Denso Co., Ltd. first introduced and successfully implemented
TPM in Japan. They won the Japan Institute of Plant Maintenance (JIPM) PM
Excellent Plant Award for their activities. This was the beginning of TPM in
Japan. Since then, TPM has spread progressively throughout the world and
established itself as a renowned Paper ID: SUB15187 487 International Journal of
Science and Research (IJSR) ISSN (Online): 2319-7064 Index Copernicus Value
Impact Factor (2013): 4.438 Volume 4 Issue 1, January 2015 www.ijsr.net
Licensed Under Creative Commons Attribution CC BY cultural improvement

20
programme. First example of TPM used in Europe to deliver world class
performance was by Volvo in Ghent, Belgium, who won the PM prize for their
work in the paint shop. This was quickly followed in the early 1990s by other
European automotive companies trying to close the productivity and quality gap
to their Japanese competitors

21
Chapter III

3.Growth & Development of the field

3.1 Varroc Group:

5th floor, Amar apex behind

Big Bazar Baner road Baner pune

3.2 Vision & mission :

 Vision
To be a $4 Billion Globally diversified business in the transportation and allied
industry in 2020. Core business will continue to be automotive components
Global operations will fuel our technology build up in emerging economies
Select technology products for 4 wheeler industry

 Mission
Be an affordable and flexible global technology supplier and deliver value to
customer by being the supplier of choice from low cost manufacturing footprints by
achieving operational excellence by investing in safe light and green technologies.

3.3 Historical background :

Varroc History: Bounded in 1990, Varroc group is an emerging global automotive

component manufacturer and supplier of exterior lighting systems, powertrains,
electricals, body and chassis parts to leading passenger car and motorcycle segments
worldwide. With 35 world-class manufacturing facilities, 11 engineering centres,
13500 employees and 760 engineering experts in 10 countries, Varroc group is on an
exponential growth trajectory clocking a sales of 1.3 billion USD in 2015-16. The
company is a leading global passenger car lighting supplier and the number one 2-
wheeler automotive component supplier in India. Varroc offers best design solutions
that give customers a competitive edge in their markets.

22
  Varroc Journey

1990-1991

The Beginning..
Established 'Varroc' as a brand

Commenced the Polymer Division

1992-1998

Product Diversification and Capacity Expansion.

Commenced the Electrical Division in 1995

Started Operation of the Metallic Division in 1997

Started 2 more Polymer manufacturing facilities in Pune and Aurangabad

23
1999-2003

Manufacturing Excellence and Creating Development Capabilities

 Technical collaboration with MITSUBA - Starter Motor and Magneto

(Electrical-Electronics Components) in 2001
 Invested in first Paint Shop at Polymers Plant in Pune
 Invested in Electrical Plant in Pune

2003-2006

Expanding Manufacturing Footprint

 Technical collaboration with Umicore - Automotive Catalytic

Converter (Electrical- Electronics Component) in 2005
 Engine Valve Technology in 2005
 Turnover crossed INR 1000 Cr. in 2006
 Invested in 6 manufacturing plants and R&D centers (Metallic-2,
Polymer-1, Valve-1, Exhaust-1)
 Ventured into European market with exports

24
  Commenced Integrated facility in North India

2007-2010

Global Acquisitions – Domain Leadership

 Acquired IMES, Poland and Italy to strengthen Forging Business in

European Markets, Off-Road and Oil Drilling Industry
 Invested in Manufacturing Capability and Paint Shop for Polymers in
NCR region to cater to OEMs in North India
 Turnover crossed INR 2000 Cr. in 2009-2010

2011-2012

Acquiring a mark in Lighting Business

Acquired E.S.E.X Forging in Italy for supplying components for the defence sector
and auto industry

Acquired European Two Wheeler Lighting Organization Tri.O.M.S.p.A. including its

R&D center

Acquired Visteon's Global Lighting Business

25
Turnover crossed USD 1 billion mark with acquisition of Visteon's Lighting Business
along with its 2 R&D centers

Invested in Crankshaft facility to cater to SCV and LCV segment

Polymer Plant set up in Pithampur (Indore), to cater to Volvo, Eicher and Mahindra
Two Wheeler Ltd.; Bangalore Plant to cater to Honda Motorcycle and Scooter India
Pvt. Ltd. and Passenger Car segment

Invested in design and set up of the 10th Polymer Plant at Chennai to cater to India
Yamaha Motors Pvt. Ltd.

2013-2016 onwards

3.4 Organization chart :

3.4.1LeadershipTeam :

Naresh Chandra Jain

Chairman of Board of Directors

Beginning with a venture in Aluminium Die Casting in 1985, the Jain Group made a
successful foray into the automobile industry by manufacturing engineering products.
However, with plastics making its presence felt in different aspects of life, the Jains
foresaw a vast potential to expand its business in the booming automobile and
consumer durable industries. This far-sight enabled them to sow the seeds of
26
successful foray into Polymer Engineering. Consequently, Varroc Engineering was
setup in the year 1990. It is operating through two divisions: Metallic and Electrical.

Tarang Jain

Managing Director, Varroc Group of Companies

Mr.Tarang Jain, a first generation entrepreneur, is a B.Com from Sydenham College –

Mumbai and a MBA from IMD – Switzerland. Mr. Jain started his career with
Kaycee Industries and acquired initial hands-on training in process and production
activities. He then moved to Bajaj Auto Ltd. as a Management Trainee. His stint at
Bajaj Auto helped him hone his managerial and technical skills.

Jeff Stevenson

President – Varroc Lighting Systems

In August 2012, Mr. Jeff Stevenson became the first President of the newly created,
Varroc Lighting Systems (VLS) having been acquired from Visteon Corporation. Mr.
Stevenson is responsible for all global facets of VLS, with engineering centers,

27
 customer centers and manufacturing operations in Mexico, the United States,
Germany, France, the Czech Republic, India and China.

Dr. Ravi M. Damodaran

President – Technology & Strategy

In 2012, Dr. Ravi Damodaran joined Varroc Group as President Technology & Strategy.
Dr. Ravi has over 18 years of vibrant and varied experience in managing large projects and
operations in technology and manufacturing. Dr. Ravi is a veteran in the field of product
development, strategic planning and business management in India. He has many industry-
firsts to his credit in the areas of materials research to technology transfers and business
turnarounds. He is also a Six Sigma Master Black Belt from (G.E). In his current role he
shoulders the responsibility for steering the Group’s foray into next generation technology.

28
 Neeraj Jain

President - Polymer Business

Mr.Neeraj Jain has joined Varroc in June 2015 as the President of the Polymer
business and is a member of the Executive Council of Varroc Group. Mr. Jain has an
extensive experience of more than 23 years. His last organisation was Tecumseh
Products Company, a US based organization and global leader in manufacturing of
Refrigeration Compressors, where he was leading the P&L and Business
Development for Asia Pacific excluding China region for India operations.

Ashwani Maheshwari

President - Forging Business

Ashwani joined us in March 2016 as President – Forging. He comes with more than 25
years of experience in General Management with a proven track record in managing P&L
of business operations, leading new business initiatives and business turnarounds. He has
worked across diverse industries like Steel, Tobacco packaging plants, Infotech,
Automotive Tyres and recently Pulp and Paper.
29
S. N. Patil

Sr. Vice President – Production Systems

Mr. S. N. Patil joined Varroc Group in 1995 as Plant Head of mould craft, one of the
earliest Plants of Varroc Group. He has over 34 years of rich and varied experience to his
credit. He began his career with VIP Industries where he served for about 12 years. He has
also worked for well-known companies namely, Supreme Industries, Eagle Flask and Jain
Irrigation.

Ms.Harsimran Singh Sethia

Group Chief Human Resource Officer

Ms.Harsimran Singh Sethia has joined the Varroc Group as a Group Chief Human
Resource Officer and is a part of our senior leadership team. Ms.Sethia is a
professionalwith over 26 years of experience in Human Resources. She has proven
her mettle in the areas of change management, people management, strategic
planning, organisational restructuring, and industrial relations functions across
various sectors like Engineering, FMCG, Pharmaceutical and Retail.
30
B. Padmanabhan

Group Chief Financial Officer

Mr. B. Padmanabhan joined Varroc Group as Group Chief Financial Officer in Dec 2007.
Mr. B. Padmanabhan has an impressive 30 years of experience. He started off his career
with Best & Crompton Eng. Pvt. Ltd. Chennai serving from Jan 1983 to Dec 1992 wherein
he held various positions in Accounts, Funds & Commercials and Taxation. From there he
moved to ACC Group for a period of more than 13 years.

Arjun Jain

Vice President & Business Head – Electrical Division

Mr.Arjun Jain, is the elder son of Mr. Tarang Jain and currently the Business Head of
Electrical Division of Varroc Engineering. Arjun obtained a Bachelors degree in Liberal
Arts and Economics from Vassar College, New York, U.S.A. in 2011. Thereafter he
worked as an associate consultant in Bain & Co. out of Mumbai. Arjun joined the Varroc
31
 Group in 2013 as General Manager, Strategy, responsible for detailing out the business
strategies for each of the divisions in India

Dr.Arvinder Gill

Head for Business Development

Dr.Arvinder Gill is a member of the Executive Council of Varroc Group and the Head for
Business Development at the Group level. He joined the Varroc Group in August 2012. A
thorough professional with proven success as CEO, CMO and President, Dr.Arvinder Gill has
an extensive experience of 30 years in auto component, industrial (key accounts) & consumer
goods industries. He has handled the business operations of large organisations with aplomb
and also helped build several start-ups.

32
 Puneet Chandhok

Group Chief Supply Chain Officer

Puneet joined Varroc in Sept 2015 as Chief Supply Chain Officer and is a member of the
Executive Council of Varroc Group. In this role, he has major responsibility of driving
cost competitive, efficient & reliable supply chain across Varroc. Puneet has an extensive
experience of more than 15 years in different areas of Supply Chain Management across
multiple industries: Aerospace, Oil &Gas, and Automotive.

33
3.5 Product Profile :

Fig 3.5.1 Digital Instrument Cluster

Fig 3.5.2 CDI and TCI units

Fig 3.5.3 Regulator Rectifier (RR)

34
Fig 3.5.4 Starter Motor

Fig 3.5.5 Wiper Motors

Fig 3.5.6 Magneto

35
Fig 3.5.7 Catalytic Converter

Fig 3.5.8 Handlebar Assembly

Fig 3.5.9 Switch

36
Fig 3.5.10 LED Head lamps

Fig 3.5.11 Blinkers

Fig 3.5.12 Tail Lamps

37
Fig 3.5.13 Rear Blinker Assembly

3.6 Current picture of company :

The Varroc Group is a preferred system solutions provider in the Indian market,
supplying plastic-moulded modules, engine valves, machined forgings, exterior
lighting and electrical systems to a wide range of customers in the country and also
many others outside. Established in 1990, the Group currently operates globally from
33 manufacturing plants and eight technical and development centers across three
continents and 10 countries globally. Varroc, which believes ‘excellence is a habit’, is
today among the top three auto component manufacturers in India. The Group has set
itself a vision for 2020 – improve its overall turnover from Rs. 7,000 crore in FY14 to
Rs. 20,000 crore by FY20.

According to Dr. Ravi: “We have a clear strategy in place towards the year 2020 as
part of which our product diversity and growth in the domestic market will take us to
a turnover of Rs. 8,000 crore from the Indian business, from the Rs. 20,000 crore
turnover targeted for the entire Group by 2020.” Further adding to this, Dr. Gill says:
“This would be possible when our new facilities come up as per plan (three more in
India by next year) and all our customer orders are on track. Our diverse customer
base and product portfolio guarantees that if the market grows at a particular pace,

38
then we either grow at the same pace or at a better pace. Thanks to our focused efforts
in the last few years, we have de-risked our future growth model.

3.7 Future plans :

3.7.1Varroc Groups growth strategy for 2020 ?

In 2012 we chartered a strategy for 2020, which broadly consists of two factors —
where to play and how to win.

So for each business vertical where to play defined market segments, products,
customers and what we will and won’t pursue. That brought more focus to our
engineering, marketing and business development efforts.

Our study totalled up to revenues of up to Rs 20,000 crore. Now during the course
some assumptions may change, market conditions may fluctuate but we do not realign
our targets. We continue to stick to them. This is the difference between a tactical and
strategic approach. That’s what we do.

3.7.2Varroc Lighting Systems is the largest vertical within the Varroc Group.
Where do you see VLS in terms of revenue by 2020?

Let’s talk in terms of percentage. VLS contributes about 62 percent of overall

revenues for the Varroc Group. Our own analysis of the market data includes different
growth rates for each customer.

Secondly, the growth rates for India and international markets are different, and a lot
depends upon the exchange rates. We are estimating that the Group turnover will
stand at around Rs 8,300 crore by end- of this financial year.

39
3.7.3 As regards the polymer and electrical divisions, the company procures bulk
orders from two-wheeler OEMs. Are you looking at diversifying into the four
wheeler segments in India?

Our vision states that we should be number one in two-wheelers (in products we
make) and a leading supplier for select products for four-wheelers. Some select
products include engine valves and lighting solutions, which we are already
supplying. We also supply interior parts under the polymer division. We are looking
at future products such as security systems (electrical and electronics) which we
estimate will have good demand in the coming times. So we will start with two-
wheelers and cater to passenger cars later.

Similarly, I look at the product line of motors and hybrid solutions for two-wheelers,
three- and four-wheelers that we think will pick up on demand eventually.

3.7.4 In the context of inorganic growth, is the company looking at options for its
polymers electrical and metallic division ?

Yes. Under the how-to-win strategy for our 2020 plan, there is a mix of organic and
inorganic growth. We have said that we will eventually get into certain products that
we don’t have today. While some of them we will be developing organically, some
will be through buyouts and partnerships. That, clearly, is our priority.

3.7.5 So has Varroc set upon a concrete option for inorganic growth for the three
divisions?
For polymers our outright focus is on India, and we are still looking for a right mix
before we finalise something. For the metallic division, we are very close to finalising
something within 2016 — It could be a partnership. We would like to share our
capabilities for end customers.

40
3.7.6 Priorities for 2016 ?

My priorities never change. I have three priorities all the time — beefing up our
technological capabilities; this requires money, for which I have to find out the
sources. Secondly, achieving operational efficiencies across the divisions, and lastly
honing up and retaining the talent.

3.8 Customers:

Fig 3.8.1 Customers

41
Chapter IV

5. Analysis & Interpretation of Data :

Varooc Engineering Pvt. Ltd. There is hug requirement of new product from Bajaj &
Honda customer for there 2 Wheeler CDI’s but we have less Capacity of Producing
The same, Instead of Arranging the new lIne we focusing the bottleneck of Existing
Line. By Analysis & Observation CDI are required more (Each CDI required 2
Capacitor) & we have 2000 no;s requirement daily so to meet this 4000 no’s
Capacitor/day required & we have increasing demand. since to meet same need to
developed new Machine which is Automatic or Semi Automatic. &Currently, We are
facing more problem of Soldering of Capacitor Of CDI, Because of less or more
length of capacitor lead which is control by manually that’s why rejection is more &
not meeting customer target, also the time for Bending & Cutting of Capacitor is
more, To meet Existing Demand 2 manpower required per ship but once’s the
Machine Developed 1 Manpower will Save.

Our Team decided to Developed New Semi-Automatic Machine For Capacitor Lead
Bending & Cutting,

Cost reduction is nothing but reduction in wastage of resources like men, material,
machine, time, space, capital etc. It can be expressed as human efforts to produce
more and more with less and less inputs of resources so that there will be maximum
distribution of benefits among maximum number of people. Productivity denotes
relationship between output and one or all associated inputs
42
 Cost Reduction of a certain set of resources (input) is therefore the amount of
goods or services (output) which is produced by them. Land and building materials,
machines, manpower (labour), technology etc. are the resources at the disposal of a
manufacturing company. Therefore higher (improved) productivity means that more
is produced with the same expenditure of resource i.e. at the same cost in terms of
land, materials, machine, time or labour, alternatively, it means same amount is
produced at less cost in terms of land, materials, machine time or labour that is
utilized.

4.1. Method Study of Cost reduction :

A business enterprise must survive, grow, and prosper. Cost Control and Cost
Reduction both are the activities necessary for ensuring that these objectives are
fulfilled. With the liberalization of the Indian Economy and Globalization, there is
now a cut throat competition from various concerns of the world. As a result there is
now a race to secure a place for survival. This has increased the importance of Cost
Control and Cost Reduction. Hence it is required to study the different tools and
techniques used for the Cost Control and Cost Reduction. For the same we need to
start with understanding deeply the concept of cost. Once we understand the meaning
of cost, its controllability, main areas where cost arises, then we can think of how to
control or reduce the cost. We can classify the cost according to their nature, behavior
then we can easily know the cost which can be controlled or reduced. Here more
emphasis is on the Controllable and Non-Controllable cost, because this classification
of the costs helps us understanding what and how we can control. If the cost can be
controlled then what steps should be taken for controlling purpose; if cannot be
controlled, what should be done. It is totally depends upon the managerial decisions,
and it is the activity of Management Accounting. With the given type of industry the
cost element varies for the industry. Piaggio Vehicles Pvt. Ltd. is a manufacturing
industry engaged in producing world-class diesel 3-wheelers and 4-wheelers.
Manufacturing industries are engaged in transforming raw material into finished
product with the help of machines and manpower. The contribution of material cost in
the total cost is more than 70%. Hence the main focus is on raw material for this

43
industry. Therefore, more emphasis should be given to the material cost and need to
find out the possible outcomes to control & reduce the material cost.

 Cost Control and Cost Reduction A world. As a result there is now a race to
secure a place for survival. This has increased the importance of cost control
and Cost Reduction. Cost Control “Cost control is the regulation by executive
action of the costs of operating an undertaking particularly where such action
is guided by cost accounting.” Cost Control is business enterprise must
survive, grow, and prosper. Cost Control and Cost Reduction are activities
necessary for ensuring that these objectives are fulfilled. With the
liberalization of the Indian Economy and Globalization, there is now a cut
throat competition from various concerns of the function, which makes sure
that actual work is done to fulfill the original intention. It is a widely accepted
notion that the actual costs for each cost element should be within the budget.
Cost control is thought of as a managerial effort to attain cost goals within a
particular environment. Cost control is not a specific program. Rather, it is a
routine activity to be frequently carried out. Cost must be controlled;
otherwise, there will be wastage, misappropriation and embezzlement.
Checking such wastage and misappropriation of resources is a continuous
activity. A firm exercising a better control last year does not mean that it has
now been relaxed from the cost control function. Cost control relies heavily on
accounting techniques. Some of the key cost control techniques are
responsibility accounting control system, standard costing, budgetary control
and cost management ratios. Therefore, cost control includes the routine
management of the organizational activities, such as controlling of wastage,
misappropriation, loss of work time, set up time etc. The cost control
definition suggests that a company should investigate good procedures for
finding out the reason why the costs of the company are not as per the pre-
decided or budgeted costs. Thus, cost control can help a company determine,
if it is really spending more than it should actually spend. Though it is not
essential to be a finance expert to understand the definition of cost control,
planning and actually implementing the cost control techniques can be quite a
44
 big challenge. It is essential for the senior level managers to have a good
understanding of the cost control software which is a part of effective cost
control techniques.
 Importance of Cost Control
 i) It enables the firm to achieve its defined objectives.

ii) It leads to proper utilization of the firm's resources

iii) It ensures the survival and growth of a firm by preserving its competitive
capability

COST REDUCTION: “Cost Reduction is to be understood as the achievement of

real and permanent reduction in the unit cost of goods manufacture or services
rendered without impairing their suitability for the use intended”. Cost Reduction is a
systematic effort to improve profit margins by eliminating all forms of waste and
unnecessary expense without impairing the generation of revenues. Some commonly
used synonyms for this activity are profit improvement, cost improvement, and
methods improvement. But, regardless of the terminology used, the aim of cost
reduction is to offset the impact of a squeeze on profits by getting the maximum
return for every rupee of funds spent by the company. Cost reduction, should
therefore, not be confused with cost saving and cost control. Cost saving could be a
temporary affair and may be at the cost of quality. Cost reduction implies the
retention of essential characteristics and quality of the product and thus it must be
confined to permanent and genuine savings in the costs of manufacture,
administration, distribution and selling, brought about by elimination of wasteful and
inessential elements form the design of the product and from the techniques and
practices carried out in connection therewith. In other words, the essential
characteristics and techniques and quality of the products are retained through
improved methods and techniques used and thereby a permanent reduction in the unit
cost is achieved. The definition of cost reduction does not however include reduction
in expenditure arising from reduction or similar govt. action or the effect of price
agreements.

45
The three fold assumption involved in the definition of cost reduction may be summarized
as under:- 1. There is saving in a cost unit 2. Such saving is of a permanent nature 3.
The utility and quality of goods remain unaffected, if not improved Importance of
Cost Reduction i)It leads to an improvement in the competitive capabilities of the
company and thereby ensures its survival, growth, and prosperity ii)It ensures
reasonable prices to customers by not passing on the inefficiency of the business itself

Purpose for Cost Control and Cost Reduction:

i)To create cash for reinvest in R&D ii)To reduce manufacturing cost to stay
competitive iii)To lower cost of service in order to provide additional services iv)To
become more efficient Reasons for Cost Reduction i)To increase company value ii)To
get competitive advantage iii)To eliminate unnecessary expenses iv)To reduce price
of product or service

4.2 Tabulation of data :

4.2.1 Number of components finished:

 Before automation:

Fig. 4.5.1 Manual Operation of bending and cutting

Time required to bend and cut one component = 45 Sec
Components finished in 1 hour = 80

46
Number of shifts = 3
Working hours in a shift = 8
Total no of hrs in all shift =24
Components finished in a day:
= 80 x 21
= 1920 unit
Number of working days in a month = 26
Hence, 49920 units components are finished in a month
Calculating number of components finished in a year gives answer of 599040 units

 After Automation:

Fig. 4.5.2 Automatic Operation of bending and cutting

Time required to trim and drill one component = 25 Sec

Components finished in 1 hour = 144
Number of shifts = 1

47
Working hours in a shift = 8
Total no of hrs in all shift =24
Components finished in a day:
= 144 x 24
= 3456
Number of working days in a month = 26 units
Hence, 89856 units components are finished in a month
Calculating number of components finished in a year gives answer of 1078272 units

4.2.2 Manpower reduction:

By using the machine 1 operators are reduced from the existing number of
operators. Operator is paid with the salary of Rs 12000/- per month.
Working days in a month = 26

Working days in a year excluding leaves = 300

Hence,

Wages = per day salary of operators x no. of shifts/day x 26 days/month

= (461.54 x 2) x 1 x 26

= Rs 24000.08/- per month

Cost saved in a year = 24000.08 x 12

= Rs 288000.96/- per year

48
4.2.3 Scrap reduction:

During manual operations approximately 27% of components were rejected from

the produced component.
Number of components finished per month before automation = 49920

Hence, number of components rejected = 0.27 x 49920

= 13478.4

= 13479 Components per month

Recycling cost of a single component is approximately Rs 5/-

Hence, Cost of recycling = 13479 x5

= RS 67395 per month

For 1 year it comes out to be Rs 808740 per year.

Before After
Sr No. Parameters
Automation Automation
No. of Components
1 49920 89856
Finished / month
No. of Operators
2 1 0
Required
Aesthetic Look and
4 Poor Good
Finishing

Table 4.3 Result table

49
 4.3 Graphical Representation

INCREASE IN PRODUCTIVITY
100000
90000
80000
70000
productuvity

60000
50000
40000
30000
20000
10000
0
Before/Month After/Month

Graph for productivity improvement

 Cost Saving Due to increasing Productivity :

1. Productivity Before/Month- 49920

2. Productivity Before/Month- 89856

50
COST SAVING GRAPH( BEFORE & AFTER RESULTS):

350000

300000

250000

200000

150000 Series1
100000

50000

0
AFTER BEFORE
COST SAVING RESULTS (BEFORE & AFTER)
b

Cost saving per year after implementing the suggestions was approximately = Rs.288001.

51
Chapter V

5.Conclusions:

The Dissertation describes a special purpose machine is capable of the respective

location bending and cutting of capacitor of motor cycle CDI automatically. It
includes the design of punches required for bending and cutting of leads , selection of
pneumatic cylinders ,material ,costing . By implementing the machine for described
purpose the productivity of the process will surely increase. The machine is capable
of performing the operations sturdily though capacitor bend and cut has excellent
mechanical, characteristics. a special care is taken for future development of the
machine. Lot of space is kept vacant for new component The project work can be
concluded with major points such as the finished component looks aesthetically
pleasant and rejection rates are almost eliminated. Requirement of operators got
reduced from 1 operators to a zero operator. The great achievement is the drastic
reduction in cycle time. The machine requires very less maintenance. We consider the
developed machine is an important step towards fulfilling the need for the company.
Productivity is Improved 49920 to 89856 per month and cost reduction

52
Referance :

1. Ajay Hydraulics and Pneumatics, “Hydraulic Systems Technical Manual.”

2. “Design Data Book”, Edition (Revised) 1978, M/s KalikathirAchchagam,
Coimbatore Tamilnadu.
3. http://shodhganga.inflibnet.ac.in
4. www.wikipedia.com
5. Manufacturing & operations management prof .L.C Jhamb
6. Data from varroc group contol chart, process flow diagram

53