FOUNDING A SUBSIDIARY

COMPANY OF A GERMAN CAR

MANUFACTURER IN
BANGALORE

BY
ANAND RAJ 1020805
DONALD BRIAN 1020809
RANBIR RATHOD 1020822
MOUMITA SINHA ROY 1020837
A rm D d w i th a di ffe re nc e

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 PROJECT OVERVIEW

• A German car manufacturer wants to establish in Indian market.

• Wants to outsource the foundation of a subsidiary company.
• Components are going to made in India and assembling will be done in Germany.
• Cutting cost is a long term perspective.
 DISTRIBUTION OF THE WORK

• Donald Brian Mendonca- Project Leader

 Project Planning and Controlling.

 Handling of the legal issues.

• Ranbirrajsinh Rathod- Marketing Manager

 Marketing strategy and Brand positioning.

 Advertisement and market related affairs.

 Consignment handling and distribution.

• Anand Raj- Technical Adviser

 R&D advises and designing.

 Quality control.

• Moumita Sinha Roy- HR and Finance Manager

 Finance and budget controlling.

 Internal affairs.
 PROJECT
STRUCTURE AND
TIMELINE
 GOAL
Delivery of cars to India using components manufactured

in India

MILESTONES
 Kickoff Meeting.

 Acquiring suitable land and Setting up the Plant.

 Establishment of the plant on lease and will take at least 7 to 8 months to be fully functioned.

 Finding the best work force and effective transport for consignment.
 As plant establishment will be at its half way, we will start our recruitment and selection process from 5 th month.

 Simultaneously we will find the best way of transportation for our consignment.

 Start of exporting consignment and Setting up the market place.

 In 8th month as we send our first consignment to Germany we will start the search for our market place and dealers in
India.

 Review and error correction.

 First lot will be in India by 10 th or 11th month, so remaining time will be for review of the project and error correction.
Kickoff Acuiring Land Finding the Start of Kickout Review of the
Meeting and Setting up Best work exporting Project
the Plant force and consignment
effactive and search of
transport market place
in India

Project Finish
Implimentation and controlling
process
Planning for compilation of
mile stones
Overall Project
 Why India???

By 2050, the country is expected to top the world in car volumes with approximately
611million vehicles.
United Kingdom being India's largest export market followed by Germany,
Netherlands and South Africa
India's automobile exports are expected to cross $12 billion by 2014
Four wheeler market: 2 million in 2005, 4 million in 2015
 Legal issues over a plant

The corporate income tax effective rate for domestic companies is 35% while
the profits of branches in India of foreign companies are taxed at 45%.
Companies incorporated in India (any setup other than a branch) even with
100% foreign ownership, are considered domestic companies under the Indian
laws.
 New Export-Import Policy of 1992 provides substantial tax incentives for
investments in Export.
Major exporters are allowed to operate bank accounts abroad to facilitate
trade. Companies that sell in the Indian market as well as international markets
may deduct export earnings from their tax liabilities.
 ORGANISATION STRUCTURE

OXYGEN LEGAL POWER FURNACE

Q. C. DEPT. PROCESS COMMERCI
PLANT PLANT HR & ADMIN.
AL

SHIFT GENERAL

ELECTRICAL I FURNACE

CENTRAL POLISHING DESPATCH

MANUFAC LAB
TURING

RECRUIT HRD
R&D TRAINING
MENT
WEIGH
ACCOUNTS
BRIDGE
 FINANCIAL DECISIONS

• Investment Decisions– Allocation Of Funds

Capital Investment WC Investment

• How to Finance- External borrowings / Debts

or share capital or retained earnings.

• Efficient and effective management of current assets to maximize return
and minimize the risk of liquidity.
• Better Operating Cycle.
 Financial plan
• Start-Up Costs—The start-up cost for Cars will be Rs.10,300 million.

This figure includes

• Office supplies- 500 million

• Marketing and reconditioning- 500 million

• Accounting and legal- 300 million

• Rental security deposit- 1,500 million

• Insurances- 1,500 million

• Plant & machinery- 4000 million

• Furniture & Fixtures- 800 million

• Human Resource- 300 million

• Chamber of Commerce dues- 200million

• Improvements to location- 500 million

• Miscellaneous expenditure-200 million

• Sources/Uses of Funds— A Rs.5,000 million ten-year loan, rest will be
financed by the mother company and Rs.6000 million of floor plan will be
used to operate the business.
• Summary of Financial Projections

– Cash Flow Projections—Budget Cars foresees no cash flow

projection problems.
– Profit/Loss Projections/Breakeven Analysis—The Company expects
to achieve its break even in the first year itself.
– Balance Sheet Projections—ARMD projects an increase of net worth
the first year to be Rs.2000 million.
 Human Resource Management

• Selecting the capable engineers with high KSA.

• Experienced engineers preferable.

• Train them to enhance their efficiency and effectiveness skills.
• Short term target attaining abilities.
• MBA’s from reputed institution- preferably knowing German language
properly. Eg. CUIM’s German MBA course.
 MARKETING STRATEGY
• Growth in Indian economy, Leads to increase in
Life style.
• Demand for the cars is Increasing.
• As per NCAER (National Council of Applied
Economic Research) largest market for the cars in
India are North, Central and West India, where
demand for passenger cars is increasing at the rate
of 8.5 to 9.5 per annum.
• As per strategy the first move will be in Bangalore
market with pilot run in Mumbai.
• Then Mumbai, Ahmadabad, Delhi, and Ludhiana
will be targeted.
• Advertisement through audio-visual, Hoardings,
Print media and Social Networking sites.
• Brand ambassador, after achieving Break even.
 Technological Aspects

• Turbo Cool 2 Engine: Engine made up of alloy of

Titanium and Steel.

• Run-Flat Tires: Tires do not change their shape, when

without air pressure in them. In such a condition, the car
can even be driven for 75-100 miles or so. Hence, with
run-flat tires, the convenience and security levels of the
car are increased.

• Self Parking Technology: With such an advanced

technology, the driver only needs to put his foot on the
brake and automatically, the car will parallel-park by
itself.
 Quality Management

• Target Population: Upper Middle and Higher

class people.

• Fuel Economy: Runs on petrol and fly wheel

technology.

• Better and stronger parts: Duralumin, fiber glass and

which are lighter and stronger than steel.

• Dual Gear Box and Drive by wire technology: Better

flexibility and convenience to the driver.
 Critical Success Factors

• Team composition

• Team work

• Communication

• Motivation

• Project goals
POSSIBLE RISKS:
  Risk arising from within the industry itself (structural risk)

 Risk arising from the expected future performance of the industry

(growth risk)
 Risk arising from forces external to the industry (external sensitivity risk).

MEASURES:

• Continuing measures for reducing vehicle emissions from conventional vehicles:

timetable for 2010 and 2012
• Supporting research and innovation
• Drawing up guidelines on financial incentives and informing consumers.
/////Thank you/////