Ijas Project

KIRLOSKAR ELECTRIC LIMITTED

INDUSTRY PROFILE

In initial years no overseas company thought of setting up a manufacturing facility

in India, Burma, Aden, Silone, many of them merchandising & contracting the rough their

local agent in India, like kilburn & company Martin & company , Killick, Nixon, F&C, Osder

& company. Balmer Lawree, Jessup & company, John Fleming ect. Understanding the

growing demand for electricity particularly in textile mills grieves, s hotel, biggest group of

spinning mills, set up its electric engineering department in 1904 holding agencies for

Crompton F&C, parkinson & variety&company & took up contract jobs for electrification.

After commissioning the Calcutta & madras power plants Crompton established

its offer in their cities in 1899 & 1904 respectively.GEC (India) Ltd. For batteries(national

carbon products) in 1934 & AEI manufacturing company limited at Calcutta in 1939, among

the India companies Bengal Electric lamps was established in this area. Other important

companies like L&T (lawren & turbo) a partnership of two enterprising young people in

1938. Bajaj electrics 1938, Ess , KAY Engineering(1935), Jyothi Ltd (1934), Mysore

Electricals(1945) then kirloskar Electric(1946) & GFM manufactorers, Punjab(1946) ect.

Over the past two decades the power plant equipment industry has been

witnessing a process of consolidation in the late 1970’s, there were 10 to 12 players and now

a day’s only 4 to 6. The consolidation or merger or acquisition has resulted in stronger

companies in increased size, Economies, wider product rang & enhanced financial strength.

They now have greater access to market & higher bargaining power as a result of companied

technologies strength.

Heavy Industry in India comprises of the heavy engineering industry, machine tool

industry, heavy electrical industry, industrial machinery and auto-industry. These industries

provide goods and services for almost all sectors of the economy, including power, rail and

road transport. The machine building industry caters the requirements of equipment for basic

industries such as steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping,

paper, cement, sugar etc.


Performance of Industry

The industrial sector recorded a healthy growth of 10.3% (measured in terms of the

Index of Industrial Production) during the period April-Oct. 2006-07 as compared to 8.6

percent achieved during the corresponding period last year. Capital goods sector, which

posted a robust growth of 16.9 per cent in 2005-06, has maintained its growth momentum

during the current year as well. According to the Index of Industrial Production, capital goods

sector posted a growth of 15.0 per cent during April-Oct. 2006-07.

Heavy Electrical Industry

Heavy Electrical Industry covers power generation, transmission, distribution and

utilization equipments. These include turbo generators, boilers, various types of turbines,

transformers, switchgears and other allied items. Majority of the products manufactured by

heavy electrical industry in the country, which includes items like transformers, switchgears

etc. are used by all sectors of the Indian economy. Some major areas where these are used are

the multi core projects for power generation including nuclear power stations, petrochemical

complexes, chemical plants, integrated steel plants, non-ferrous metal units, etc.

India is the only other developing country besides China, which produces a full range

of electric power generation and transmission equipment. In fact, the history and growth of

Bharat Heavy Electricals Ltd.(BHEL), a public sector enterprise under in the country,

symbolizes the overall growth pattern of heavy electrical industry in the country. BHEL has

the unique distinction of being one of the very few companies in the world, manufacturing all

major power generating equipment under one roof.

The industry has been upgrading the existing technology and is now capable of taking

up turnkey contracts also for export markets. The industry has been delicensed. Foreign

collaborations are allowed with 100 percent FDI. The country is planning to add 150,000

MW power generation capacity in the next 10 years. This will generate substantial demand

for heavy electrical equipments.


The heavy electrical industry is capable of manufacturing transmission and

distribution equipment up to 400 KV AC and high voltage DC. The industry has taken up the

work of up gradation and transmission to the next higher voltage system of 765 KV and have

upgraded their manufacturing facilities to supply 765 KV class transformers, reactors, CTS,

CVT, bushing and insulators, etc.

The investments in R & D by the electrical industry are amongst the largest in the

corporate sector in India. Large electrical equipment used in steel plants, petrochemical

complexes and other such heavy industries are also being manufactured in the country. The

domestic heavy electrical equipment manufacturers are making use of the developments of

the global market with respect to product designs and upgrading of manufacturing and testing

facilities. The heavy electrical industry has established its reference in the global arena also.

These encompass thermal, hydro and gas based power plants, substation projects,

rehabilitation projects, besides a wide variety of products like transformers, photo voltaic

equipments, insulators, switchgears, motors, etc.

Generator sets:

AC Generators manufactured in India are on par with international AC Generators

and consistently deliver high quality power with high performance. Domestic manufacturers

are capable of manufacturing AC Generator right from 0.5 KVA to 25,000 KVA and above

with specified voltage rating. The imports and exports of turbines and generators during

2005-06 were Rs.2420 crore and Rs.565 crore respectively.


a. Background and inception of the company

Name of the company KIRLOSKAR ELECTRIC CO

LTD

Constitution Public Limited Company

Date of establishment 2005

Sales head quarter Bangalore

Factory location Govenahalli, Nelamangala

Incorporation 2005

Contact phone no 9180-7730263/64/66

Authorized capital Rs.42 Crores

Subscribed and paid up

capital

Rs.38.77 Crores

Land and building area 16 Acres and 4.16 Acres

Financial year turnover Rs.245 Crores

KIRLOSKAR ELECTRIC LTD. is established in 1946. It is one of the large

engineering and manufacturing companies in India today. The KEC Network of 9

manufacturing locations, 34 sales offices spread across the country, wide network of spares

dealers and service centers and hundreds of dealers enables the company to efficiently serve

the customers and advise on suitable products, systems and services at competitive rates.

KEC makes more than 70 products under 8 product groups catering to core sectors of the

economy like Power Generation, Transmission and Distribution, Industry, Transportation,

Renewable Energy etc.


Kirloskar electric has:

Installed base of 2.6 million motors in Petrochemicals, refineries, steel, cement plants,

aluminum, fertilizer and agro based industries etc.

Supplied over 15000 MVA of transformers operating in T&D network up to 100MVA

220kv Class for utilities, captive and industrial users.

Supplied traction electrics, power car generators and Batteries to the Indian Railways.

Kirloskar Electric is organized around 2 business sectors, power and industry:

Industrial power and control equipment.

Power Generation, Transmission and Distribution and control Equipment.

Every employee is given an equal opportunity to develop himself and grow in his

career. Continuous training and retraining, career planning, a positive work culture and

participative style of management have engendered development of a committed and

motivated workforce setting new benchmarks in terms of productivity, quality and

responsiveness.

Their recent Acquisition of Lloyd Dynamowerke in Bremen, Germany has

complemented and strengthened our core business by adding world class products and Skills

that are accepted around the world as the best.

Founders

Shri Laxmanrao Kashinath Kirloskar was a successful industrialist, but

his chief merit lay in the trail he blazed, for the principle in life he depended upon were his

vision and a spirit of pioneering.

Laxmanrao K. Kirloskar,

Founder, Kirloskar Group of Companies


Shri Ravindra L. Kirloskar was the youngest son of Laxmanrao and

Radhabhai Kirloskar, who later headed KEC operations. Having a degree in Electrical

Engineering from the Worcester Polytechnic Institute, U.S.A. he began his professional

career in Kirloskar Brothers. In 1942 he designed and built India's first Electric motor at

Kirloskarwadi with his colleague N.K.Joshi. He guided us to the highest level of quality...

"Quality must go beyond standard tests and procedures. It must be equated with self

respect and personal pride."

Ravindra L. Kirloskar,

Founder, Kirloskar Group of Companies

b.Nature of business carried

The business carried by KEC is production of industrial goods viz., A.C motors, D.C

motors, generators etc. KEC produces the motors, generators and transformers in national as

well as export to many foreign countries. The KEC Company mainly manufactures high

voltage motors and generators as per the customer requirements. The company has no

competitors for the kind of manufacturing. It only faces competitions from foreign

companies. This company has a kind of monopoly in producing big motors and generators in

India


c. Vision, Mission and Quality Policy

Vision & Strategy

“The power of now” is the energy of opportunities that

come to us disguised as challenges. The power of now at Kirloskar Electric is the dynamics

of making opportunities work as by meeting client's tough specifications of cost and quality.

Mission

To remain a leading producer of electrical technology products in India.

To continuously grow in our business and became a significant player in the world

market.

To maximize return on investment.

To achieve international levels of excellence in technology and quality.

Quality Policy

KEC is committed to achieve customer's delight by effective deployment of its

Business Process. Quality performance demonstrated is the result of optimization of design,

effective process control in manufacturing together with testing and approval process in the

environment of Quality management system. Furthermore, our trained and competent team

striving towards continuous improvement paves our steps towards sustaining the interest of

our valued customers.


Quality Policy of kirloskar Electric Company ltd “Shall be to continuously

improve the effectiveness of the Quality Management System, conforming to ISO 9001:2000

standards in design, manufacturing, marketing and service at competitive prices, products, of

such quality resulting in customer satisfaction and market leadership”

d. PRODUCTS PROFILE

AC Motors

Kirloskar Electric was the first company in India to manufacture AC Motors way back in

1948. Since then it has manufactured millions of motors for domestic and International

Market. Its initial technology support from BRUSH Electric UK & technical collaborations

with NEI Peebles Electrical Machines, Scotland and AEG of Germany enables KEC to

develop high capacity motors for various applications. A strategic alliance with FUJI Electric

of Japan enabled the company to absorb and implement state of art technology for motors.

The product range in capacity and variety caters to multitude applications. KEC has

electric motors for every conceivable application and industry. The wide industrial range is

from 0.12 to 20000 kW in frames 63 to 1250. Motors are offered in open type, closed type

and heat exchanger type enclosures. Voltages range from 340 to13800V Class F insulation

being standard for all motors, class H insulation is also offered for low voltage motors.

The rugged and highly reliable higher range motors are specifically designed for exacting

duties. The modular design totally enclosed air to air heat exchanger is the first choice of

industry for the more arduous applications. Compact rib cooled motors with unique internal

cooling are used for duty atmospheres.


DC Motors

Kirloskar Electric forms its fabled stable of DC Motors have

put into international use more than 0.1 million motors since 1969. The wide product range

in capacity and variety satisfies the needs of a multitude of applications. The Industrial

Laminated Yoke range starting from frame 80 to 1250 with outputs of 0.75 to 3250 kW

caters to the industry requirement of torques up to 200 km. The rugged and reliable higher

range of motors are specifically designed for exacting duties in a hot and cold metal rolling

mill drive, the sticky rubber mixer drive and continues duty cement kiln drive. These

products come from an in house developed technology based on the best of world class

international design and manufacturing concepts.

Kirloskar Electric has a history of excelling in special application and

customization. It is this spirit that saw us develop complete electric for 5 & 10 cubic meter

Electric Shovels for coal mines. Today, there are more than 150 Electric Rope working in

Indian coal mines, completely powered by Kirloskar Electrics. India's premier aircraft

manufacturing facility in Bangalore houses one of the worlds few high power and outdoor

duty vertical DC motors, for helicopter blade load testing made by Kirloskar.

Continuing our efforts in supplying clean & efficient motive power to the

environment friendly electric material handling equipment, it is only natural that KEC

moves on to electric passenger vehicles. The prestigious CERN Super Particle Accelerator

project in Geneva uses Kirloskar Electric Super Conducting DC Corrector Magnets in very

large numbers. This is a high precision product of extreme reliability and has to work in a

cryogenic environment.

The constant pursuit of newer applications has pushed KEC to enter space

applications. Our space duty Brush less DC Servo Motors will provide the Rocket Nozzle

control force in Indian space launch vehicle for the future.

The fully equipped and highly quality manufacturing facility backed by a

strong force of dedicated and skilled design, marketing and service team with a focus on

quality brings in great levels of reliability to the product that is trusted in India and abroad.


AC GENERATORS

The unique strength of the company in customizing AC generators for special needs

of missiles projects, warship, battle tanks, and fighter aircrafts makes KEC the only company

to offer AC generators for the widest of applications. Continuous product development has

kept pace with corresponding prime mover availability like wind mills, gas turbines ,water

turbines, steem turbines and variety of makes of diesel engines.

The products quality based on world class technology and state-of-the-art

infrastructure makes leading consultants specify Kirloskar Electric AC generators again and

again. Kirloskar electric offers AC generators from 1kVA to 20MVA,right from low voltage

of 220v to high voltage of 11000 volts, for synchronous speeds as high as 3000rpm to as law

375rpm, for standard frequencies of 50Hz or 60Hz or even special 200Hz and 400Hz.

In alternatives of open construction or closed construction –air cooled or water

cooled, mechanical construction of single bearing double bearing and variety of excitations

system both brush type, with class F or class H insulation, meeting the performance

requirements of national international standards. In the aspects of dimensions, size, weight,

aesthetics and performance they are comparable to the best in the world.

e. Area of Operation

Global/National/Regional:

Area of Operation-Global

Asian countries Other countriesSaudi Arabia

Oman

Yemen

Kuwait

Syria

Malaysia

New Zealand

United kingdom

Africa

France

Sweden

Germany


Dubai

Sri Lanka

Kualampur

Singapore

Greece

Turkey

Italy

Hungary

Area of Operation-National/Regional

North zone South zoneLudhiana

Lucknow

Jaipur

New Delhi

Hyderabad

Bangalore

Hubli

Chennai

Cochin

Coimbatore

Madurai

East zone West zoneKolkata

Guwahati

Patna

Bhubaneshwar

Durg

Nagpur

Mumbai

Pune

Ahmadabad

Indore

Nashik

Surat

f. Ownership Pattern:

Kirloskar Electric Company Ltd is a public limited company. Share holding

pattern of the company is as follows:


Particulars Share Holding (In %)

Share holding of promoters 43.40

Foreign holdings 00.00

Public shareholding institutions 22.33

Non-institutions 34.37

TOTAL NUMBER OF SHARES OF THE COMPANY

Category No. of shares held Percentage of shareholding

Promoters 13569514 43.40

Mutual funds and UTI - -

Banks, financial institutions 4257938 13.62

Foreign investment

Institutions

2692154 8.61

Private corporate bodies 1002303 3.20

Indian public 7764488 24.83

NRIs/OCBs 1982420 6.34

TOTAL 31268817 100.00

Kirloskar Electric products are readily accepted in USA, Europe, Canada, Hong

Kong, Australia, China, Singapore, South Africa, Malaysia, Pakistan, Bangladesh, along

with the hard to earn certification by world's leading companies, are the direct result of an

ongoing process of Streamlining, Redefining and Recreation of Processes, Design and Test

parameters to Six Sigma and other stringent quality measures. Along with innovation as a

way of life and willingness to take up any challenging customization project and making it a

success so much so that they are in the process of changing their market definition from

90:10 to 40:60 domestic to export ratio. Contract manufacturing, Turnkey projects,

Customized Products and testing facilities form our current export profile.


g. Competitors Information

Kirloskar is facing competition mainly from un organized sectors. The various

Competitors of kirloskar are as follows

Crompton grieves

Bajaj electrical

Siemens

Westing house bakers and signas

Crompton Parkinson

Philips electrical

L&T

Mysore electrical

h. Infrastructural Facilities

Shop Floor Facilities:-

Facilities available at shop floor are:

a) CNC lathe

b) Heat treatment

c) Winding machines

d) Owens

e) Testing equipments

f) Vacuum impregnation machine

g) Heavy duty cranes.

Communication:

The internal mail service is operated by personnel department. Telex, fax and courier

services are available in postal section of marketing department. Inter units and branches


communication is through E –mail. Personal call can be made from the public telephone

booth situated near the security gate.

Security checks:

Any material official/otherwise that is being brought in taken must have

appropriate documentation. Regular security checks are conducted to prevent unauthorized

material leaving entering the organization. Employees required to leave the factory on

official/personal work during working hours are to be submit an authorized gate pass to the

security.

Medical facilities:

The medical centre is staffed by a resident Doctor and trained attendants

and supported by efficient Ambulance service.

Library:

A well-maintained library provides member with a latest books, reports and

magazines on Science, Management and Technology. Journals in engineering and

management are scanned regularly and relevant articles which are likely to be of interest are

highlighted, indexed and entered into computerized data base. A newsletter providing

information on the entries is circulated to all departments.

TIMINGS:- 9.00am to 4.00 pm

BOOKS CIRCULATION:- 10.00am to 2.00pm

Canteen Facilities:

Canteen services are available as follows:

1. BREAK FAST:- 6.15am to 6.30am

2. LUNCH:- 11.00am to 11.30am

3. DINNER:- 7.00pm to 7.30pm

4. COFFEE or TEA:- 9.00am, 1.00pm, 5.00pm, 12.00pm, & 4.00am


Transportation Facilities:-

Transportation facilities are rendered by the KEC to all the Daily Rated

Employees and also Monthly Rated Employees based on their shifts.

i. Achievement/Award

Millstones

India's first satellite tracked

Proud scientists celebrated the successful tracking of India 's first satellite. The meticulously

planned event was held in Hassan, Karnataka. The team had finalized the specifications for

AC generators with Kirloskar Electric Co., taking care of intricate details like transient

loading and transient voltage regulation performance.

Missile test fired

The first ever indigenously built missile was test fired in early 90's, year before; premiere

defense organizations perfected the intricate performance requirement of the power supply

unit. KEC played a key role in building the entire power supply unit. The AC Generators of

KEC were customized for arduous duty.

Rajdhani flagged off

The research wing of India Railways worked with specialists:From KEC to design highly

reliable AC Generators that would take that heat, dust, smoke and the acceleration of the

bogie and continue to function giving passengers of the Rajdhani greater speed, greater

comfort and increased safety.

Stealth ship launched

On 18th April 2003, national dailies splashed the launch of the first indigenously designed

stealth ship. The ship has four KEC 1000kW AC Generators which are the result of our

close association with Indian Navy, in the supply of AC Generators, for frontline battle

ship.


Certifications

The Export House Certificate

Bureau Veritas Quality International (BVQI)

Bureau Veritas Quality International (BVQI) has certified the

Quality Management System of KEC. We are also first in electrical industry to obtain ISO

9001-2000 certification by BVQI.

The ISO 9001-2000 certificates awarded to: KEC - Bangalore, Hubli, Mysore, Tumkur

Confirmative Europeenne (CE)

‘CE' stands for ‘CONFIRMATIVE EUROPEENNE' and conformity to

European standards meeting basic requirements of Safety, Health, Environment &

Protection(SHEC). KEC is entitled to provide 'CE Marking' for AC motors, AC generators

and DC machines. ‘CE' marking allows the product un-registered legal access to the

European market.

KEMA Certification

‘KEMA'registered quality B.V.Netherlands, notified authority have

tested our products with respect to low voltage directive, EMC (Electromagnetic) directive

and MD (Machinery) directive.

NVLAP Certification

We are proud of having established an independent laboratory

duly certified by NVLAP - NIST, USA for testing of energy efficient 3phase Induction

motors upto50HP

http://www.kirloskar-electric.com/certification.shtml









j. Work flow model

WORKFLOW MODEL

1. Usage of material:-

a. Goods issue against production order.

b. Ensuring specified material is taken for processing.

c. Ensuring inspection status of input material as indicating conforming before

taken up for processing.

d. Reporting of damage.

2. Usage of Document & Data:-

a. Maintaining pertinent issues of drawings, specification, datasheet, process

sheet etc.

b. Provide applicable work instruction & reference of process sheets, production

resource tools etc., along with production orders.

3. Usage of equipment for processing:-

a. Creation of Routings in SAP system.

b. Ensuring that appropriate equipments are used for production.

c. Co-ordination of preventive, maintenance activities with plant engineering.

d. Ensuring prompt action in the event of process equipment breakdown.

e. Releasing of measuring instrument for calibration.

f. Verification of jigs and fixtures.

4. Customer Supplier Product:-

a. To receive communication regarding customer supplied product.

b. Storage handling & processing of customer supplied product.

c. Reporting of damage/loose/uncertainty of customer supplied product to

production planning and materials management department.


AC Motor Manufacturing Activities

Customer Requirement Design

Coil Section Sub-Assembly section

(Inspection)

(Inspection)

Stator Winding Rotor Winding

(Stator) (Inspection) (Rotor)

Impregnation and Dipping

(Inspection)

(Inspection)

(Inspection)

(Inspection)

Production Planning

Raw Material

Balancing

Assembly

Testing

Painting

Packing


DC Motor Manufacturing Activities

Customer Requirement Design

Coil Section Sub-Assembly section

(Inspection)

(Inspection)

Stator Winding Commutator Section Rotor Winding

(Stator) (Inspection) (Rotor)

Impregnation and Dipping

(Inspection)

(Inspection)

(Inspection)

(Inspection)

Dispatch

Production Planning

Raw Material

Balancing

Assembly

Testing

Painting

Packing

Dispatch


k. Future growth and prospects

Growth perspective:

The strategy that we laid out is bearing fruits now. We are now laying down a

process to ensure long term enduring sustained growth with stable revenue growth. We want

to enhance our market share in all the areas which we cater to. This can be had only with

continuous hard work and by being globally competitive. The Company is setting growth

directions with assiduous planning for each of its segments with processes to ensure

implementation and monitoring. The operating standards are being set and reset to bring in

competitiveness on all fronts and to bring in all round enhancement of efficiency. Every

dimension of our operations is being measured.

The growth that the company has witnessed over the past five years has

been sustained in a strong and steady way. After completing the restructuring activities in

2004, the company has grown to its highest ever turnover of Rs. 728 Crores with a profit after

tax of Rs. 23.7 Crores in 2007-2008. These correspond to a growth rate of 23% in turnover

and a 32% in profit. The Company’s order books stood at a record high of 132.55 Crores. To

capitalize on the demand for our products, we have increased our marketing presence by

adding new sales offices in the previous year. We continue to invest in new infrastructure and

strengthen our human resources to meet this growing demand. We are focusing our energies

in particular on our transformer and rotating machine business where we strive to make

bigger and larger machines for our esteemed customers in India and abroad. Similarly, we

continue our increase our presence in the Switchgear and Electronics area. Our new business

of diesel generating sets under the brand name BLISS continues to grow well and we plan to

expand the existing range of products.


The board of directors of Kirloskar Electric, at their meeting held on

(August 20, 2008) approved the acquisition of nearly 95 per cent stake in German

manufacturing company, Lloyd Dynamowerke GmbH & Co (LDW) and 100% holding in

Lloyd Beteiligungs. The acquisition is expected to cost around 3.2 billion Indian rupees (€ 50

million). The acquisition is through the wholly owned subsidiary of the Company Kirsons

B.V. - in the Netherlands. LDW manufactures electrical rotating machines and drive systems

which are sought in a market where performance and efficiency are desired for industrial

applications for extraordinary requirements. LDW has cultivated a regular customer list

which includes companies such as Siemens, Alsthom, and Thyssen Krupp andGottwald.

According to Vijay R Kirloskar, Chairman & Managing Director of the

Company, the acquisition is of strategic interest to the Company. It will give Kirloskar

Electric complementary engineering skills, a unique footprint in Europe and an important

customer base built over the last few decades. KEC will benefit from LDW's technology and

ongoing research work with German universities. KEC will be able to sell LDW's products

under the AEG brand name in the Indian subcontinent and ASEAN countries and address

the market for high voltage electrical machines over 50 Megawatts.

KEC and its group Companies have factories located in Bangalore,

Mysore, Hubli, Pune and Tumkur. The Company has over 30 sales offices in India and

offices in Singapore, Malaysia and the U.A.E. With a gross turnover of Rs7.65bn in 2007-08,

Kirloskar Electric is a leading manufacturer of electrical equipment in India.

Lloyd Dynamowerke GmbH & Co KG (LDW) located in Brenien,

founded in 1915, was a former member of AEG. In 2006, a private equity Company, CMP

Funds I GmbH from Berlin, Germany acquired the new majority ownership of LDW and

provided additional capital for the manufacture of motors, generators and drive systems. For

the year ended December 31, 2007, LDW's revenues were US$78mn. It is a profitable entity

with positive operating cash flows and growth trends.


The McKinsey 7S Framework

.

Let's look at each of the elements specifically:

Strategy: the plan devised to maintain and build competitive advantage over the

competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the

job done.

Shared Values: called "super ordinate goals" when the model was first developed,

these are the core values of the company that are evidenced in the corporate culture

and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.


STRATEGY:

Pricing of kirloskar:

The name “kirloskar” itself is the mark of quality for the customer. The company has

across different price terminologies/price strategies. They are as follows:

1. List price

2. Discount

3. Payment periods

4. Credit terms

5. Seasonal pricing

6. Area wise pricing

7. Pricing on demand

STYLE:

Top down style

In KEC/KSL management follows the top down decision making at the time

of taking any decision relating to management.

Board of directors and chief executive of the company give decisions about

the management relating problems of the company. The decision taken is flow from top to

down, (to Middle Level and Lower Level Management) in KEC they follow the participative

leadership in case of recruitment.

Participative leadership:

The head of the department takes some decisions there may by consulting the

other employees. In this type of leadership all the level of management participate in taking

decisions. In case recruitment A.G.M personnel department consult the entire department

head to take decision regarding recruitment of new employees.

STAFF:


It refers to the people working in an organization. the company’s people resources

and how they are developed, trained and motivated. The process of staffing includes

various processes like recruitment and selection procedures, training etc. It refers to how

the people are developed, trained, socialized, integrated, motivated and how the

employees’ career is shaped in an organization.

Total no. of employees - 1695

Corporate - 349

Manager - 175

Worker - 615

Temporary - 556

Technical Staff:

These are the staffs they are responsible for the work related to technical

aspect. In this company they are appointing well –qualified and experienced persons

as technical staff. So these staff will have good knowledge about the working

environment.

Supervisory Staff:

These are the persons who are in charge with supervising the other employees in

the organization. In this company they are employing experienced staff as supervisor.so

they can observe the fellow workers and guide them as per the companies need.The

experienced supervisors are one of the key assets of this company.

Clerical staff:

Clerical staff required for clerical work, clerical work need for all organization

for clerical staff required B.com/BBM


SHARED VALUES:

1. Integrity among various departments

Various departments in organization are working successfully. Coordination

of all the functional departmental area works together to achieve the stated object of

the company.

2. Team work among the employees

Every person or worker in the organization knows the objectives of the

company. With the proper communication network and corporation among the

employees, synergy is existing in the organization.

3. Customer satisfaction

The status of customer satisfaction is measured through two principles

interventions.

a. Customer satisfactory survey

The customer satisfaction is measured by sending structured questionnaires

to major customers and exacts their opinion about the product being offered reported for

internal reviews and also for reviews at higher level in the organization. The results of these

are used to update the quality management system and procedures.

b. Customer complaint handling system

The calls and complaints from the customers are systematically processed for

timely response and solution right from the branch, maintenance centre or the site itself. The

complaints are continuously monitored and regularly reviewed by the unit chief to ensure

speedy redressal.

STRUCTURE:

CHAIRMAN

DEPUTY MANAGING DIRECTOR

COMPUTER INFORMATION TECHNOLOGY

A.C. ENGINEERING

UNIT CHIEF

QUALITYPP & MM

D.C. ENGINEERING

VENDOR DEVELOPMENT DEPARTMENT

PERSONNEL DEPARTMENT

FINANCE DEPARTMENT

PRODUCTION DEPARTMENT R & D


It is the part for specialization and co-ordination. It comprises of the basis organization of

the company. Its departments, reporting lines areas of expertise, and responsibility (and how

they inter–relate), and the way in which the parts of a thing are arranged or organized.

STRUCTURE

Organization Chart

The above design of Organizational Structure is a critical task of the top

management of the Organization. It prescribes the formal relationship among various

positions and activities.

It reduces external uncertainty through forecasting, research and planning in

the Organization. It also reduces internal uncertainty arising out of variable,

unpredictable, random human behavior within the Organization through control

mechanisms.

1. Production department structure


2. Human resource department :

Unit chief

HOD

Manager(DC) Manager(AC) Manager (outsourcing and

production)

Plant engineer

SAP activity

engineerPTC engineer

Shift in charge 1 Shift in charge 2 Shift in charge 3

Commercial shop & DC sub

assemblyRotor winding

Coil winding

AC Coil section Rotor & Stator AC Winding

AC & DC completion &

painting

AC & DC

(T.U.B)

Large ( AC/DC) assembly

Medium (AC/ DC) Assembly

DC shop AC shop


H R M POLICY

KIRLOSKAR ELECTRIC COMPANY recognizes its employees as the most

important asset for its continuous growth. HRM in KEC shall strive to ensure continuous

organization growth by nurturing the strength of its employees and providing the

environment and opportunity for every individual to rise to his or her highest potential

identify and achieve his or her personal goal within the framework of organizational, societal

and national objective. It shall Endeavour to uphold the dignity of individuals, by recognizing

their worthy contribution and making them feel proud partners in progress through the

following measures:

Compensation Trainers

3. Finance Department

President

Vice president

Manager for Employment

Manager for compensation

Manager for training and development

Manager for safety

Recruiter Clerk Safety specialist

VP & CFO

DGM FINANCE DGM-CORP FINANCE

ASST. MANAGER

TREASURY MANAGEMENTEXPORT

EXCISE FORMALITIESMIS COSTING, INVENTORY

PAY ROLL

PAYABLES & ITS RECOVERIES

VP & UNIT CHIEF


Finance management in a broad sense provides a conceptual framework for

financial decision making. It is efficient and wise allocation of funds to various uses. In the

sense, it is integral part of overall management. Kirloskar Electric Ltd., which is situated at

Govenhalli, has a corporate finance department at Malleswaram, which is responsible for all

the major financial decisions.

Corporate finance department:

The corporate finance department controls thee Financial Activities of all the units of KEC.

It is responsible for taking all the important financial decisions and also prepares the annual

operating plans and the long range plans.

There is a system to monitor the daily credit of production by the product shops, billing

collection by marketing department. Purchase department has a daily operating plan to

monitor the purchase on daily basis; the monthly operating plans are divided into weekly and

daily operation plans. The unit has a fixed target on daily basis derived from operation plan

prepared on daily basis and circulated to the entire concerned corporate officer.


4. Quality assurance department

Functions of quality assurance department

The functional responsibilities of different section of quality assurance divisions are

as follows

1. Incoming material inspection and testing

2. In process inspection at product shops

3. Final inspection and testing

4. Quality laboratory

.

Deputy General Manager

Senior manager

Manager

Asst. Electrical manager

Asst. Mechanical manager

Inspector Inspector


SKILLS:

The term skill refers to those activities of organizations, with which they do best and for

which they are known.

Classification of skill at KSL is as follows:

1. Top Management Skills:

Top management includes board of directors, secretaries and unit chief. Top

management skills includes balancing, integrating, setting, priorities, developing standards,

conceptualizing, leading, persuasive, and planning process.

2. Supervisory Management Skills:

It includes additional general manager, deputy general manager, senior

manager and manager. Every superior in the unit should have sound technical knowledge of

his field to provide proper instructions and guidance to operatives, accuracy in work, and

communication skill for interaction with the higher management.

3. Technical and Clerical Skills:

Technical skills are required from an individual as per the project

requirements. For technical skills employee should be engineer/diploma holder. For clerical

work candidates should be Bcom/ BBM.

Candidates who have passed industrial training institute are engaged scheme under trade

apprentices’ for a year. Besides fulfilling the training requirements under the apprentices act.


SYSTEM:

Management Information System (MIS)

“A Management Information System, as the term is generally understood, is an

integrated, user-machine system for providing information to support operations,

management, and decision making functions in an organization. The system utilizes computer

hardware and software; manual procedures; models for analysis; planning, control and

decision making; and a database.” Management Information System is the application of

information technology to support business activities. MIS and the information it generates

are generally considered essential components of prudent and reasonable business decisions.

Management Information System, which has been computerized partly at Kirloskar

Electric Company, is used for specific purpose that has been identified.

Personnel, Marketing, Finance, Accounting, Payrolls functions, Production planning,

Material management, Budgeting etc are the departments which are made computerized in

Kirloskar Electric Company.

The Management Information System utilities: -

Computer hardware and software.

Manual procedures.

Models for analysis, planning, control, and decision-making.

A database.

SWOT ANALYSIS


The SWOT approach is distillation of the steps and considerations that should be

taken to formulate and effective corporate strategic plan. The term SWOT is the acronym for

strength, weakness, opportunities and threats.

STRENGTH

KEC is one of the rare units in the world which produces the high voltage AC/DC

motors and generators.

Management is very stable, that forms strong foundation of the company.

The company got the ISO certificate for producing quality products.

Well equipped quality control department for inspecting the quality of incoming of

raw materials and final products.

Employees are being provided with all necessary welfare facilities.

There are highly skilled and committed employees.

There branches have been spread widely not only in India but also all round the globe.

Company guarantees job security to all its employees this has made them to more

commit and loyal employees.

WEAKNESS

Under utilization of the resources because of overstaffing.

As the company provides job security the employees have become less productive.

Less coordination between different departments.

Most of the workers in the organisation are of aged persons, which might reduce the

company’s productivity in future.

No proper elimination of scrap materials like copper, if properly utilized will give

return of 400 per kilo gram of copper scrap.

OPPORTUNITIES


The company has the opportunity to expand its production units due to more demand

for its products.

The company has more demand for its parabolic leaf spring from abroad.

The company has got better tool for better planning and decision-makimg.

The company can establish more branches across the globe.

There is growing demand for Motors and Generators in other developing countries.

THREATS

Competition from BHEL, Powerica, ABB, Siemens etc.

Workers absenteeism is very high, since most of the workers are old.

Cost of production is comparatively high.

The company faces competition from not only large units but also from smaller units,

because of concession duties/tax deduction available to them.

As compared to other company in the industry workers get less salary, this might cause in for

attrition of more skilled and efficient employees in future.


ANALYSIS OF FINANCIAL STATEMENT

Ratios 2009

Current ratio 1.20

Net profit ratio 6.305

Fixed asset turnover ratio 5.809

Proprietary ratio 0.953

1) Current ratio:

The current ratio is the measure of the firm’s short term solvency. KEC has a

current ratio of 1.20:1. Therefore it may be interpreted to be in sufficiently

liquid. The higher the current ratio, greater the margin of safety. The current

assets are more than the current liabilities as it shows the firm’s ability to meet

its current obligations.

2) Net profit ratio:

This ratio used to measure the overall profitability and hence it is very useful

to proprietors. It is an index of efficiency and profitability of business. The

higher the ratio means greater will be the profitability. Here the ratio is 6.305

it’s satisfactory.

3) Fixed asset turnover ratio:

Here the fixed asset turnover ratio times implies that it generates only a sale of

5.809 for one rupee of investment in fixed asset. The fixed asset turnover ratio

is not satisfactory.

4) proprietary ratio:

An ideal proprietary ratio of 1:1 is considered to be satisfactory. Since, the

proprietary ratio of KEC in 2009 is 0.953 its satisfactory and the firm is liquid

and has the ability to pay off its immediate obligation in time


Learning experience:

The first and foremost strength of Kirloskar Electric Company’s is

its Brand name. For any organization, to achieve expected Mission it is necessary to have a

full pledged headed by the experienced devoted task managers and skilled supporting staffs.

Kirloskar Electric Company is well established company and its performance and the

satisfaction level amongst employee is very high and the unit is having excellent order-book

position from within the country and abroad as well.

In this context, it is to be highlighted that Kirloskar Electric

Company has a very good team of task managers. The entire staff is so dedicated in their

assigned jobs that there will not be any scope for complaints both from inside and outside the

organization. The company is known for its quality products with its esteemed clients

globally. The company has its own websites which provides update information regarding

new product so that customers/ clients would get first hand information well on time.

Emphasis is given to man, management and every opportunity is

given so that people can grow with the organization. It is the policy of Kirloskar Electric

Company to provide equal opportunities to promote on merit and stimulate its people

thinking globally. The company has different employees/ workers having different skills,

talents, abilities, attitudes that they are being co-ordinate and utilized in an optimum manner,

in achieving organization goals.

KEC has the good market share for the AC Motors and the DC

Motors. They are the leading market share Electric products in India.The company is eco-

friendly. They recycle the waste water re use the same water for their daily use like washing

and gardening. Advertisement cost is too less because they manufacture the products based

on he order. The Kirloskar Electric Company has ISO, KEMA, CE and NVLAP certified.

The company has a good quality testing team in the shop floor. Workers would be instead to

wear compulsorily the safety gadgets.Computerization has reduced the activity of paper

works and documentation time. It is integrated system that co-ordinates and connects various

information of different departments. Hence it provides ready information to the top level

management to take immediate decision.


INTRODUCTION:

Logistics

The term Logistics originally comes from the Greek word ‘logistikos’. In Latin it is

‘logisticus’ meaning calculation and reasoning in the mathematical sense.

Logistic start before physical distribution and means strategically procuring right input

( raw material, component and capital equipment) converting them efficiently in to

finished product, and dispatching them to final destinations.

Logistic includes planning the infrastructure to meet demand, then implementing and

controlling the physical flows of material and final goods from point of origin to point

of use, to meet customer requirements at a profit.

Steps in logistic:

Deciding on the company’s value position to its customers. ( what on – time

delivery standard should we offer?)

Deciding on the best channel design and network strategy to reaching the

customers.

Developing operational excellence in sales forecasting, warehouse management,

transportation management and materials management.

Implementing the solution with the best information system, equipment,

policies and procedures.

Logistics is “The process of planning, implementing and controlling the efficient, cost

effective flow and storage of raw materials, in-process inventory, finished goods and

related information from point of origin to point of consumption for the purpose of

meeting customer requirements”


The material flows from supplier to the manufacturer are referred as Inbound

Logistics

The material flows from manufacturer to customer are referred as outbound

Logistics.

Logistics objective:

“Getting the right goods to the right place at the right time for the least cost”

Logistic decisions:

The firm must make 4 major decisions about its logistics:

1. How should we handle orders? ( order processing )

2. Where should we locate our stock? ( warehousing)

3. How much stock should we hold? ( inventory )

4. How should we ship goods? ( transportation )

The following product / equipment categories comprise heavy electrical equipment:

➢ Power and Distribution Transformers

➢ Switchgears

➢ Electric Motors

➢ Generators

➢ Alternators

➢ Turbines

➢ Capacitors

➢ Energy Meters


STATEMENT OF THE PROBLEM:

This study is undertaken to analyze the procedures followed by Kirloskar Electric

Company Ltd in the selection of vendors, steps followed at the time of selection of the inventory

management techniques, production methods and distribution network.

Along with this, the study will be explored with the effectiveness of logistics on working

capital, inventory management production cycle and sales. And the other aspect that will be taken

into the study is the role of Intermediaries in the channel of distribution.

Location of the Study: Kirloskar Electric Company Ltd, Bangalore.

OBJECTIVES OF THE STUDY:

1) To study the process adopted for procurement of raw materials at Kirloskar Electric

Company ltd.

2) To analyze the process of warehousing and inventory management at Kirloskar Electric

Company ltd.

3) To study the process of reverse logistics adopted at Kirloskar Electric Company ltd.

4) To analyze the impact of logistics management on sales.


SCOPE OF THE RESEARCH:

Here I have selected Logistics management as my topic, as it covers the entire core

operations of the company and with the cooperation of department heads I am conducting this

research with the help of appropriate tools and literatures. Here I am analyzing the operations of

Procurement of raw materials, Plant Layout, transportation, Warehouse, Inventory management,

working capital, and production cycle and distribution channel. Here an analysis of various

strategies of the company is carried and interpretation of the data is done with the help of analytical

tools.

METHODOLOGY

Overview of the Research planned and expected outcomes/results:

The Research is planned with the help of Questionnaire to company executives.

Departmental reports, production summaries, financial and accounting reports of theDepartmental reports, production summaries, financial and accounting reports of the

company are also used for the research. company are also used for the research. Research design:

Research Instruments: Questionnaire, Books and Journals of Logistics, operational

management and reverse logistics, Company Websites, Articles related to Logistics,

Company internal sources like Departmental reports, production summaries, marketingDepartmental reports, production summaries, marketing

summaries, financial and accounting reports.summaries, financial and accounting reports.

Data Collection:

1. Data Sources:

Primary Data :

Primary data is collected directly from the respondent Mr. Subbana, H.R manager Mr.

Mahaveer, Marketing-DC and Mr. Raj Kumar purchase department.

Secondary Data:

The secondary information will be obtained from the records and reports available at the

company. The literature on the subject has been gathered from journals, periodicals

books and website.


Data collection Tools:

Secondary Data studies: It will be done by using Internal and External Sources

Internal Sources: process and plant report, Departmental reports, production summaries,

financial and accounting reports, marketing and sales studies.

External Sources: books and periodicals, Computer-retrievable databases, publications, media

sources and special collections.

Personal Interview: Personal interview with H.R manager Mr. Subanna and Mr

Mahavir marketing head, Raj Kumar purchase department.

Review of Literature:

The project report presupposes a good knowledge of the subject and the title, which has

been chosen for a detailed analysis. Attempts have been made to acquire the detailed

information on the subject through a detailed literature survey. This requires an extensive

survey of literature available in the form of published articles in business magazines,

publication of institutions, newspapers and Journals.

After deciding about the topic of the project, it was decided to do a detailed literature

survey, to know what type of work was already done in the similar topic. The purpose of

doing a literature survey is to avoid repetition of the same study of the topic and also to

understand the scope of the subject and difficulties which arise during the course of the

study.

It helps to study the tools and technique appropriate to suit the requirement of the

company & apply them in the appropriate context and come to meaningful conclusions

and find solutions to the problems faced by the company. The literature survey helped in

deciding about the methodology which is adopted for the collection, analysis and

presentation of data.


LIMITATIONS OF THE STUDY:

The study is conducted only for the Govenahalli (Bangalore) branch. So, the company

cannot take major decisions based on my feedbacks.

Interaction of the study was limited because of their busy work schedule.

The results of the study are based on the present conditions.

Limited time period for the study.

Most of the numerical data are of approximate value.


Chapter: 1

Result and analysis

Purchasing and Supply Management (PSM)

Table 1: Information of number of orders per year

particulars No: orders per year

Copper 11

Stamping material 10

Stator frames 12

CE & NC covers 9

IP coils 10

Analysis

The analysis shows that Kirloskar orders 11 times in a year for Copper, 10 times in a year for

Stamping material, 12 times for Stator frames, 9 times for CE & NC covers and orders 10

times in a year for IP coils.

Graph 1: Information of number of orders per year

Copper Stamping material

Stator frames

CE & NC covers

IP coils0

2

4

6

8

10

12

14

No: orders per year

No., orders per year

Interpretation

It can be interpreted as Kirloskar is having major purchasing transactions of stator frames with “MPP

Technologies” and this vendor is having more effects on the company’s purchasing decisions. So

VDD gas to maintain a strong relationship with this vendor for cost advantages.


Table 2: Quota allocation for Raw materials

Raw materials Quota Allocation Percentage (%)

Copper 9,00,000 26

Stamping material 1,20,000 3

Stator frames 12,50,000 36

CE & NC covers 10,00,000 29

IP coil 2,25,000 6

Analysis

The study reveals that Kirloskar allocates 26% of its budget to Copper, 3% to Stamping

materials, 36% to Stator frames, 29% to CE & NC covers, and 6% of its budget amount to IP

coil.

Graph 2: Quota allocation for Raw materials

26%

3%

36%

29%

6%

Quota allocationCopper Stamping material Stator framesCE & NC covers IP coil

Interpretation

From the analysis it can be interpreted as company allocates major amount of its budget to

stator Frames and the vendor “MPP Technologies” is getting more preference in the

company’s Quota allocation and this vendor is having major impacts on the company’s

Purchasing.


Table 3: Information of Quality Standards fixed by the company and the performance of

Vendor related to standards

Particulars Percentage of Company

Quality standards (%)

Percentage of Vendor

Quality (%)

Pearl Metal Products 98 99

EBG India 98 98

MPP Technologies 98 95

Premier Industries 98 96

Copper Metal

Corporation

98 99

Analysis

The study reveals that ‘Pearl Metal Products’ is supplying 99% of quality materials to

Kirloskar, ‘EBG India’ is supplying 98% of quality materials; ‘MPP Technologies’ is

supplying 95% of quality materials, ‘Premier Industries’ is supplying 96% of quality

materials and ‘Copper Metal Corporation’ is supplying 99% of quality materials to the

company.

Graph 3: Information of Quality Standards fixed by the company and the performance of

Vendor related to standards

Pearl Metal Products

EBG India MPP Technologies Premier Industries93

94

95

96

97

98

99

Percentage of Company quality standards (%)Percentage of Vendor quality (%)Series3

Interpretation

It can be interpreted as Vendors like ‘Pearl Metal Products’ and ‘Copper Metal Corporation’

is supplying more qualitative materials to Kirloskar compared to other vendors and VDD has

to maintain a strong bondage with these vendors to increase the company performance and to

attain cost benefits.


Table 4: Information of On-time delivery Standards fixed by the company and the performance

of Vendor related to standards

Percentage of Company on-time

delivery standards (%)

Percentage of Vendor on-time

delivery (%)

Pearl Metal Products 97 95

EBG India 97 94

MPP Technologies 97 90

Premier Industries 97 91

Copper Metal Corporation 97 95

Analysis

The study reveals that ‘Pearl Metal Products’ is rendering 95% level of on-time delivery to

Kirloskar, ‘EBG India’ is rendering 94% level of on-time delivery, ‘MPP Technologies’ is

rendering 90% level of on-time delivery, ‘Premier Industries’ is rendering 91% level of on-

time delivery and ‘Copper Metal Corporation’ is rendering 95% level of on-time delivery to

the company.

Graph 4: Information of On-time delivery Standards fixed by the company and the

performance of Vendor related to standards

Pearl M

etal P

roducts

EBG In

dia

MPP Tech

nologies

Premier

Industr

ies86

88

90

92

94

96

98

Percentage of Company on-time delivery standards (%)Percentage of Vendor on-time de-livery (%)Series3

Interpretation

It can be interpreted as Vendors like ‘Pearl Metal Products’ and ‘Copper Metal Corporation’

is rendering major on-time delivery services to Kirloskar and the company has to control the

relationship in a better manner to provide goods to the customer on-time.


5.Table shows different buyers of KEC

Analysis: from the above table and chart I can analyze the buyers of the KEC is

Manufacturers 25%, Dealers 15%, customers 60 %.

5.Graph

Manufacturer Dealers Customers0%

10%

20%

30%

40%

50%

60%

70%

Percentage

Percentage

Interpretation: From the above analysis we can say that major part of KEC sales are done

directly to the customers.

Particulars Percentage

Manufacturer 25%

Dealers 15%

Customers 60%


6.Table shows different types of distribution channel

Particulars Distribution channel

Direct channel 80%

Through dealer 15%

Through branches 5%

Analysis:

The study shows that Kirloskar uses 80% direct channel, 15% are distributed through dealers

and 5% are sold through their own branches.

6.Graph

Direct channel Through dealer Through branches

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Distribution channel

Distribution channel

Interpretation:

It Can be interpreted as KEC uses direct distribution channel as a major part of their

marketing.


7. Table shows overall production of KEC

Particulars % of production

Out sourcing 40%

Self manufacturing 60%

Total 100

Analysis: The study shows from above graph is out of 100% of production 40% outsourcing

from other industries remaining 60% is manufacturing in govenahalli only.

Graph7:

Out sourcing Self manufacturing 0%

10%

20%

30%

40%

50%

60%

% of production

% of production

Interpretation:

From the above graph I can interpret that in KEC 40% of the raw material out sourced (JIT)

& this reduces the ware house cost and increase the working capital. It is positively

responsible for getting good margin.


8. Table shows different ways of receiving orders

Particulars Ways of order

E-mail 60%

Telephone 30%

Fax 10%

Analysis:

From the analysis it can be considered as 60% of orders are coming through E-mail, 30% are

through telephone and 10% are coming through Fax.

8. Graph

E-mail Telephone Fax0%

10%

20%

30%

40%

50%

60%

Ways of order

Ways of order

Interpretation:

The Results shows that KEC’s Major way of receiving order is through E-mail .


9.Table shows different mode of transportation

Particulars Mode of transport

Road Transport 95%

Shipment 3%

Airways 2%

Analysis:

From the analysis it is clear that KEC distributes 95% of its product through road transport,

3% through shipment and 2% trough airways.

9. Graph

Road Transport

Shipment Airways 0%

10%20%30%40%50%60%70%80%90%

100%

Mode of transport

Mode of transport

Interpretation:

It can be interpreted as most of the product distribution are doing through Road

transportation.


10. Table shows rent paid for delivery

Particulars Rent

Matador 900

Canter 1200

Truck (lorry) 1500

Analysis:

From the analysis it is clear that KEC pays Rs.900 for Matador, Rs.1200 for Canter and

Rs.1500 for Truck for each delivery.

10. Graph

Matador Canter Truck (lorry)0

200

400

600

800

1000

1200

1400

1600

Rent

Rent

Interpretation:

It can be interpreted as the rent of Truck is very high compared to other for delivery of

products at each time.

Objective 2: To analyze the process of warehousing and inventory management at Kirloskar

Electric Company ltd


11. Table shows the employees working in ware house

Particulars Employees

Officers 3

Clerks 2

Workers 8

Total 13

Analysis:

From the analysis it can be considered as 3 officers, 2 clerks and 8 workers are employed in

the shop floor.

11. Graph

Officers Clerks Workers Total 0

2

4

6

8

10

12

14

Employees

Employees

Interpretation:

The Results shows that KEC have workers, supervisors and account clerks.

12.Table shows repairs and maintenance costs in (lakhs)


Analysis: From the above table and chart I can analyze the maintenance cost of the

warehouse is building 33%, machines 53%, others 10 %.

Graph no 12

Interpretation: From the above analysis we can say that in warehouse maintaining machines

and equipment cost is high.

37%

54%

10%

Table shows repairs and main-tenance costs Costs in (lakhs)

Building Machines & equipmentsOther expenses

Particulars Costs in

(lakhs)

Costs in %

Building 28.47 37%

Machines & equipments 41.67 53%

Other expenses 7.54 10%

Total 77.68 100


13. Table shows percentage wise Costs incurred for raw materials

Particulars % of cost

Copper 30%

Stamping 25%

Mild still 15%

Insulation and others 30%

Analysis

Above pie diagram is showing the cost incurred for the different raw materials. Company is

spending 30% on Copper, 25% on Stamping,!5% Mild still, 30% on Insulation and others.

Graph 13

Copper Stamping Mild still Insulation and others

0%

5%

10%

15%

20%

25%

30%

% of cost

% of cost

Interpretation

Organization is spending more money on getting the raw materials of Copper, Stamping and

Mild still from different vendors. And it helps to maintain safety stock in unit.


14. Table shows percentage of raw materials used in production

Particulars % of raw materials used in

production

Copper 20

Stamping materials 30

Stator frames 20

CE & NC 10

IP Coils 5

Mild steel 15

Total 100

Analysis:

The study shows that Kirloskar uses 20% of Copper, 30 % of Stamping Materials, 20% of

Stator Frames, 10% of CE & NC covers, 5% of IP Coils and 15% of Mild steel for production

of one DC Generator

Graph 14

Copper

Stamping materials

Stator frames

CE & NC

IP Coils

Mail still

Total

20

30

20

10

5

15

100

% of raw materials used in produc-tion

% of raw materials used in production

Interpretation:

It Can be interpreted as KEC uses Stamping Materials as a major raw material for its

production and major costs of raw material is incurred for Stamping materials.


15. Table shows lead time of raw materials

Particulars Lead time in days

Copper 14

stamping materials 14

stator frames 30

CE & NC covers 14

IP coils 14

Rubber 15

Nuts and bolts 14

Washers 14

M/S component 14

Graph 15

Copper

stamping m

ateria

ls

stator f

rames

CE & NC co

vers

IP coils

Rubber

Nuts an

d bolts

Wash

ers

M/S co

mponent

14 14

30

14 14 15 14 14 14

Lead time in daysLead time in days

Analysis:

The graph shows that KEC gets Copper within 14 days of ordering, Stamping materials

within 14 days, Stator Frames within 30 days, CE & NC Covers within 14 days, IP Coils

within 14 days, Rubber within 15 days, Nuts and Bolts within 14 days, Washers within 14

days and M/S components within 14 days of ordering

Interpretation:


It can be interpreted as procuring of Stator Frames is consuming more time and the company

has to concentrate on this and should try to reduce the Lead time of procurement of Stator

Frames. If lead time is high its indirectly effects to dispatching of goods and sales.

Calculations

1 Raw materials storage period

A. Annual consumption of raw materials – [ 2191.91(Rs in lakhs)]

B. Average daily consumption of raw materials = 1/360 – [6.0866]

C. Average stock of raw materials = opening stock + closing stock/2 – [566.43]

D. Raw materials storage period = C/B

566.43/6.0866 = 93 days

Analysis : The above calculations shows the annual consumption of raw material is

2191.91lakhs, average daily consumption 6.0866, average stock of raw material is 566.43

lakhs finally raw material storage period is 93 days.

Interpretation:

From the analysis we can interpret that as the raw material storage period is 93 days, the

conversion time is late because of industrial goods (> 1000WT) so logistics should be

effective so that it caries Raw materials without time delay. Here we can also interpret that,

while procurement Process Company should take great care while Vendor selection process,

so that the vendor supplies raw materials at regular intervals of time with specified quality.

So, we can conclude that Transportation and Procurement of raw materials i.e. one of the

features of logistics has an impact on working capital and Inventory management.

2 Conversion period

A. Annual cost of production = opening stock of WIP + consumption of raw

materials + other manufacturing cost ( salaries, wages, power & fuels) +

depreciation + closing WIP [5535.25]

B. Average daily cost of production = 1/360 – [15.37]

C. Average stock of WIP = opening stock WIP + closing stock WIP / 2 – [1168.85]

D. Average conversion period = C/B

1168.85/15.37 = 76 days

Analysis:


The result shows that Kirloskar keeps an average stock of work-in-process of rs.15.37lakhs,

its annual cost of production is rs.5535.25 lakhs and its average daily cost of production is

rs.2.13 cr. Finally, its average Conversion period is 73 days.

Interpretation:

From the analysis we can interpret that production cycle play its key role in the conversion

period. For production, one of the features of logistics i.e. proper plant layout is necessary

and proper movements of goods. Key Considerations for proper way of procurement and lead

time of raw material plays an important role in production cycle. So, we can conclude that

lead time, transportation and inventory i.e. one of the feature of logistics has its impact on

Working Capital and Production Cycle.

3 Finished goods storage period

A. Annual cost of sales – [5904.49(in lakhs)]

B. Average daily cost of sales =1/360 – [16.40]

C. Average stock of finished goods = opening stock + closing stock/2 – [683.34]

D. Finished goods storage period = C/B

6834.34/16.40 = 41 days

Analysis:

The results shows that kirloskar’s annual cost of sales is 5904.49 lakhs, average daily cost of

sales is 16.40 lakhs, average stock of finished goods 683.34 lakhs and finally finished goods

storage period is 41 days.

Interpretation:

From the analysis we can interpret that Kirloskar finished products will be stored for 41 days

From this, we can understand the Kirloskar is doing B to .B business it takes more time for

dispatching of goods because companies customers are industries customers.. So, we can

conclude that the Distribution network, one of the features of the logistics has its impact on

Working Capital. Here also the features of logistics like Transportation and Warehouse

comes into picture and shows, these features also have their impacts on working capital.

16. Table shows raw materials ordering cost


Particular Total ordering cost % of cost

Copper 1800 22

Stamping materials 1500 18

Stator frames 1500 18

CE & NC covers 1650 20

IP coils 1800 22

Total 8250 100

Analysis:

Above graph showing the ordering cost to the company to get the raw materials, organization

is spending Rs 1800 for getting the raw materials of Copper and IP coils. The organization

spending the 1650 Rs as ordering cost to get the CE & NC covers. Stator frames and

Stamping materials ordering cost is 1500. Rs

Graph 16

Copper

Stamping materials

Stator frames

CE & NC covers

IP coils

Total

1800

1500

1500

1650

1800

8250

0.22

0.18

0.18

0.2

0.22

100

ordering cost

% of cost Total ordering cost

Interpretation :

Total cost incurred by the company to ordering the materials is 8250.Rs

17. Table shows the re order point of raw materials at KEC


Particulars Re ordering point

Copper 8000 (in KGs)

Stamping materials 11662 (in KGs)

Stator frames 600 units

CE & NC covers 530 units

IP coils 7800 units

Analysis

Above graph showing the reordering of raw materials to the vendors. When copper reaches to

the 8000Kgs , Stamping materials reaches 11662Kgs, Stator frames reaches 600 units, CE &

NC reaches to 530 units and IP coils reaches to 7800 units. The company will go for re

ordering point.

Graph 17

Copper

Stamping m

ateria

ls

Stator f

rames

CE & NC co

vers

IP coils

800011662

600 530

7800

Re ordering pointRe ordering point

Interpretation

Reordering point plays key role to maintain the stock in proper order to avoid the out of stock

in the company.

18. Table shows the non performance cost of different companies

Companies Non performance cost


Pearl Metal Products Rs.2000

EBG India Rs.1000

MPP Technologies Rs.3750

Premier Industries Rs.2350

Copper Metal Corporation Rs.1750

Analysis

The analysis shows that the nonperformance cost of PMP is Rs.2000, EBG is Rs.1000, MPP

is Rs.3750, PI is Rs.2350 and CMP is Rs. 1750.

Graph 18

Pearl M

etal P

roducts

EBG In

dia

MPP Tech

nologies

Premier

Industr

ies

Copper Meta

l Corp

oration

0500

1000150020002500300035004000

Non performance cost

Non performance cost

Interpretation

It can be interpreted as the nonperformance cost of Premier Industries is very high compared

to other companies.

19. Table shows the percentage of wastage of raw materials at KEC


Particulars Percentage of wastage

Copper 3%

Stamping material 2.5%

Analysis

Above pie diagram showing the wastage of raw materials in the production unit in the form

of cutting the pieces,

Graph 19

Copper Stamping22%

23%

24%

25%

26%

27%

28%

29%

30%

% of cost

% of cost

Interpretation

If the organization reduces wastage it leads to reduce the cost of getting the raw materials.

20. Table shows the sales of KEC


Year Sales % of sales

2008 1956.4 22%

2007 1775 19%

2006 2097 23%

2005 1819.32 19%

2004 1567.76 17%

Total 9215.42 100

Compiled based on Personal Interview

Analysis

The above chart shows the sales of KEC in 2008 sales is 22% in 2007- 19% 2006-23%

2005- 19% and in 2004-17%

Graph 20

2008 2007 2006 2005 20040%

5%

10%

15%

20%

25%22%

19%

23%

19%17%

% of sales

Interpretation

from the above analysis I can interpret that sales of KEC is having major fluctuations

because of limited customers and same tine recession affects.

Chapter 2


FINDINGS, SUGGESTIONS AND CONCLUSIONS

TRANSPORTATION

In bound logistics

In KEC for other then JIT purchase company will use the private vehicles.

In KEC 95% depend on road transport for receiving and sending of the goods.

Including transportation cost quotations are prepared by the KEC and suppliers are

responsible for transporting the raw material to the warehouse of the company.

From the warehouse to the layout of production to transport material Cranes are used

which are company owned.

Price will fix by based on distance, weight and type of vehicle or 5% margin.

In KEC stamping materials are importing from Russia.

Major importing costs are.

CIF price- 82.19 ( in lakhs )

Customs – 3.10 ( in lakhs )

Clearing charges-1.83 ( in lakhs )

The Other traveling charges 29.64 ( in lakhs )

Out bound logistics

The KEC has made contract for transport with Babu traders and ARC( Associate

Road corporation)

KEC maintaining certain standard rent for sending finished goods from Govinahalli

unit to Bangalore.

Matador -900

Canter - 1200

Truck (lorry) – 1500

In KEC most of the time customer only takes the delivery from companies

dispatching unit.

The customer only bares the transportation and insurance charges.

In KEC some time company send the goods to customers.


For transporting of finished goods to customer the company will charge 10000 to

25000 depend on distance and Wight.

WAREHOUSE AND INVENTORY MANAGEMENT

The KEC has its own warehouse in his plant.

The dimension of warehouse is 40/100ft

Number of warehouse employs are as follow

Officers 3

Clerks 2

Workers 8

Total 13

Major risk for Kirloskar (Govenahalli) in logistics management is Time risk like late

delivery, lead time, inventory and production

KEC 40% of the raw material out sourced (JIT) it reduces the ware house cost and

increase the working capital. It is positively responsible for getting good margin.

In warehouse maintenance machines and equipment cost is high

Organization is spending more money on getting the raw materials of Copper,

Stamping and Mild steel from different vendors. And it helps to maintain safety stock

in unit.

KEC uses Stamping Materials as a major raw material for its production and major

costs of raw material is incurred for Stamping materials.

As the raw material storage period is 93 days, the conversion time is late because of

industrial goods (> 1000WT) so logistics should be effective so that it caries Raw

materials without time delay.

Kirloskar finished products will be stored for 41 days From this, we can understand

the Kirloskar is doing B to .B business it takes more time for dispatching of goods

because companies customers are industries customers.. So, we can conclude that the

Distribution network, one of the features of the logistics has its impact on Working


Capital. Here also the features of logistics like Transportation and Warehouse comes

into picture and shows, these features also have their impacts on working capital.

Total cost incurred by the company to ordering the materials is 8250.Rs

Reordering point plays key role to maintain the stock in proper order to avoid the out

of stock in the company..

From the above analysis I can interpret that KEC is more depend on direct sales

because in govenahalli unit manufacturing industrial goods. So in KEC very less

intermediaries.

The inventory cost has on impact of 51.25% on sales and the magnitude of

relationship between inventory cost and sales is 43.06%

Chapter 3

SUGGETIONS


1. Marketing department to form a team and this team to create need base analysis with

customers based on increasing capacity of motors in watts and new designs with

additional features.

2. There is a lack of proper process layout in DC motor section and this improper layout

is increasing cost concern to cranes and pullis and ropes and increasing the conversion

period. the company has find solution to get better benefits.

3. Company is using JIT technique is affected factor like PEST so company has to make

situation analysis which has its own effects on inventory level and production

4. If company pay immediate cash to Vendors Company can save the cost 18% and it

increase the working capital and it indirectly help to increase the company profit.

5. KEC adopted ABC technique based on values and usage and it is using to maintain

the inventory in warehouse it reduces the damages of goods in warehouse so it

increases quality of production and same time it gives information about re ordering

point order delivery period

6. KEC’s Major Raw material cost is for Steel and the company should handle these

costs in a better manner to gain benefits.

7. Procuring of Stator Frames is consuming more time and the company has to

concentrate on this and should try to reduce the Lead time of procurement of Stator

Frames. If lead time is high its indirectly effects to dispatching of goods and sales.

8. Due to increase in Inflationary prices in the year 2009, KEC has incurred more costs

on Inventory. So the company can follow some Inventory Techniques to avoid the

effects of Inflationary prices

9. As the raw material storage period is 93 days, the conversion time is late because of

industrial goods (> 1000WT) so logistics should be effective so that it caries Raw

materials without time delay. Here we can also interpret that, while procurement

Process Company should take great care while Vendor selection process, so that the

vendor supplies raw materials at regular intervals of time with specified quality..

10. If the organization reduces wastage it leads to reduce the cost of getting the raw

materials

Chapter 4

CONCLUSIONS


As company as well experience and its own brand image in the electric sector they are

not finding much difficulties in manufacturing the goods and the competitors are less in this

sector. This factor has made KEC market leader and the company deriving better benefit in

both cost performance and market performance finally conclude that KEC has good growth

in electric sector. So far, companies have invested their time, resources and budgets for

gaining customer relationships through Sales Force Automation and CRM applications. But

optimizing customer relationships also demands streamlining and strengthening back-end

related processes and support of the value chain. A VRM solution provides visibility across

the entire supply base to help company to increase the value of business relationships. VRM

helps companies to analyze and anticipate purchasing patterns, compress sourcing cycles and

collaborate in real time .Long-term relationships with suppliers prove the ability of a

company to deliver a value. VRM provides an efficient, cost-effective way to automate

business processes to include all suppliers across the globe and build sustainable relationships

with the ones that do things right. Kirloskar Electric Company (KEC) has successfully taken

its initiatives in the process of Vendor Relationship management (VRM) and improved its

efficiency and internal operations.KEC have raised the need to dig deep into the next levels

of efficiency and cost savings by leveraging supplier relationships and through VRM it has

improved the relationship between Demand and Supply by providing new and better ways for

the former to relate to the latter. Finally we can conclude that “Winning customers require

winning suppliers”


AC MOTOR

DC MOTOR


Questionnaire

1) How many orders of raw materials are placed per year?

2) Explain about quota allocation for Raw materials?

3) What are the quality Standards fixed by the company and the performance of Vendor related

to standards?

4) What are the details about On-time delivery Standards fixed by the company and the

performance of Vendor related to standards?

5) To whom you are selling the final products?

a. Manufacturer b. Dealers c. Customers

6) What are the different modes of distribution channel?

a. Direct channel b. Through dealers c. Through branches

7) Details about the overall production of KEC?

Particulars % of production

Self manufacturing

Out sourcing

8) What are the different ways of receiving orders?

a. E-mail b. Telephone c. Fax

9) Which is the mode of transportation used for procurement of raw material and

delivery of finished goods?

a. Road transport b. Shipment c. Airways

10) What are the costs incurred for the process of transportation?

11) How many employees are working in warehouse in KEC?

Particulars Employees

Officers

Clerks

Workers


12) \What are the cost incurred for repairs and maintenance?

Particulars Cost

Building

Machines

Other expenses

13) What are the percentage wise Costs incurred for raw materials?

14) Which is the major material costs incurred in production?

a. Steel b. Copper c. Barings

15) What is the lead time of raw materials?

16) What is the minimum and maximum level of storage of raw material?

17) What are the various costs involved in ware house and inventory management?

18) What are the non performance costs of different companies?

19) What is the percentage of wastage of raw materials at KEC?

20) What is the year wise sales of KEC/


REFERENCES:

LIST OF BOOKS:

1) “Logistics and supply chain management ”

Editors- G. Raghuram and N Rangaraj

Published By- Macmillan india ltd

First Edition: 2000

ISBN:0333933427

2) “marketing management”

Editors team- Philip kotler, K.L KECler, Abraham koshy, M Jha

Edition – 13

Published By- Dorling Kindersley[india] pvt ltd

ISBN: 978-81-317-1683-0

3) “Marketing channels”

Editors team- Pelton, Lumpkin

Edition – 2

Published by : McGraw-Hill Higher Education

LIST OF WEBSITES:

Kirloskar Electric Co Balance Sheet, Kirloskar Electric Co Financial Statement &

Accounts.htm

http://www.processregister.com/register/seo.asp

http://kirloskarelectriccoltd_ww.indiabizclub.com - [Visit Website]

http://power.indiabizclub.com/products/list

www.kirloskar-electric.com/pdf/kecbalancesheetfinal.pdf

www.eworldtradefair.com/kirloskarelectriccompanyltd//

power.indiabizclub.com/.../1665500~kirloskar_electric_co.ltd~bangalore

http://www.kirloskar-electric.com/founders.shtml www.sribd.com

http://www.kirloskar-electric.com/founders.shtml

http://www.eworldtradefair.com/kirloskarelectriccompanyltd//

http://www.kirloskar-electric.com/pdf/kecbalancesheetfinal.pdf

http://kirloskarelectriccoltd_ww.indiabizclub.com/

http://www.processregister.com/register/seo.asp

Ijas Project

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