A REPORT ON

A STUDY ON INVENTORY MANAGEMENT IN LUCAS

TVS AT PADI (T.N.)

By: Karthikeyan M S

LUCAS-TVS PRIVATE LIMITED

PADI (T.N.)

Date: 22.07.2011
 A REPORT ON
(A STUDY ON INVENTORY MANAGEMENT IN LUCAS TVS
AT PADI (T.N.)

By: Karthikeyan M.S

Register No. 3511010320
Master of business Administration

A report submitted in partial fulfillment of the requirements of

MBA(2010-2012)

SRM School of management

Chennai

Company Guide:
Mr. Prabhakaran Mr. Raman
Miss. Vijayalakshmi.
Lucas TVS, Padi
 DECLARATION
I hereby declare that this project report A STUDY ON
INVENTORY MANAGEMENT IN LUCAS-TVS AT PADI (T.N.) is
my own work, to the best of my knowledge and belief. It contains no
material previously published or written by another person nor materials
which to a substantial extent has been accepted for the award of any
other degree or diploma of any other institute, except where due
acknowledge has been made in the text.

Karthikeyan M S
DATE: 22.07.2011 Register No. 3511010320
 CERTIFICATE
This is to certify that students Name Karthikeyan M S,
Reg. No.3511010320, a student of Master business business
management from SRM School of Management, Chennai has done his
summer training at Lucas-TVS from 14 june 2011 to 14 july 2011.

The project work entitled A STUDY ON INVENTORY

MANAGEMENT IN LUCAS TVS AT PADI (T.N.) embodies the
original work done by Karthikeyan M S during his summer project
training period.

Mr. Raman. D

Company Guide
 ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me the
possibility to complete this thesis. I would like to thank my college
authorities and my H.O.D Mr. Balasubramanian first for providing me
the opportunity to work one of the most prestigious organization. I want
to thank the Head of training department Mr. Prabhakaran for giving
me permission to commence thesis instance, to do the necessary research
work and to use department data.
I have furthermore to thank the Company Guide Mr. D. Raman,
who gave and confirmed this permission and encourage me to go ahead
with my thesis.
I am deeply in debted to my Faculty Guide Miss. Kavitha whose
help, stimulating suggestions and encouragement helped me in all the
times of research for and writing of thesis.

This project report could not have been prepared, if not for the help
and encouragement from various people. Hence, for the same reason I
would like to thank my guide Miss. Vijaya Lakshmi.

My brother Mr. Shiva Prakasham looked closely at the final

version of the thesis for English style and grammar, correcting both and
offering suggestions for improvement.

Especially, I would like to give my special thanks to my parents,

my brothers their love and blessing enabled me to completete this work.
 LIST OF CONTENTS
Sl.No Title Page No
1 INTRODUCTION
2 PROFILE
INDUSTRY PROFILE
ORGANISATION PROFILE
3 STATEMENT OF OBJECTIVE
OBJECTIVE OF THE STUDY
NEED OF THE STUDY
SCOPE OF THE STUDY
LIMITATIONS OF THE STUDY
4 RESEARCH METHODOLOGY
5 DATA ANALYSIS AND INTERPRETATION
6 FINDINGS
7 SUGGESTION
8 CONCLUSION
9 BIBLOGRAPHY
ANALYSIS OF INVENTORY MANAGEMENT
IN LUCAS - TVS
INTRODUCTION
 INTRODUCTION
Inventory management involves the control of assets being
produced/procured to be sold in the normal course of the firms operations. The
general categories of inventories include raw material, work-in-process inventories
and finished goods inventory. The three categories of inventories are taken into
biggest component of current assets.

Inventory management is about determining and maintaining an optimal

level of inventory, i.e., a level that is neither inadequate nor excessive.

Inventories constitute the most significant part of current assets for a large majority
of companies in India. On an average, inventories are approximately 60 per cent of
current assets in public limited companies in India. Because of the large size of
inventories maintained by firms, a considerable amount of funds is required to be
committed to them. It is, therefore, imperative to manage inventories efficiently, in
order to avoid unnecessary investment.

It is possible for a company to reduce its level of inventories to be

considerable degree, eg., 10 to 20 per cent, without any adverse effect on
production and sales, by using simple inventory planning and control techniques.
The reduction in excessive inventories carries a favorable impact on a companys
profitability.

MEANING OF INVENTORY

Inventory represents value locked up at both ends of the production system.

For a typical manufacturing firm, this blockage is in the form of raw material
at one end of the production system, WIP (or semi-finished) goods within it,
and completely finished goods at the other end.

For example, in a trading or merchandise firm such as Big bazaar, inventory

refers to the stock of finished goods for sale, while in the case of manufacturing
business, the definition of inventory refers to raw materials, WIP (or semi-finished)
goods, and finished goods. Thus the definition of inventories is specific to the
nature of business.
 All though spares and stores are also shown as a part of inventory for
financial reporting purpose, they are excluded from the definition of inventory
because they are procured to facilitate production/operations and not for sale.

DEFINITION OF INVENTORY MANAGEMENT

Inventory management is primarily about specifying the size and

placement of stocked goods. Inventory management is required at different
locations within a facility or within multiple locations of a supply network to
protect the regular and planned course of production against the random
disturbance of running out of materials or goods. The scope of inventory
management also concerns the fine lines between replenishment lead time,
carrying costs of inventory, asset management, inventory forecasting, inventory
valuation, inventory visibility, future inventory price forecasting, physical
inventory, available physical space for inventory, quality management,
replenishment, returns and defective goods and demand forecasting.

NATURE OF INVENTORY

Inventories are stock of the product a company is manufacturing for sale and
components that make up the product. The various forms in which inventories exist
in a manufacturing company are:

Raw materials are those basic inputs that are converted into finished
product through the manufacturing process. Raw materials inventories are
those units which have been purchased and stored for future productions.

Work-in-process inventories are semi manufactured products. They

represent products that need more work before they become finished product
for sale.

Finished goods inventories are those completely manufactured products

which are ready for sale. Stocks are raw materials and work-in-process
facilitate production, while stock of finished goods is required for smooth
 marketing operations. Thus, inventories serves as a link between the
production and consumption of goods.

The levels of three kinds for a firm depends on the nature of the business. A
manufacturing firms have substantially high levels of all three kinds of inventories,
while a retail or wholesale firm will have a very high level of finished goods
inventories and no raw material and work-in-process inventories. Within
manufacturing firms, there will be difference. Large heavy engineering companies
produce long production cycle products; therefore they carry large inventories. On
the other hand, inventories of a consumer product company will not be large
because of short production cycle and fast turnover.

Firms also maintain a fourth kind of inventory, supplies or stores and spares.
Supplies include office and plant maintenance materials like soap, brooms oil, fuel,
light bulbs, etc. These materials do not directly enter production, but are necessary
for production process. Usually, these supplies are small part of the total inventory
and do not involve significant investment. Therefore, a sophisticated system of
inventory control may not be maintained for them.

NEED TO HOLD INVENTORIES

inventories involves tying up the companys funds and incurrence of storage and
handling costs. There are three general motives for holding inventories.

Transactions motives, which emphasizes the need to maintain inventories

to facilitate smooth production and sales operations.
Precautionary motives, which necessitates holding of inventories to guard
against the risk of unpredictable changes in demand and supply forces and
other factors.
Speculative motives, which influences the decision to increase or reduce
inventory level to take advantage of price fluctuations.

A company should maintain adequate stock of materials for a continuous supply

to the factory for an uninterrupted production. It is not possible for a company to
procure raw materials whenever it is needed. A time lag exists between demand for
materials and its supply.
 The procurement of materials may be delayed because of such factors as strike,
transport disruption or short supply. Therefore, the firms should maintain sufficient
stock of raw materials at a given time or streamline production. Other factors
which may necessitate purchasing and holding of raw materials inventories are
quantity and anticipated price increase.

The firm may purchase large quantities of raw materials than needed for the
desired production and sales levels to obtain quantity discounts of bulk purchasing.
At times, the firm would like to accumulate raw materials in anticipation of price
rise.

Stock of finished goods has also to be maintained for sudden demands from
customers. In case the firms sales are seasonal in nature, substantial finished
goods inventories should be kept to meet the peak demand. Failure to supply
products to customers, when demanded, would mean loss of the firm competitors.
The level of finished goods inventories would depend upon the coordination
between sales and production as well as on production time.

Ordering costs:

Cost arise ordering/ acquiring goods regardless of the actual value of the
goods. In both making to stock and marketing to order, stock acquisition cost are
incurred. Replenishment and purchasing administration paid for. It may take a
skilled operator an hour to set up equipment for a new order or schedule batch.
Materials may be wasted in the set up process. On completion of the job,
equipment must be cleaned and tools put away.

Requisition, placing of order, transportation, receiving, inspecting and

storing and clerical and staff services. Ordering costs are fixed per order. Therefore
they decline as the order size increases.

The purchasing order processing costs include receiving the goods, delivery
for large or small orders and invoice processing. Precise costs per ordered unit are
often elusive, but the staff and overhead costs are significant. It is expressed in
terms of cost per order.
 Adhoc purchasing must be compared with long-term contracts involving
regular deliveries perhaps with just-in-time supply or amounts that the operation
can call off from a supply a supply over, say, a quarter.

Carrying costs:

Warehousing, handling, clerical and staff services, insurance and taxes.

Carrying cost vary with inventory holdings. As ordering size increases, average
inventory holding increases and therefore, the carrying cost increase.

Expressed as a % of stock value and may be 15 30% per annum.

Cost of capital tied up in inventory (the opportunity cost of money).
Storage cost: Space, equipment, warehouse & stores staff, warehouse &
stores insurance, services, etc are often 5 10% of stock value per annum.

Stock losses/wastage: Theft, accident damage, stock exceeding its shelf life
and obsolescence and wire-offs.

Inventory examples
While accountants often discuss inventory in terms of goods for sale,
organizations - manufacturers, service-providers and not-for-profits - also have
inventories (fixtures, furniture, supplies, ...) that they do not intend to sell.
Manufacturers', distributors', and wholesalers' inventory tends to cluster
in warehouses. Retailers' inventory may exist in a warehouse or in ashop or store
accessible to customers. Inventories not intended for sale to customers or
to clients may be held in any premises an organization uses. Stock ties up cash and,
if uncontrolled, it will be impossible to know the actual level of stocks and
therefore impossible to control them.
While the reasons for holding stock were covered earlier, most manufacturing
organizations usually divide their "goods for sale" inventory into:

Raw materials - materials and components scheduled for use in making a

product.

Work in process, WIP - materials and components that have begun their
transformation to finished goods.
 Finished goods - goods ready for sale to customers.

Goods for resale - returned goods that are salable.

OBJECTIVE OF INVENTORY MANAGEMENT

The main objective of inventory management is to maintain inventory
at appropriate level to avoid excessive or shortage of inventory because both the
cases are undesirable for business. Thus, management is faced with the following
conflicting objectives:

1. To keep inventory at sufficiently high level to perform production and

sales activities smoothly.
2. To minimize investment in inventory at minimum level to maximize
profitability.

Other objectives of inventory management are explained as under:-

1. To ensure that the supply of raw material & finished goods will remain
continuous so that production process is not halted and demands of
customers are duly met.
2. To minimize carrying cost of inventory.
3. To keep investment in inventory at optimum level.
4. To reduce the losses of theft, obsolescence & wastage etc.
5. To make arrangement for sale of slow moving items.
6. To minimize inventory ordering costs.

FUNCTIONS OF INVENTORY MANAGEMENT:

The most important functions of inventory management are

To meet anticipated demand.

To smooth production requirements.
To decouple components of the production distribution system.
To protect against stock outs.
To take advantage of quantity discounts.
To hedge against price increase.
MAIN PURPOSE OF HOLDING INVENTORY:

Holding inventory is cost effective and helps achieve sales of competitive

prices. The other objectives of holding inventories are

To ensure prompt delivery.

To avail quantity discounts.
To reduce the order cost.
To avoid production shortage.
To achieve efficient production runs.
PROFILE
 INDUSTRY
PROFILE

INDUSTRY STRUCTURE

The automotive industry designs, develops, manufactures, markets, and

sells motor vehicles, and is one of the world's most important economic
sectors by revenue. The term automotive industry usually does not include
industries dedicated to automobiles after delivery to the customer, such as repair
shops and motor fuel filling stations.

The global automotive industry is a highly diversified sector that comprises

of manufacturers, suppliers, dealers, retailers, original equipment manufacturers or
OEMs, aftermarket parts manufacturers, automotive engineers, motor mechanics,
auto electricians, spray painters or body repairers, fuel producers, environmental
and transport safety groups, and trade unions

The automotive manufacturing sector consists of automobile and light truck

manufacturers, motor vehicle body manufacturers, and motor vehicle parts and
supplies manufacturers. This sector is engaged in manufacturing of automotives
and light duty motor vehicles, motor vehicle bodies, chassis, cabs, trucks,
automobile and utility trailers, buses, military vehicles, and motor vehicle gasoline
engines.

The Top Automaking Nations United States, Japan, China, Germany and
South Korea are the top five automobile manufacturing nations throughout the
world. The United States of America is the world's largest producer and consumer
of motor vehicles and automobiles accounting for 6.6 million direct and spin-off
jobs and represents nearly 10% of the $10 trillion US economy. Automobile is one
of the important industries in the world, which provides employment to 25 million
people in the wold. IN the recent past, the auto parts, the auto parts manufacturing
industry of Midwest lost 12.7% of its employment. The various factors behind this
decline are unemployment recession, domestic relocation and foreign competition.
This loss in employment has badly affected this industry.
MAJOR MANUFACTURING REGIONS

Northeastern United States and Southern Great Lakes Region, Northwestern

Europe, Western Russia and the Ukraine, and Japan are the major manufacturing
regions of automotive in the world. In North America, the prominent automotive
manufacturing regions are New England, New York and the Mid-Atlantic, Central
New York, Pittsburgh/Cleveland, Western Great Lakes, St. Lawrence Valley, Ohio
and Eastern Indiana, Kanawha and middle Ohio Valley, St. Louis, the Southeastern
region, Gulf Coast, Central Florida, and the West Coast. The European Union has
the largest automotive production regions in the World. The key automobile
manufacturing regions are United Kingdom, Rhine-Ruhr River Valley, Upper
Rhine - Alsace - Lorraine region, and the Po Valley in Italy. In the Western Russian
and Ukraine Region, the leading industrial regions are Moscow, the Ukraine
region, the Volga region, the Urals regions, and the Kuznetsh Basin Region

MAJOR INDUSTRY PLAYERS:

The worldwide automobile industry is largely dominated by five leading

automobile manufacturing corporations namely Toyota, General Motors, Ford
Motor Company, Volkswagen AG, and Daimler Chrysler. These corporations have
their presence in almost every country and they continue to invest into production
facilities in emerging markets namely Latin America, Middle East, Eastern Europe,
China, Malaysia and other markets in Southeast Asia with the main aim of
reducing their production costs.

Global Automobiles and Components % Share, (By Volume 2010)

General Motors - 10.10 %

Toyota - 7.90 %

Ford - 7.70 %

Others - 74.30 %

MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY:

Auto components amount to 31.5% share of the global automobiles and

components industry group's value. The global automotive component industry is
highly diverse and comprises of various product segments like engine parts, drive
transmission and steering parts, suspension & braking parts, electrical parts and
other auto components parts.

Engine Parts segment in the automotive component industry

comprises of different parts like engine parts, fuel delivery system
and products such as pistons, piston rings, engine valves,
carburetors, and diesel-based fuel delivery systems. Engine parts
form one of largest product segment of the automotive components
industry and have a production share of 31%. The latest trend in this
sector is of outsourcing a part of the engine from vendors

Electrical Parts segment comprises of generators, starter motors

and spark plugs. An important and relatively larger product segment -
engine parts are gaining popularity at a faster pace in the global
automotive parts & components industry. Electric start mechanism in
different scooter and motorcycles is the latest concept in the
automobile industry. Electrical parts sector contribute around 9% to
the auto components industry.
 Drive Transmission and Steering Parts segment has sub segments
like gears, wheels, steering systems, axles, and clutches. Having 19%
share, this segment is considered the largest product segment after
engine parts segment. The emergence of different leading automotive
manufacturers is intensifying the competition in the sector especially
for products like gears and clutches.

Suspension and Braking Parts segment comprises of automobile components

like brakes, brake assemblies, leaf springs, shock absorbers, brake linings.
Suspension and braking parts segment has around 12% share in the global
auto component industry.

Body and Chassis Parts segment comprises of body and

chassis, sheet metal components, and plastic-molded parts. The
global sourcing of automotive components comprise of chassis,
frames, brakes, steering and much more has reached to US $ 185
billion in 2008-09. This product segment has 12% share in the global automotive
component and parts industry.

KEY INDUSTRY DRIVERS

The highlighting features of global automotive industry are:

Offers support to other industries such as iron, steel, rubber, glass, plastic,
petroleum, textiles, oil & gas, paints & coatings, transportation industries.
Rising foreign investments have led to the rapid growth in terms of
automobile production and exports. Overseas companies are making
huge investments and are installing extensive production capacities in
developing countries.
Continuous investment in research & development has resulted in
increased productivity and better quality automobiles, automotive
accessories and parts.
 Increase in standards of living and purchasing power parity have resulted
in the increase demand of automobiles especially four-wheelers in
developing nations, mostly in South Asian region.
This sector provides employment to major chunk of human population in
the world i.e. 25 million. This industry not only provides millions of jobs
to the people, but also produces billions of dollars in terms of worldwide
revenues.
Adequate infrastructural facilities in form of power supply, machinery,
capital, ready availability of raw materials and labor help in the
tremendous growth of this industry.

Market Forecasts:

With the upcoming marketing strategies of the manufacturers, the auto parts
industry is expected to have reached a value of USD 586 billion by year 2009.
According to reports, the compound annual growth rate of this industry is 2.6% for
the period of 2004 - 2009.

Global Auto Components Forecast Value - USD billion 2004

2009
Year USD billion % Growth
2004 515.5 2.30
2005 526.2 2.10
2006 538.9 2.40
2007 553.4 2.70
2008 569.1 2.80
2009 585.9 3.00
CAGR 2004 - 2009 2.6%

It is believed that by 2015, the global auto component industry would reach US$
1.9 trillion. With different low cost countries emerging at a fast pace in this
industry, it is also expected that around 40% of the money will be sourced from
such countries. India is one of such low cost countries. At present, it has only 0.4%
of the global auto components trade of US$ 185 billion. By the year 2025, it is
expected that India might be among the top five auto component economies.

FUTURE OUTLOOK

The automotive industry is witnessing tremendous and unprecedented

changes these days. This industry is slowly and gradually shifting towards Asian
countries, mainly because of saturation of automobile industry in the western
world. The principal driving markets for Asian automotive industry are China,
India and ASEAN nations.

Low cost vehicles namely scooters, motorcycles, mopeds and bicycles have
led to the massive growth of some of the fastest developing economies like China
and India. The future of automotive industry in the Asian countries such as
Thailand, Philippines, Indonesia, and Malaysia is bright and promising because of
the ASEAN free trade area under which the export tariffs are very less.

On a global scale, the assets of the top ten automotive corporations accounts
for 28% of the assets of the world's top 50 companies, 29% of their employment
and 30% of their total sales. In the year 2006, the United States of America sold
around 16 million of new automobiles, Western Europe sold around 15 million,
while China and India sold 4 million and one million respectively. Latin America,
Middle East, Eastern Europe, China, Malaysia and other South-Asian nations are
now emerging as the dominant markets of the automotive industry.

Most of the major automotive players are shifting their production facilities
in these emerging markets with the main purpose of gaining better access and
reduction in their production costs. There is an estimation that the automotive
markets in South America and Asia will witness a boom in the near future. The
various factors such as cheap financing and prices discounts, rising income levels
and infrastructure developments will assist in the growth and development of
automotive sector in the majority of Asian nations.
ORGANISATION
PROFILE
 ORGANISATIONAL PROFILE

LUCAS TVS was established in the year 1961 as a joint venture between
Lucas industries, UK and the TVS group. It is a lending manufacturing of auto
electrical products and diesel fuel injection equipment in India.

This is QS 9000 & ISO 140001 certified company. It produces all types of
auto electrical for two wheelers. The TVS group is one of indias largest
conglomerates. T.V.Sundaram Iyengar and Sons Limited established in 1911 are
the parent and holding company of TVS groups.

The combination of these two well-known groups has resulted in the

establishment of a vibrant company, which has had a successful track record of
sustained growth over the last four decades.

TVS is one of Indias twenty large industries houses with twenty five
manufacturing companies and has a turnover in excess of US$ 1.3billion. The
turnover of Lucas-TVS and its division during 2007-2008 is Rs.1842.43 crores.

This became the largest of its kind in the company, legendary for its
punctuality and services. In fact the rules and regulation laid by them later became
the blue print for the motor vehicle act.

HISTORY OF THE ORGANISATION

TVS Group was established in 1911 by T.V.Sundram Iyengar, one of the

visionaries of the Indian industries. His ideas were years a head of their times.
Three years before World War I. When the automobile was still seen as some kind
of intimidating horse-less carriage he had the vision to set up South Indias first
ever rural bus service and over the years, this transport company became the
largest of its kind in the country, legendary for its punctuality and service. In fact,
the rules and regulations laid down by him later became the print for the Motor
Vehicles Act. The importance given by the founder of the TQM framework even
today. T.V.Sundram Iyengars philosophy of business reflected the kind of man he
was simple and stern. It was based rigidly on four concepts Quality, service,
reliability and a sense of Ethics. The TVS Group is the largest manufacturer and
distributor of automotive components in India, with a turnover in excess of 2.7
billion US dollars and a family of over 25,000 members.

LUCAS-TVS was established in 1961 as a joint venture between Lucas

Industries, UK and the TVS Group. It is a leading manufacturer of auto electrical
products and diesel fuel injection equipment in India. It reaches out to all segments
of the automotive industry such as passengers cars, commercial vehicles, tractors,
jeeps, two wheelers and off-highway vehicles, as well as for stationary and marine
applications. Lucas-TVS was for sometime a part of UK and Varity Corporation of
US. Now Lucas-TVS is fully owned by the TVS group

MISSION:

To be a respected supplier in the global auto industry, by developing

innovative products and solution of value to customers through creative skill and
involvement of employees, suppliers and dealers and use of contemporary
technology.

VISION:

To be the supplier of choice of all leading vehicle manufacturing in India.

To be a recognized Original Equipment Supplier in Asia Pacific and Middle
East markets.
To achieve global recognition for innovative approach to products and
solutions.
And, by 2010, to sell Rs.2000 crores (USD 430) of products and solutions.

The milestone in the journey of LUCAS-TVS as it has emerged today are listed:
 Lucas-TVS today has emerged as a total automobile electrical system
supplier, operating from four plants located at Chennai, Pondicherry, Pune
and Rewari in Haryana.
The electrical division of Lucas-TVS manufactures a complete range of auto
electrical products namely starters, alternators, wipers, and distributors,
making it a one-stop shop for the automotive industry.
Currently the company produces over 2.5 million starters and alternators per
annum, and has plans to double the volume.
The Delphi-TVS Fuel Injection Equipment (FIE) division makes state-of-
the-art rotary pumps, thus providing a competitive supply option for this
vital component.

Lucas-TVS has grown hand in hand with the automobile industry in

the country. The companys policies have recognized the need to
respond effectively to changing customer needs, helping to propel it to
a position of leadership. The company has raised its standards on
quality, productivity, reliability, and flexibility by challenging its
interests.

At present, there are five divisions:

Divisions Turn-Over During

Crores INR 2008 2009
Million USD
Auto Electrical L-TVS 958.29 239.75
Fuel Injection Equipment(FIE)-DTVS 465.30 116.41
Electronic Ignition System (INEL) 120.23 30.08
Automotive Lighting (IJL) 132.92 33.25
After Market Operations(LIS) 165.69 41.45

LUCAS-TVS GROUP OF COMPANIES:

Delphi-TVS.

Lucas India Service.

Indian Nippon Electricals Ltd.

 Indian Japan Lighting.

Delphi TVS is a joint venture between Delphi Automotive Systems, USA

and T.V.Sundram Iyengar and Sons, Indian manufacturing diesel fuel equipment
for passenger and commercial vehicles. Lucas Indian Service was established in
1930 as a specialist organization in sales and service of Lucas-TVS Auto
Electricals and Delphi-TVS Diesel Fuel Injection Equipment. LIS also
manufacturers automotive products like ignition coils and solenoid switches in
Chennai, marketed under the brand name Lucas. INEL is situated in the industrial
town of Hosur, established in 1985 as a manufacturer of electric ignition systems
for two wheelers and portable gensets, INEL is a joint venture of Lucas Indian
Service, India and Kokusan Denki Co.Ltd., Japan. India Japan Lighting was
incorporated in December 1996. It is joint venture between Lucas-TVS Limited,
Chennai and Koito Manufacturing Company Limited, Japan. IJL is a manufacturer
of automotive lighting equipment.

TVS Group Companies:

The TVS Group, with turnover of over one billion dollars, is the largest
manufacturers of automotive components in India. The group produces auto
electrical, diesel fuel injection systems, automotive wheels and axle fasteners,
powder metal components, radiator caps, two wheelers and computer peripherals.
Backed by five service and distribution companies with an extensive network
across the country, the group has the largest distribution network for automotive
products in India.
COMPANY
Manufacturing Companies
Axles India Ltd.
Brakes Ltd.
India Nippon Electricals Ltd.
India Japan Lighting Limited.
Lakshmi Auto components Ltd.
Lucas-TVS Ltd.
TVS Srichakra Ltd.
Sundaram Brake Linings Ltd.
Delphi-TVS Ltd.
Sundaram Clayton Ltd.
Sundaram Fasteners Ltd.
Sundaram Textiles Ltd.
Turbo Energy Ltd.
TVS Interconnected Systems Ltd.
TVS Electronics Ltd.
TVS Sewing Needles Ltd.
TVS Motor Company Ltd.
TVS cherry Ltd.
PRODUCTS
Automotive Axles
Automotive Axles.
Hydraulic brakes & clutch actuation
systems.
Magnetos, Two/Three wheeler ignition
systems.
Headlamps, Rear combination lamps
and various other signal lamps for
automotive and Two wheelers
applications.
Engine/transmission components.
Auto electrical
Automotive tyres.
Brakes linings & clutch facings.
Diesel fuel injection equipment.
Air brakes
High tensile fasteners, cold extruded
products, sintered components,
intelligent system, radiator caps.
Yarn
Turbo charges
Electronic connectors
Computer peripherals
Sewing needles.
Two wheelers.
Precision miniature, sub-miniature,
selector switches, hall effect sensors,
key switches and advanced

Wheels India Ltd.
Distribution Companies
India Motor Parts & Accessories Ltd.
Lucas India Service Ltd.
T V Sundaram Iyengar & sons Ltd.
Other companies
Southern Roadways Ltd.
Sunco machines Ltd.
Sundaram Industries Ltd.
performance/special purpose keyboards.
Automotive wheels
Distributors of automotive components.
Distributors of auto electrical and auto
components, Fuel Injection Equipment,
LISPART & Batteries.
Distributors of passengers cars
commercial vehicles, automotive spare
parts.
Freight services.
Precure tyre retreading equipment
Tyre retreading, coach building, rubber
components.

QUALITY POLICY:

Lucas TVS is committed to achieving ever increasing levels to customer

satisfaction through continuous improvements to the quality of the products and
services. It will be the companys Endeavour to increase customer trust and
confidence in the label Made in Lucas TVS.

Quality is no longer an option but as a basic requirement in todays world.

At Lucas TVS, quality in inbuilt in every phase of manufacture. The companys
quality assurance measures stand on the foundation of a solid belief that quality
and ends with the customer. This commitment forms the backbone of its approach
to Quality Assurance.

Lucas TVS has adopted a prevention-oriented quality policy through

ingrained with the traditional ideas of quality control. Everyone from the highest
levels of the organization to the lowest practice quality control both as an
individual and as a team.

An effective Quality Control System has resulted in the recognition of the

companys outstanding achievements in the various fields. Lucas TVS was
awarded the ISO 9001 certified by BVQL in December 1993. The company
reached a further milestone when it recently received a certificate of recognition
from BVQL for ISO 9000 Auto Electricals.

Lucas TVS has bagged the Rajiv Gandhi National Quality Award for 2006.
This award is for the category large scale manufacturing industry.

Lucas TVS is pioneer in manufacturing transformation in the Indian industry (since

1985-90) through a combination of methodology and technology implemented
through a series of change sessions done through the people and by the
employees. In simple terms the change programs were focused on: process Lay-out
to Product Lay-out (cellular concept)- Module system of shop floor (Customer
Centric). Decentralized organization structure with autonomy to machines
controlling cycle time. Nagare cells in manufacturing areas with auto cycle
machines controlling cycle programs were: Lead time reduction features like QCT
(Quick Change Tooling), Chaku-Chaku (auto unloading), Single Piece
Charging System (material feeding) dedicated containers, pull system (2 bin C
class for small parts and Kanban for A and B parts), e-Kanban
(communication to suppliers to dispatch) are in place in all the modules. Quality
initiatives like online maker control of Quality, CpK improvements, SPC,
Measured Quality, Poka-Yoke (Fool Proofing), SOP (Standard Operating
Procedure), enable to retain or improve Quality Performance. Productivity is the
combined results of methodology and Low Cost Automation led by KMT (Kaizen
Module Team) effort of employees.

We are committed to achieving greater levels of customer satisfaction

through constan improvement to the product quality and service, by improving the
effectiveness of the Quality Management System. Our endeavor is to increase
customer trust and confidence in the label Made by Lucas-TVS.

As a responsible corporate entity, we are committed to protection, preservation and

improvement of the environment by continually orienting our activities, products
and processes and services so as to: Institutionalize adoption of environment
friendly concept while designing our products and processes Conserve resources
like copper, energy, varnish, oils, compressed air, and water by applying the
concept of 3R (reduce, reuse and recycle). Minimize generation of inevitable waste
like waste oil, used coolant, and the like. Improve working environment through
good house-keeping, taking pro activity measures for the health and safety of our
employee and development of our greenery. Comply with all relevant legal and
other requirements. Spread awareness about the importance of the environment
protection throughout the organization as well as among our business associates
such as suppliers, dealers and customers

A very unique in Lucas-TVS wherein employee voluntary organize

themselves as teams and focus on 5S in shop floor, 5S in office, TPM, Sippliers,
Safety, Energy and Environmental issues. They participate in these activities
during their off time (holidays), select the are pertaining to them and implement
functional team activity involving engineers and officers. The team takes up
problems of higher importance while also focusing on customer requirements and
providing effective improvements. The department head reviews the progress the
team.

FUTURE PLANS OF THE ORGANISATION:

Auto component manufacturer Lucas-TVS said it will invest up to Rs. 400

crore in the next two-three years to expand capacity and product development
while planning to set up new manufacturing units in Indonesia and Thailand.

We will invest up to Rs.400 crore over the next two-three years in R&D,
manufacturing and capacity building, Lucas-TVS vice-president (Business
Planning) Arvind Balaji.

The company, which at present has seven operational plants, including one
in Iran, is also mulling over setting up new plants in Indonesia and Thailand. Mr.
Balaji said the company had started production in the Iran plant through a joint
venture with an investment of Rs.16 crore in which it was the majority partner.

To expand its presence, the company would launch its products in Germany
in the next two years, besides looking for inorganic growth opportunities.Lucas-
TVS is looking out for domestic and international acquisitions, company
president (operations), N.Ravichandran.
 On the domestic front, Lucas-TVS is about to set up a plant in Singur to
supply parts to Tata Motors for its Rs. 1 lakh car. We have acquired land in Singur
for setting up a plant and will supply and alternators to Tata Motors Rs. 1 lakh
small car, Mr.ravichandran.

The company, which had a turnover of $ 250 million in the last fiscal, was
expecting to double the revenue in the next four years- Mr.Balaji.

LUCAS-TVS CUSTOMER NAMES:

1. CARS:

MARUTI UDYOG
TATA MOTORS
HYUNDAI MOTORS
FORD INDIA
HINDUSTAN MOTORS
WEST INDIA POWER EQUIPMENT
FIAT INDIA
GENERAL MOTORS

2. COMMERCIAL VEHICLES:

TATA MOTORS
BAJAJ AUTO
FORCE MOTORS
TATA CUMMINS LTD
ASHOK LEYLAND
M & M JEEP
SWARAJ MAZDA

3. TRACTORS:

M&M
PUNJAB TRACTOR LTD
TRACTORS AND FARM EQUIPMENTS
 HMT LIMITED
ESCORTS
EICHER L & T

4. ENGINES:

KIRLOSKAR OIL ENGINES

SIMPSONS
TATA CUMMINS INDIA LTD
GREAVES COTTON INDIA LTD
LOMBARDINI

5. TWO WHEELERS:

TVS MOTORS COMPANY LTD

BAJAJ AUTO LTD
SOORAJ AUTO LTD
SCOOTERS INDIA LTD
HERO HONDA
HONDA MOTOR CYCLES AND SCOOTERS INDIA
YAMAHA INDIA
DEPARTMENTATION:

Department can be defined as the process by which activities or function of

the company of the company are grouped homogeneously into different groupss
departmentation is very important as it give ways for division of labor
specialization and to have check on time which is very much needed for company.

Features Of Departmentation:

The following are the features of departmentation

Departmentation leads to specialization of jobs. As there are separated

department for each job E.g. Sales, purchase, services etc. which enable to
focus his attention on a narrow aspect of the work more efficiently.
Division-of-work enables specialization which results in early completion of
job and saves the time of the person.
Each department has their heads that are accountable for the results so it
helps in easy supervision of the work done.

Various Department Of The Company:

Purchase Department
Marketing Department
Production Department
Finance Department
Personnel Department
Secretarial Department

Function of Finance Department:

The following are the function of finance department,

To estimate the finance requirement of fixed and working capital

To measure the earning and saving to the best advantage of the company.
To take decision regarding borrowing of funds or utilization of own funds
for purpose of investment.
To maintain the books of accounts the company.
 To prepare budget and financial statement of the company and control.
To ensure the solvency position of the company.

This department has many sub-sections:

PAY ROLL
BILLS RECEIVABLE
BILLS PAYABLE
CASH, BANKING AND LEGAL
TAXATION AND LEGAL
COSTING, BUDGET AND CAPEX
MATERIAL ACCOUNTING
INTERNAL AUDIT
M.I.S

PAY ROLL SECTION:

This section handles all matters relating to the payment made to the
employees consisting of payroll, advances, PF trust, travelling and related
allowance/claims, medical claims, personal taxation and canteen expenses. The
type of payroll and distribution date is follows:

Supplementary payroll 5th

Apprentices payroll 7th
Casual payroll 10th
General payroll 30th
Executive payroll 30th

Beside these OT payments and attendance bonus are made on 15th of every month
once an employees joins the organization, the data related to his pay roll is sent
from personnel department to payroll is sent from personnel department to payroll
section.

PF TRUST:

The company is exempted establishment as per PF Act and is maintaining a

separate trust. The board of trustees consists of two each from union and
management sides. The remittances are in the form of investments as per the
pattern set out by government as given below

25% - State government

15% - Central government
40% - Public sector units
20% - Special Deposits account in nationalized Bank

Individual employee accounts are maintained and the interest is credited as on

st
31 march every year. Any short fall in meeting the interest commitment should be
borne by the employee. Any excess payments & short receipt affecting the fund is
also be borne by the employer. All expenses in administering the trust are to be
borne by the employees including PF inspection charges. The advances /
withdrawals are for the following purpose as permitted.

Withdrawals medical, marriage, housing, education

Advances pilgrimage & religious functions.

BILLS PAYABLE SECTION:

This section is responsible for supplier payments and maintenance of their

accounts. The section divided into four areas dealing with the following

Raw materials
Components (bought out)
Sub components
Indirect material

BILLS PASSING:

The purchase order master is maintained under POP system with details of
items, rate, quantity and other terms and conditions. The system is linked with
terminal at goods receiving Deck where goods inward in prepared. Once the items
are received in GRD, GI raised with details of party Chelan NO., quantity
received and the relevant purchase order details. Whenever there is a mismatch
between the quantity as per supplier DC and the actual quantity received a
discrepancy note is raised and sent to the party
 BIBIOGRAPH

BOOKS:

I.M. Pandey, Financial Management, Vikas Publication, New Delhi, 10th

Edition, 2003
Rajiv Srivastava, Financial Management, Oxford University Press, New
delhi

WEBSITE:

www.lucas-tvs.com
www.automotive-online.com/auto-industry.html