1 INTRODUCTION

1.1. About the Group The TVS Group - T V Sundaram Iyengar & Sons Ltd. was established in 1911 by Shri. TV Sundaram Iyengar. As one of Indias largest industrial entities it epitomizes Trust, Value and Service. Today, there are around 43 companies in the TVS Group, employing more than 25,000 people worldwide and with a turnover in excess of USD 5 billion. With steady growth, expansion and diversification, TVS commands a strong presence in manufacturing of two-wheelers, auto components and computer peripherals. It also has vibrant business in the distribution of heavy commercial vehicles passenger cars, finance and insurance.

1.2. About the Company T V Sundaram Iyengar & Sons Ltd., established a Vehicle Dealership in Chennai for handling Cars and Commercial Vehicles and thus Sundaram Motors was born on August 13, 1945. Being the trading and distribution arm of the group, the business activities of Sundaram motors include Dealerships for Automobile vehicles, Distribution of spares for after market, Sales & Service support for Garage Equipment, Sales & Service of products for special applications like construction & Material handling and providing customer centric services for car customers under brand My TVS.

1.3. Automobile Dealership Sundaram motors distributes commercial vehicles, Utility & Sports Utility vehicles, Passenger Cars representing various leading automobile vehicle manufacturers such as Ashok Leyland, Daimler Chrysler, General Motors, Honda and Mahindra & Mahindra. The company has more than 100 outlets and sells over 30,000 vehicles and services more than 300000 vehicles per annum being the leading automobile distribution company in India.

1.4. Parts distribution The company is the largest distributors of automobile spare parts in the country, handling more than 80 suppliers and 35, 000 part numbers of franchised parts, agency lines TVS branded parts and so on. It has operations in Tamil Nadu, Kerala, MP & UP and reaches over 3000 retail outlets spread all over these territories. It has modern warehouse supported with state of the art IT infrastructure.

1.5. Tools and Garage equipments division The company also undertakes Sales & Service of Garage Equipments and specializes in installing commissioning and providing complete after sales service support for critical imported state - of - the art automobile service equipment. All these are imported from various countries from suppliers who are reputed brands abroad.

1.6. Special products division The company has also diversified into Marketing (Sales & Service) products for special application such as Construction & Material handling Equipment, Man lifts, Air Compressors, Bus Air Conditioners etc., representing leading names from India & Overseas in this field and has earned a niche for itself in this category of business. The company has also launched a new avenue of service providing Fork Lift Trucks with trained operators on a monthly lease basis under its unique Own & Operate scheme.

1.7. Customer centric business My TVS My TVS is the newest initiative of TVS & Sons to offer customers a branded alternative chain of service network for all brands of cars. Thus, TVS has given birth to a true multi brand independent aftermarket integrated solution for car customers.

2 COMPANY PROFILE
TVS Motor Company

Type

Public(BSE: 532343, NSE: TVSMOTOR)

Industry

Automobiles

Founded

1978

Founder(s)

Venu Srinivasan

Headquarters

Chennai, India

Key people

Venu Srinivasan, Chairman K N Radhakrishnan, President & CEO S G Murali, CFO H S Goindi, President Marketing Harne Vinay Chandrakant, President NPI R Anandakrishnan, VP Business Planning BLP Simha, President Director, PT.TVS Indonesia

Products Parent Subsidiaries Website

Motorcycles, Scooters, Mopeds, Three-Wheelers and car distributors TVS Group PT TVS Motor, Indonesia TVSMotor.in
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3 BUSINESS MODEL OF SUNDARAM MOTORS

Sundaram motors

Showroom

WorkShop

Purchase

Sales

Purchase

Sales

FIGURE 1 BUSINESS MODEL OF SUNDARAM MOTORS

The flow of cash at Sundaram motors primarily comes from two sources, the showroom and the workshop. The show room is responsible for new vehicle sales while the workshop is responsible for spare parts sales and servicing. Both show rooms and workshops have a purchase and sales function.

The purchase function of the showroom is further subdivided into three based on the OEM i.e. Honda, GM and Benz. The purchases from these three manufacturers are financed through the group company Sundaram Finance. There is an open credit line between Sundaram motors and Sundaram finance for a period of 45 days from the date of purchase.

On the sales side vehicle delivery happens once the full settlement is made by the customer to Sundaram motors either from the end customer or from the customer financing company.
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The workshop department has a purchase function as mentioned earlier. The suppliers to the workshop are of two types, one the OEM and the second the local supplier who manufactures parts independently. All transactions in this case are settled automatically with being settled upfront. Coming to the sales function we can further classify it into 5 divisions based on the type of customer. The sundry customer, credit based customer, insurance companies, group companies and the Government. Credit based customers are given a time period of 15 days to settle their dues, which the same in case of other buyers except sundry customers who need to close their dealings immediately with cash.

4 DEALERSHIPS IN TVS SUNDARAM MOTORS

Ashok Leyland Ashok Leyland Ashok Leyland, leading automobile giant, manufactures state-of-the-art vehicles for commercial, defense and special projects. This includes 7.5 RLW to 145 RLW vehicles for goods transportation. Ashok Leyland vehicles have established a reputation in the market today. Honda The company's division, Sundram Honda, is the authorised dealer for Honda Siel Cars India Ltd. The showrooms conform to Honda's global specifications and meet international standards. Mahindra & Mahindra TVS & Sons are authorised dealers for Mahindra & Mahindra's range of utility vehicles and LCVs in Kerala. To facilitate convenient access for the customers, it has set up service and spares outlets across Kerala.

Special Projects The company has also diversified into marketing (sales & service) products for special applications, such as construction & material handling equipment, man lifts, air compressors, door closure units etc., representing products of Escorts / Massat / JLG for Tamilnadu and Kerala

5 FUNCTIONING OF VARIOUS DEPARTMENTS 5.1 FINANCE DEPARTMENT

5.1.1 ACCOUNTING PRACTICES AT SUNDARAM MOTORS The key stakeholders in the accounting process followed at Sundaram motors are: 1. The Bank 2. The Customer 3. The Vendor The vendor can be further subdivided into auto part suppliers and office equipment vendors. We will look at each of these in detail. This gives us a clear picture of the accounting department from a transactional level. Cash management Cash transactions happen in two cases, cash received from customer or cash goes out to the vendor, in case of office equipment vendors it is treated as petty cash expense. Petty cash expenses might be incurred for employees as well. E.g. couriering parcels or travel within the city. The Customer The customer is the entity who purchases cars, parts from Sundaram motors. A separate account is maintained for the customer accounts receivables. The customer account always maintains a debit balance meaning we always receive money from the customer. An anomaly to this rule needs to be investigated further. The Vendor The vendor account consists of accounts payable to the supplier and usually maintains a credit balance. This means that Sundaram motors gets some time period before it needs to pay the vendor or supplier. A debit balance in the vendor account is not preferred and such occurrences need to be investigated immediately. The Bank The bank simply acts as a repository of cash and transactions. Sundaram motors has accounts with several banks mostly in the public sector. The transactions to and from the bank are available online and reports from the bank are a vital input for reconciliation activities.

Reconciliation This is one of the key activities carried out by the finance department at Sundaram motors. Reconciliation takes place at several levels. At the highest level reconciliation occurs with the bank account i.e. the reports from bank are cross checked with internal accounts maintained by the company. At the lower level it takes place individually with each customer and vendor account. The main purpose of reconciliation is to ensure that the accounts are all in order and all credit and debit balances are maintained as required. The reports taken from the bank must tally with individual accounts of the customer and vendor.

5.1.2 WORKING CAPITAL TURNOVER IN TVS Working capital turnover indicates how effectively the company is using its working capital in order to generate sales. Working capital (current assets - current liabilities) is used to fund operations and purchase inventory which is then converted into sales.

Year 2004-05 2005-06 2006-07 2007-08 2008-09

Sales 1683.654 2129.681 2834.490 2738.751 3392.312

Working Capital 279.799 379.533 955.471 1219.203 1498.042

WCT (times) 6.017 5.611 2.966 2.246 2.264

TABLE 1 WORKING CAPITAL TURNOVER

So we obtain the relationship between the money used to fund operations and the sales generated from these operations. A higher the working capital turnover is better because it means the company is generating more sales as compared to the funds it uses.

WCT
7 6 5 4 3 2 1 0 2004-05 2005-06 2006-07 WCT 2007-08 2008-09

FIGURE 2 WORKING CAPITAL TURNOVER In case of Sundaram motors we find that the working capital turnover has come down from a peak of 6 times to only 2 times in the year 2009. This means that the firm is using more and more of its funds to generate less of sales. Though sales has increased in this period, it has not been achieved efficiently. Instead the company has simply pumped in more money to achieve this sales increase.

5.1.3 Liquidity Ratios Liquidity refers to the ability of a company to meet its current obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulating assets. The current assets should either be liquid or near about liquidity. These should be convertible in cash for paying obligations of short-term nature. The sufficiency or insufficiency of current assets should be assessed by comparing them with short-term liabilities. If current assets can pay off the current liabilities then the

liquidity position is satisfactory. On the other hand, if the current liabilities cannot be met out of the current assets then the liquidity position is bad. 5.1.4 Current ratio Current Ratio is a measure of general liquidity and mostly used to make the analysis of short-term financial position of a company. It is defined as the ratio between current assets and current liabilities.

Current assets include cash, accounts receivable, inventory, marketable securities, trade credits etc. Current liabilities include outstanding expenses, accounts payable, dividends payable etc.

Year 2004-05 2005-06 2006-07 2007-08 2008-09

Current Assets 729.070 820.133 1433.363 1738.373 2037.862

Current Liabilities 731.411 893.262 1016.607 1242.814 1094.898

Ratio 1.00 0.918 1.490 1.398 1.861

TABLE 2 CURRENT RATIO The general thumb rule for current ratio is that it should be 2:1 for currents assets to current liabilities. When the companys current ratio is near about this value it indicates that the liquidity position of the company is satisfactory. A low current ratio shows that the liquidity position of the company is not good and the company shall not be able to pay its current liabilities as and when they are due. A relatively high current ratio is an indication that the company is liquid and has the ability to pay its current obligations as and when they are due.

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Current Ratio
2 1.5 1 0.5 0 2004-05 2005-06 2006-07 Current Ratio 2007-08 2008-09

FIGURE 3 CURRENT RATIO

In the case of Sundaram Motors, we can clearly see that the current ratio has been on an upward trend since 2004. It has reached 1.8 in the year 2009, which is still less than an ideal current ratio of 2:1.

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5.1.5 Aspects of Working Capital Management 1. A healthy level of current ratio to maintain would be at 2:1 for current assets to current liabilities. It is seen that in case of Sundaram motors, the maximum value of current ratio has been 1.8, reached in the year 2009. Since bankers and lenders take keen interest in the current ratio of a company, it is important that we maintain this ratio at a normal level. To achieve this, we can look at collecting our receivables faster. It is to be noted that the sundry debtors have increased significantly over the period of analysis. We need to reduce the receivables amount under sundry debtors and covert more of this to cash or bank balances. We can request for banker acceptance letters, credit notes or credit lines from banks as an additional tool to ensure prompt payment.

2. As indicated in the current ratio, the level of inventory has been increasing throughout the entire duration of analysis (2004 to 2009). The spending on inventory needs to be reviewed to understand the requirement for maintaining such high levels. Significant cost savings can be achieved by reducing the level of expenditure in this area.

3. It is seen the Inventory turnover ratio has come down gradually over the period of analysis. Inventory turnover ratio indicates the number of times inventory has been depleted and new inventory stocked (turnover). The higher this ratio the better it is for the company, as already noted inventory has surged over the 5 year period. Hence this ratio is another indicator that the spending on inventory needs to be looked at again.

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5.2 HR DEPARTMENT
HYUNDAI provider delivering technology-driven business solutions. HYUNDAI is the No.1 provider of integrated business, technology and process solutions on a global delivery platform. The main objectives of the project are,

To collect the information relating to the evolution of banking in India. Critical Analysis of Human Resource Policies IN Wipro Technologies. To analyze the collected data and identify the role of HRM. To come up with the conclusions and recommendations regarding the
present and future outlook and role to be played by HRM in PSBs.

To visit the offices of three nationalized banks and collect information

about HRM policies, system and procedures adopted by various banks in last 3 years.

To analyze the collected data and identify the role of HRM.

The basic purpose of having a manpower plan is to have accurate estimate of required manpower with matching skills requirements. The main objectives are:

Forecast manpower requirements. Cope with changes environment, economic, organizational. Use existing manpower productively. Promote employees in a systematic way.

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5.2.1 MODEL OF HRP SYSTEM

FIGURE 4: MODEL OF HR SYSTEM

5.2.2 HUMAN RESOURCE POLICIES Manpower Planning Recruitment & Selection Training & Development Performance Appraisal Promotion, Transfer, & Demotion Administration Section Grievance Handling Kaizen suggestion Welfare Activities

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5.2.3 RECRUITMENT PROCESS.

Round 1 : Written test

Verbal: synonyms, antonyms, Analogies, SC, Prepositions and reading

comprehension.

Aptitude: Time & Work, Time & Distance, Blood Relations, Series
Completion, Puzzles, Calendars, Clocks, Percentages, Ratio proportions, Ages, Pipes and Cisterns etc.

Technical: Strong on Technical Aspects, Hardware, Software

Engineering, Micro Processors, etc. Candidates are informed to brush up their technical skills which were covered in their regular academic curriculum. Recruitment process Cont.,

Round 2: Technical Interview This is a major elimination round. Candidates should be thorough with their basic technical skills to clear this round. Candidates are here by informed to be prepared with their core subjects.

Round 3: HR Interview Candidates can expect basic HR interview questions like Tell me about yourself, Why should I hire you, Why only WIPRO, What is SIX sigma level. Candidates will be tested in their communication and vocabulary during technical and HR interviews.

Round 4: Placement Upon Joining, the incumbent shall be given an employee code number by Manager(HR) and he shall fill up the joining forms and shall submit the same to the Manager(HR) for further course of action.

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5.3 DISTRIBUTION DEPARTMENT TVS & Sons is one of the largest automobile spare parts distributors in India. It sells over 35,000 part numbers, manufactured by more than 80 suppliers and caters to over 7,000 customers across the country. Sophisticated warehousing facilities with state of the art IT infrastructure enables smooth procurement and deliveries. We also market quality products under the name of TVS Brand, with a key communication - TVS Quality Spare Parts - Move Safe with us. In pursing business excellence, T. V. Sundram Iyengar & Sons Ltd. Is committed to supplying genuine spare parts and ensure timely delivery to its customers. The company regularly innovates and improves its systems and processes to enhance customer/supplier satisfaction. TVS & Sons is committed to creating an environment for the development of employees, to cater the future needs of the organisation.

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5.3.1 TVS PART SMART

This is an extended arm of distribution business and is a franchisee model. Currently, the parts retail market is highly fragmented, largely unorganised, large supply chain inefficiencies and credit driven. TVS & Sons have a huge opportunity to cater to the customers since OES caters only 20-25% of after-market through dealers and 75-80% are serviced through distributors and others. Customer dissatisfaction is largely felt in a) quality b) price c) reliability d) safety. Thus, there is an urgent need to improve share of organized retail in auto parts.

On account of this, the company identified three customer categories 1) retailers 2) fleet operators and 3) garage owners. TVS PartSmart initiative addresses the following:

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For the Retailers margin, investment, obsolescence, succession is the concerns and it is addressed with assured, reasonable, minimal obsolescence and opportunity for the next generation. For the Fleet operators concerns on genuineness, inconsistent pricing, vehicle downtime and availability are addressed with assured quality of spares, uniform pricing, minimum downtime and anytime availability. For the Garage owners concerns similar to the above and technology know how, it addresses with continuous training and upgradation TVS PartSmart would initially serve commercial vehicle customers. The offering would be genuine & reliable parts, uniform pricing, full range coverage, store's inventory transparency for frequent replenishment, in store promotions and below the line activities, web based on demand solutions. This initiative would provide opportunity for the supply chain to promote their brands at the point of sales, to train mechanics in use of products, to build loyalty programs, Pan India reach, assured availability of genuine parts and protection from spurious parts. TVS and Sons Ltd. offers integrated web based, on demand software solution, Net working of mother warehouse with franchisee shops, transparency of shop inventory and promise supply chain efficiency. TVS PartSmart stores will bring great value to all stake holders by offering reliable products at affordable price with dedicated manpower and all outlets will provide a unique purchasing experience. TVS Partsmart franchisee model outlets will sell commercial vehicle parts and will expand its network and be operational across India. TVS PartSmart commenced its operations from Tamilnadu in September'08 and is planning to reach an overall level of 300 franchisees across the nation by 2011.

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5.4 LOGISTICS DEPARTMENT

TVS Logistics Services Ltd., started as a business unit of T V Sundram Iyengar & Sons Ltd. in 1995, operating several state-of-the-art warehouses across the country. The business unit has been hived off as a separate company in 2004. TVS Logistics Services Ltd. has perfected the science of professional logistics management. The company has vast experience and know-how, to handle logistics of immense scales. The company partners industry leaders to operate freight forwarding,

warehousing operations and logistics operations across Europe, the USA and the neighboring countries. TVS Logistics Services Ltd., started as a business unit of T V Sundram Iyengar & Sons Ltd. in 1995, operating several state-of-the-art warehouses across the country. The business unit has been hived off as a separate company in 2004.

TVS Logistics Services Ltd. has perfected the science of professional logistics management. The company has vast experience and know-how, to handle logistics of immense scales. The company partners industry leaders to operate freight forwarding, warehousing operations and logistics operations across Europe, the USA and the neighboring countries. The entire basket of services required for supply chain management includes:
y y y y y

Integrated logistics Outbound logistics Inbound logistics Export warehousing (Know-Down/After-market) Warehousing

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5.5 MARKETING DEPARTMENT

By integrating all messages in all media we will reinforce the brand name & main points of product differentiation. Research about media consumption, pattern will help our advertising agency to choose appropriate media and timing to reach prospects before & during the product introduction. Thereafter, advertising will appeared on a pulsing basis to maintain brand awareness and communicate various differentiation messages. The agency wills also co-ordinate public relation efforts to build Hyundai brand & support the differentiation message. To attract market attention & encourage purchasing, we will offer a limited time, registration & insurance. To attract, retain & motivate channel partners for a push strategy, we will use trade sales promotions and personal selling to channel partner.

5.5.1 PROMOTION STRATAGY OF TVS 1. Road Shows

The company plans to stage road shows, to display vehicles in the pavilions during various college festivals and exhibition. This car will appeal to youngsters more.

2. Television advertisements
Advertisements to promote and market our product will be shown on leading television channels. Major music and sports channels will promote and they will reach out to the youth will be promoted through Star, Zee, Sony and Doordarshan etc as it has more viewers.

3. Radio
Radio is the medium with the widest coverage. Studies have recently shown high levels of exposure to radio broadcasting both within urban and rural areas, whether or not listeners actually own a set. Many people listen to other people's radios or hear them in public places. So radio announcements will be made and advertisements will be announced on the radio about the product features and price, qualities, etc.

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4. Print Ads
Daily advertisements in leading newspapers and magazines will be used to promote the product. Leaflets at the initial stage will be distributed at railway stations, malls, college areas and various other locations.

5. Workshops and Seminars

Workshops and seminars will be held in colleges and big corporate to make people aware about the companies past performance and product features, its affordability and usage, vast distribution network. Road shows will be conducted where free trials of the car would be given.

6. Banners, neon signs

Hoardings, banners, neon signs will be displayed at clubs, discs, outside theatres and shops to promote our brand car.

7. Booklets and pamphlets

Booklets will be kept at car showrooms, retail battery outlets, etc for the customer to read. These booklets will provide information about our company; the products offered which suits the customers need accordingly.

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5.2.2 STRUCTURE OF MARKETING DEPARTMENT

FIGURE 5 STRUCTURE OF MARKETING DEPARTMENT

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6 Conclusions
Overall we can see that the company has managed to increases its sales significantly over the five year period. It has substantially increased its cash and bank balances while at the same time improving its financial ratios. It is seen that the company has lowered its risk and is in a better position to meet its obligations both short term and long term in time. This is clearly indicated by the rising trends in current and quick ratios as well as the falling D/E ratio and increase in interest coverage ratio. Where the firm seems to be lacking is in the area of inventory management, working capital turnover and accounts receivables. Hence we will be focusing our recommendations on these specific areas.

It is interesting to note that in the initial two years of the analysis period, the cost of goods sold exceeds the total revenues. This has happened because of subsidizing sales to group companies, mainly in the case of spare part sales. However Sundaram motors has since then moved on to arms length pricing and is now treating group companies as equivalent to external companies. This is a significant shift in terms of management policy.

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7 REFERENCES
Links 1. http://www.aicpa.org 2. http://www.investopedia.com 3. http://www.bized.co.uk 4. http://www.accountingformanagement.com 5. http://www.netmba.com 6. http://hubpages.com/hub/ 7. http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html 8. http://www.siamindia.com 9. http://www.araiindia.com 10. http://www.aasindia.in 11. http://www.tvsgroup.com 12. http://www.tvsiyengar.com 13. http://www.sundarammotors.com

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