A REPORT ON

OUTBOUND LOGISTICS FREIGHT MODEL TO ACHIEVE CUSTOMER SATISCFACTION

By:

SHARAD SHARMA ICFAI Business School 08BS0003081 At: HONDA SIEL CARS INDIA LIMITED (HSCIL)

A Report On OUTBOUND LOGISTICS FREIGHT MODEL TO ACHIEVE CUSTOMER SATISFACTION

Submitted To: Submitted By:

Dr. Suneel Arora Faculty Guide ICFAI Business School Ahmedabad

Sharad Sharma 08BS0003081

Company Guide:

Mr. Akshay Pradhan Asst. Manager Marketing Supply Chain Honda Siel Cars India Ltd.

TABLE OF CONTENTS
TOPIC Acknowledgments About the Founder About the Company Introduction About Logistics Abstract Recommendations Attachment: Questionnaire Glossary References PAGE No. 4 6 8 23 48 51 96 97 102 103

Acknowledgments
I take this opportunity to thank the management of Honda Siel Cars India Ltd. for allowing me to take up the Summer Internship Program in their organization. It is not the brains that matter, what matters is who guides them, the characters, the hearts, generous qualities and progressive forces. I am grateful to the staff and executives of the company who helped me a lot with the information, supervision and cooperation.

Expressing gratitude is a difficult task and words often fall short of reflecting ones feeling. It is my proud privilege and I undertake this task with utmost sincerity. I am grateful to Dr. Suneel Arora(Faculty Guide, ICFAI Business School) for his priceless guidance, significant suggestions and help accomplishing the project work at every step of the project.

I am highly indebted to Mr. Akshay Pradhan(Asst. Manager, Marketing Supply Chain) for assigning me this project and for his valuable help, benevolent guidance, precious advice, suggestions and encouragement without which the project would not have taken this shape.

I also extend my heartfelt thanks to Mr.Achal Paliwal under whose expertise this project was developed.

Last but definitely not the least I would like to thank all the staff members of the HSCIL Commercial Department who have readily responded to my request for any kind of help and support required during the tenure of the project.

ABOUT THE FOUNDER

Mr. SOICHIRO HONDA

The Honda story is the story of one man, Soichiro Honda, and his unparalleled achievement of bringing motor cycles to the masses. Soichiro Honda was a racer, a businessman, and a manufacturer. But most of all he was a dreamer. He dreamed of a better way of making piston rings, founded a small company, and began production. He dreamed of giving people everywhere an economical form of transportation, and began producing small motorcycles, including one built in 1949 called the D-Type Dream.

He also loved racing too. So his company built bigger and faster machines, two, four, five and six-cylinder race bikes and won the Isle of Man. Honda Motor Company is by far the world's biggest motorcycle maker. Honda's first motorcycle was born out of necessity in immediate post World War II Japan, where public transportation was desperately overcrowded and gasoline severely restricted. Looking for a solution to his, and thousands of others', personal transport problems, Honda came across a job lot of 500 war surplus twostroke motors designed to power electric generators; nobody else wanted them so Honda picked them up cheap. His aim was to adapt them for attachment to push-bikes and, by October 1946, his small factory in Hamamatsu was making complete, makeshift motor bikes using proprietary cycle frames. Because gasoline was in short supply, Honda adapted his motors to run on turpentine, a fuel that he himself distilled from pine trees and sold throughout Japan. Turpentine (or gas thinned out with turpentine) was not the best thing for powering motorbikes, and required a lot of strenuous pedaling to warm the engine up enough before you could get going. Honda's first bikes were very successful and supplies of the surplus engines ran out after a few months. Business was good by then, so he decided to manufacture his own motors. Using the surplus motor as a model, Honda designed and built his own 50cc engine.

ABOUT THE COMPANY

HONDA HISTORY TIMELINE:

In October 1946, Soichiro Honda established the Honda Technical Research Institute in Hamamatsu, Japan, to develop and produce small 2-cycle motorbike engines. Two years later, Honda Motor Company, Ltd. was born, and in 1959 Honda opened its first storefront in Los Angeles with six industrious employees.

1946: Soichiro Honda establishes the Honda Technical Research Institute. 1947: Honda produced its first product, the A-type bicycle engine.

1958: Honda super club motor bike debuts.

1959: Honda 125cc motorcycle takes 8th place in its class in the Isle of Man TT race.

y American Honda Motor Co. Inc. opens in Los Angeles, USA.

1960: Honda begins manufacturing motorcycle production at Suzuka factory.

1963: Honda released S500, its first sports car in Japan.

1964: y Honda enters Formula One(F1) Auto Racing for the first time. y Auto production begins at Hondas Saitama factory in Sayama.

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1965: y Honda introduces the E300 portable generator.

y Honda recorded its first F1 victory in Mexico.

1972: Honda Civic debuts

1973: CVCC engine complies with clean air amendments for 1975.

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1977: Honda Civic ranks firsts in U.S fuel economy tests for fourth consecutive year.

1978: Honda Prelude debuts.

1979: Honda of American manufacturing opens and begins motorcycle assembly. 1981: Honda wins 500cc Motocross World Championship ttle for 3rd consecutive year. 1982: Honda of America manufacturing begins assembly of Honda Accord.

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1983: Honda Civic CRX wins first place for gasoline car fuel consumption in US tests.

1984: Honda returns to F1 racing after a 15 year hiatus.

1990: y The Acura NSX, a new sports car, debuts.

y Honda wins its fifth consecutive first ranking in J.D Power Consumer Satisfaction Index.

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y Ultra fuel efficient VTEC-E engine debuts in the new Civic.

1991: y Honda posts its 10th consecutive win in the isle of Man TT. 1993: Hondas power products are the first to meet new California emission regulations.

2000: Honda breaks ground in a new $440 million auto plan near Lincoln, Alabama.

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2001: y Honda Accord is the bestselling car in America.

y Honda Odyssey earns a double five star safety ranking for a third year in a row.

y Honda introduces the redesigned 2002 CRV.

y Honda Civic coupe becomes one of the first cars to earn an all around five star

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safety rating from NHTSA.

y Honda wins the CART manufacturing Championship for the fourth time.

2002: y ASIMO, Hondas humanoid robot, rings the opening bell to celebrate American Hondas 25th anniversary of being listed on the New York Stock Exchange.

y Civic Hybrid becomes the first established mainstream gasoline electric hybrid engine to be sold in North America. 2003: 10,00,000th Honda vehicle is manufactured in the United States. 2004: y 25th Anniversary of manufacturing in the United States. y Honda wins Indy Car manufacturing championship. 2005: y Honda wins Indy Car manufacturing championship. y Redesigned Honda Civic wins Motor Trend Car of the year award.

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y Honda Ridgeline wins Motor Trend Truck of the year award. y Honda Ridgeline is the first ever four door truck to earn top government crash test rating.

y Honda delivers FCX fuel cell vehicle to worlds first individual customer y 100,000th Honda hybrid vehicle is sold in the United States. y Experimental Honda Jet makes public world debut at EAA Air Venture 2005.

2006: y Honda Aircraft Company begins sales of its Honda Jet Advanced Light Jet.

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y Honda Fit is introduced in the United States and earns highest possible government safety rating for full frontal crash performance from NHTSA.

y Honda opens a new plant, Honda Precision Parts of Georgia, LLC. The plant begins mass production of five speed transmission. y Honda R&D Americas opens new Advanced Styling Centre in Pasadena, California to focus on a future styling direction for the Honda and Acura brands. 2007: y FCX Clarity advanced fuel cell vehicle makes its world debut. Delivering three times the fuel efficiency of a modern gasoline powered car with water as its only emission. y Honda completely redesigned 2008 Accord emphasizing outstanding performance, fuel economy and safety with an expressive and spacious design. 2008: y Honda is named Americas Greenest Automaker for the fourth consecutive time by union of concerned scientists in its biennial study of smog-forming and global-warming emissions from automakers U.S vehicles. y Honda breaks ground on a new $550 million automobile plant in Greensburg, Indiana.

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HONDA IN INDIA
Honda Siel Cars India Ltd., (HSCI) was incorporated in December 1995 as a joint venture between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddharth Shriram Group company, with a commitment to providing Hondas latest passenger car models and technologies, to the Indian customers. The Honda City, its first offering introduced in 1997, revolutionized the Indian passenger car market and has ever since been recognized as an engineering marvel in the Indian automobile industry. The success of City as well as all its other models has led HSCI to become the leading premium car manufacturer in India. The total investment made by the company in India till date is Rs. 1620 crores, further investment of RS. 1000 crore is planned and being currently invested for the coming second plant in Rajasthan. The company has a capacity of manufacturing 100,000 cars. HSCIs state-of-the-art manufacturing unit was set up in 1997 at Greater Noida, U.P with an investment of Rs. 450 crore. The green-field project is spread across 150 acres of land (over 6,00,000 sq. m.). The initial installed capacity of the plant was 30,000 cars per annum, which was thereafter increased to 50,000 cars on a two-shift basis. The capacity has further been enhanced to 1,00,000 units annually in February 2008 . The capacity expansion was necessitated by the excellent performance of all the Honda models, particularly the growing demand for City in India. Several modifications were done by the company with the objective of offering higher quality products to its customers, faster and quicker. The expansion process also included expansion of the covered area in the plant, from 1,07,000 sq. m. to 1,31,794 sq. m.
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HSCI currently produces the All New City, Civic and Accord models in India and the premium SUV, CR-V is sold as a fully imported unit from Japan. The company operates under the stringent standards of ISO 9001 for quality management and ISO 14001 for environment management.

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PRODUCTS IN INDIA

CITY

CIVIC

21

ACCORD

CR-V
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INTRODUCTION
INDIAN AUTOMOBILE MARKET

In 1953, the government of India and the Indian private sector initiated manufacturing processes to help develop the automobile industry, which had emerged by the 1940s in a nascent form. Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow at a slow pace due to the many government restrictions. A number of Indian manufactures appeared between 1970-1980. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies Following the economic reforms of 1991, the automobile section underwent delicensing and opened up for 100 percent Foreign Direct Investment. A surge in economic growth rate and purchasing power led to growth in the Indian automobile industry, which grew at a rate of 17% on an average since the economic reforms of 1991. The industry provided employment to a total of 13.1 million people as of 2006-07, which includes direct and indirect employment. The export sector grew at a rate of 30% per year during early 21st century. However, the overall contribution of automobile industry in India to the world remains low as of 2007. Increased presence of multiple automobile manufacturers has led to market competitiveness and availability of options at competitive costs. India was one of the largest manufacturers of tractors in the world in 2005-06, when it produced 2,93,000 units. Indias car market has emerged as one of the fastest growing in the world. The number of cars sold domestically is projected to double by 2010, and domestic production is skyrocketing as foreign makers are
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setting up their own production plants in India. The governments 10year plan aims to create a $145 billion auto industry by 2016. Out of 400 Indian suppliers, 80 percent have the ISO 9000 certificate the international standard for quality management.

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INDIAN AUTOMOTIVE STATISTICS

Current Scenario
y India represents one of the largest two-wheeler markets in the world, with an estimated size of 5.4 million units a year. y India is the two-wheeler capital of Asia with an average of 27 twowheelers per thousand people, compared to China's 8 two-wheelers per thousand people. y India became the fastest growing car market in the world in 2004, growth rate of 20%.

Overview
India is being recognized as potential emerging auto market. y Foreign players are adding to their investments in Indian auto industry. y Passenger vehicles sales crossed the mark of 1 million in 2004-05. y 2/3rd of auto component production is consumed directly by OEMs.
y

Cars by Price Range Under Rs. 3 Lakhs

y y

Maruti 800, Alto, Omni Reva

y y

Rs. 3-5 Lakhs

y y y y

Ambassador Fiat Palio Hyundai Santro, Getz,i10 Chevrolet Opel Corsa Maruti Zen,Wagon R,Swift,Versa, Ford Icon & Fiesta
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y y

Tata Indica, Indigo Mahindra Bolero Chevrolet Swing, Optra, Tavera Hyundai Accent, Elantra Mahindra Scorpio Maruti Baleno Toyota Corolla, Innova Tata Safari Mitsubishi Lancer, Lancer Cedia Honda City Ford Mondeo & Endeavour Chevrolet Forester Skoda Octavia Classic & Combi Honda Civic & CR-V Maruti Suzuki Grand Vitara Hyundai Sonata Embera, Terracan & Tucson Mitsubishi Pajero Audi A4 Opel Vectra Honda Accord Mercedes C Class Toyota Camry Audi A6, A8 & TT BMW X5, 5 Series & 7 Series Mercedes E Class, S Class, SLK, SL & CLS-Class Porsche Boxster, Cayenne, 911 Carrera & Cayman S

y y y

Rs. 5-10 Lakhs

y y y y y

Rs. 10-15 Lakhs

y y y

y y

Rs. 15-30 Lakh

y y y y y

y y

Rs. 30-90 Lakhs

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Toyota Prado Bentley Arnage, Continental GT & Flying Spur Rolls Royce Phantom Maybach

Above Rs. 1 Crore

y y

The segregation is made on Ex-Showroom price of base models.

Industry Growth
Indian Auto Market Growth for the year 2004-05
y

y y

y y

The automobile industry crossed a landmark with total vehicle production of 10 million units. Car sales was 8,82,094 units against 8,20,179 units in 2004-05. The two-wheeler market grew by 13.6 per cent with 70,56,317 units against 62,09,765 units in 2004-05. Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against 3,18,430 units in 2004-05 The domestic automobile industry sales grew 12.8 per cent at 89,10,224 units as against 78,97,629 units in 2004-05. According to the Society of Indian Automobile Manufacturers (SIAM), car sales was 8,82,094 units against 8,20,179 units in 2004-05. The growth of domestic passenger car market was 7.5 per cent Car exports stood at 1,70,193 units against 1,60,670 units in 200405. The two-wheeler segment, the market grew by 13.6 per cent with 70,56,317 units against 62,09,765 units in 2004-05. Motorcycles had the upward march, 17.1 per cent in domestic market touching 58,15,417 units against 49,64,753 units in 200405.

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Scooter segment grew by 1.5 per cent, fall at 9,08,159 units against 9,22,428 units in 2004-05. Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against 3,18,430 units in 2004-05. Medium and heavy commercial vehicles managed a growth of 4.5 per cent against 23 per cent growth in the year ended March 31, 2005. Light commercial vehicles sales growth was 19.4 per cent at 1,43,237 units against 1,19,924 units in 2004-05. Three-wheelers sales rose by 17 per cent at 3,60,187 units against 3,07,862 units in 2004-05.

Production of 4-Wheelers 2005-06 (AprMar) In Nos. 2005-06 (AprMar) In Nos.

Manufacturers

Manufacturers

Japanese OEM Maruti Udyog Ltd. Toyota Kirloskar Motor Pvt. Ltd. Honda Siel Cars India Ltd. Swaraj Mazda Ltd. Total 572,097 44,975 41,361 11,946 670,379

Korean OEM Hyundai Motor India Ltd. 260,440

American OEM General Motors India Pvt. Ltd. Ford India Pvt. Ltd. Total 30,687 26,946 57,633

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European OEM Skoda Auto India Pvt. Ltd. Daimler Chrysler India Pvt. Ltd. Volvo India Pvt. Ltd. 9.767 1,780 1,004

Indian OEM Tata Motors Ltd. 449,878

Mahindra & Mahindra 128,601 Ltd. Ashok Leyland Ltd. Force Motors Ltd. Eicher Motors Ltd. Hindustan Motors Ltd. 65,085 35,728 24,348 15,458 719,098

Tatra Trucks India Ltd. 125 Fiat India Pvt. Ltd. 671

Total

13,347

Total

Production of 2-Wheelers 2005-06 (AprMar) In Nos. 2005-06 (AprMar) In Nos.

Manufacturers

Manufacturers

Japanese Hero Honda Motors Ltd. Honda Motorcycle & Scooter India (Pvt.) Ltd. Yamaha Motors India

Indian 3,006,486 Bajaj Auto Ltd. TVS Motor Company Ltd. LML Ltd. 2,042,289

603,436 248,665

1,366,866 107,044

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Pvt. Ltd. Suzuki Motorcycle India Pvt. Ltd. 2,328 Kinetic Engineering Ltd. Majestic Auto Ltd. Kinetic Motor Company Ltd. Royal Enfield (Unit of Eicher Ltd.) Total 3,860,915 Total 82,392 56,819 53,880 30,596 3,739,886

Domestic Sales The half yearly figures (April-September 2007 over April-September 2006) indicate that domestic sales of automobiles decelerated with a negative growth rate of 5.91 percent. The cumulative growth of the Passenger Vehicles segment during AprilSeptember 2007 was 12.86 percent. Passenger Cars grew by 13.16 percent, Multi Purpose Vehicles by 19.95 percent and Utility Vehicles by 8.71 percent in April-September 2007 compared to the same period last year. In April-September 2007, the Commercial Vehicles segment grew by 2.92 percent over the same period in 2006. Light Commercial Vehicles recorded a growth of 14.75 percent; however, Medium & Heavy Commercial Vehicles witnessed a fall by 5.18 percent. Bus segment registered a growth of 41.39 percent while truck segment registered a decline by 2.25 percent.

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Three Wheelers sales fell by 6.87 percent with sales of both Goods Carriers decreasing the highest, by 15.76 percent and Passenger Carriers by 0.57 percent during the period. Two Wheeler sales registered a negative growth of 9.47 percent during April-September 2007 over April-September 2006. Though Mopeds and Scooters grew by 22.37 percent and 20.13 percent respectively, Motorcycles and Electric Two Wh eelers registered a negative growth rate of 15.20 percent and 10.74 percent respectively. Exports Automobile Exports grew by 17.13 percent during April-September 2007 over the same period last year. Exports were led by Two Wheelers, which grew by 22.98 percent, followed by Commercial Vehicles exports at 16.53 percent and Three Wheelers exports at 11.59 percent. Passenger Vehicles Exports grew marginally with a growth rate of 1.48 percent. Turnover of Automobile Industry 1999-00 to 2004-05 Turnover of Automobile Manufacturers Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 (Rs.In Million) 422,933 492,024 499,136 595,184 661,769 835,851

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Installed Capacities in the Indian Automobile Industry 2003-04 2003-2004 Installed Capacity (In Million) a) Four Wheelers b) Two &Three Wheelers c) Engines 2004-2005 Installed Capacity (In Million) 1.72 9.13 0.18 b) Two &Three Wheelers

1.51 a) Four Wheelers 7.83

0.18 c) Engines

Market Share
Domestic Market Share for 2006-07 CVs Total Passenger Vehicles 5 14

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Total Two Wheelers Three Wheelers

77 4

Trends in Automobile Industry

Automobile Domestic Sales Trends Category Passenger Cars

(Number of Vehicles) 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 509088 541491 696153 820179 882208 1076408

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Utility Vehicles MPVs

104253 113620 146388 176360 194502 61775 52087 59555 65033 66366

220199 83091 (Number of

Automobile Production Trends Total Passenger Vehicles M&HCVs LCVs Total Commercia l Vehicles Three Wheelers Scooters Motorcycle s Mopeds Electrict Two Wheelers Total Two Wheelers Grand Total

675116 707198 902096 1061572 1143076 89999 56672 115711 161395 198506 207472 74971 98719 119924 143569

1379698 275600 192282 467882 403909 940673 6553664 355870 7341 7857548 10109037

146671 190682 260114 318430 351041 200276 231529 284078 307862 359920 908268 825648 886295 922428 909051 2887194 3647493 4170445 4964753 5810599 408263 338985 307509 322584 332741 -

4203725 4812126 5364249 6209765 7052391 5225788 5941535 6810537 7897629 8906428

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Category Passenger Cars Utility Vehicles MPVs Total Passenger Vehicels M&HCVs LCVs Total Commercial Vehicles Three Wheelers Scooters Motorcycles Mopeds Electrict Two Wheelers Total Two Wheelers Grand Total

2001-02 2002-03 2003-04 2004-05 2005-06 500301 105667 63751 669719 96752 65756 162508 212748 557410 114479 51441 723330 120502 83195 203697 276719 782562 146325 60673 960487 1046133 182018 67371 196506 66661

Vehicles) 2006-07 1238032 222111 84707 1544850 294266 225734 520000 556124 943974 7112225 379987 7982 8444168 11065142

989560 1209876 1309300 166123 108917 275040 356223 214807 138896 353703 374445 219295 171788 391083 434423

937506 848434 935279 987498 1021013 2906323 3876175 4355168 5193894 6207690 427498 351612 332294 348437 379994 -

4271327 5076221 5622741 6529829 7608697 5316302 6279967 7243564 8467853 9743503

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Automobile Exports Trends Category Passenger Cars Utility Vehicles MPVs Total Passenger Vehicles M&HCVs LCVs Total Commercial Vehicles Three Wheelers Scooters Motorcycles Mopeds Electrict Two Wheelers Total Two Wheelers Grand Total 200102 49273 3077 815 53165 4824 7046 11870 15462 200203 200304 200405 200506

(Number of Vehicles) 2006-07 192745 4403 1330 198478 18838 30928 49766 143896 35685 545887 37566 619138 1011278

70263 125320 160670 169990 1177 565 3049 922 4505 1227 4489 1093

72005 129291 166402 175572 5638 6617 12255 43366 8188 9244 17432 68144 13474 16466 29940 66795 14078 26522 40600 76881

28332 32566 53687 60699 83934 56880 123725 187287 277123 386054 18971 23391 24078 28585 43181 -

104183 179682 265052 366407 513169 184680 307308 479919 629544 806222

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Forecasted Growth The following points are taken from the forecasted statistical report,
y

Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians. By 2010 India will take over Germany in sales volumes and Japan by 2012 The Indian automobile component industry is estimated to triple from USD 63 billion to USD 190 billion within a span of six years by 2012. Estimated turnover USD 12 billlion, plus components revenue USD 3 billion, this is the vastness of Indian automobile industry. Industry analysts predict this industry to touch USD 13000 million mark by 2010, a cumulative growth of 9.5% annually. It is said that for every Re 1 spent, the auto sector returns Rs. 2.24 to the Indian economy. By 2010, India is expected to witness over Rs 30,000 crore of investment. Component industry's growth was only 9% between 1997-2000. But between 2000-2005 it has grown to 20%. It is projected 17% between 2005-2014. According to estimation the compound annual growth rate (CAGR) of Indian Automobile sales will grow at 9.5% and will touch a mark of 13,008 million by 2010.

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CURRENT INDIAN AUTO MARKET SHARE

The latest trend in the Indian Auto Market depicts that a major chunk of the Automobile Industry in India still belongs to the Two Wheelers i.e 76.49%. It is followed by the Passenger Vehicles including cars, SUVs(Sports Utility Vehicles) and MUVs(Multi Utility Vehicles) i.e 15.96%.Last comes the Commercial Vehicles including Trucks, Trailers, Earthmovers etc and the Three Wheelers.

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THE INDIAN FOUR WHEELER INDUSTRY

The 4W industry in India has not quite matched up to the performance of its counterparts in other parts of the world. The primary reason for this has been the all-pervasive regulatory atmosphere prevailing till the opening up of the industry in the mid1990s. The various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as "unaffordable luxury". Initially in the post-liberalisation period, the automotive sector, especially the passenger car segment, saw a boom. The buoyancy in the sector was derived primarily from economic vibrancy, changes in Government policies, increase in purchasing power (especially of the upper middle class), improvement in life styles, and availability of car finance. The passenger car industry was finally deregulated in 1993, and many companies, both Indian and foreign (like Daewoo, Ford, General Motors, and DaimlerChrysler), entered the market. However, the smooth sailing was suddenly disrupted in the last quarter of FY1996. The automobile industry, which contributed substantially to industrial growth in FY1996, failed to maintain the same momentum between FY1997 and FY1999. The overall slowdown in the economy and the resultant slowdown in industrial production, political uncertainty and inadequate infrastructure development were some of the factors responsible for the slowdown experienced by the automobile industry. In FY2000, the sector experienced a turnaround, posted positive growth rates and witnessed the launch of many new models. But the spectacular
39

growth in FY2000 was followed by a decline in FY2001 and only a marginal growth of 0.5% in FY2002.

However, since FY2003, industry sales have increased at a 3-year CAGR of 17.4% to 1.14 million in FY2006. Although there was a slowdown in FY2006, after the high growth in FY2004-05, the recent high growth has been on the strength of an increase in the disposable income of middle-income salaried people, release of pent-up demand, and easy availability of credit.

Low Penetration, but Rising Share of World Production Although the Indian automobile industry has come a long way since the deregulation in 1993, India does not rank well among its global peers in many respects, viz., the contribution of the sector to industrial output, number of cars per person, employment by the sector as a percentage of industrial employment, number of months' income required to purchase a car, and penetration of cars.

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However, the major car manufacturers worldwide consider India a good potential market and they foresee a large future demand here. As can be seen from the table below, India is now a major global producer of cars, with India's share in world production increasing from 1.6% in 2000 to 2.7% in 2005.

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Two things that stunted growth of the Indian automobile industry in the past have been low demand and lack of vision on the part of the original equipment manufacturers (OEMs). However, the demand has picked up after the liberalization of the regulatory environment, and global OEMs who enjoy scale economies both in terms of manufacturing and research and development (R&D) entered the Indian market. This has resulted in a significant shift in the way business is conducted by suppliers, assemblers and marketers. Spending on Vehicles and Transport India's private final consumption expenditure (PFCE) on transport was estimated at around Rs. 3,124 billion in FY2005, accounting for around 16.5% of total PFCE. This comprises three categories: personal transport equipment, operation of personal transport equipment, and purchase of transport services.

In terms of PFCE, the share of transport in total PFCE has witnessed rapid growth since the mid-1980s. By comparison, the share remained at around 3-5% till the mid-1980s. The motor vehicles sector is also an important source of central excise duties. Central excise duty collections from motor vehicles
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were Rs. 54.70 billion during FY2005, accounting for 6% of central excise duty collections.

Taxes on vehicles, passengers and goods also form an important component of states' tax collections, and formed 8.7% of states' own tax collections during FY2005.

DEMAND CHARACTERISTICS Passenger Cars In developed markets, engine capacity and wheel-base are the bases of segmentation of passenger cars: price does playa role but only up to a point. Since affordability is the most important demand driver in

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India, the domestic car market has until now been segmented on the basis of vehicle price. Price-based competition takes place in a continuum rather than in segments since nearly all the models are launched in multiple versions at different price points. As a result, a higher-end variant may compete with a lower-end variant of a car in a segment above it.

MUVs The MUV segment consists of vehicles that are suited to both rural and urban areas. In rural areas where the roads are usually bad, these vehicles are used as goods carriers and also for public transportation. Northern and Western India account for nearly two-thirds of the demand for MUV. Specifically, in States like Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra, the demand for MUVs is the largest. There are three segments of buyers for MUVs: the private market, Government, and the Defence. Until the 1990s, the Government and Defence segments accounted for the largest share of the market. The reduction in Government and defence spending since the 1990s has substantially reduced sales to these two segments. This has pushed private sector purchases into greater prominence.

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There are three sub-segments of the UV / MUV segment: the hardtop, soft-top and pick-up. The hard-top version consists of the higher-end Sports Utility Vehicles (SUVs) that have been present in the Indian markets since FY1999. Following the success of the higher-end SUVs, the share of the hard top segment in total MUV sales has registered an increase. Soft-top MUVs, which are largely dependent on sales in the rural and semi-urban markets where the vehicles serve as modes of mass transportation (maxi taxi), have witnessed a contraction in volumes in recent years. The declining share of the soft-top sub-segment is attributable largely to the increasing acceptance of SUVs as an alternative to soft-tops (and even higher end-cars). That apart, soft-top sales have also been affected by a decline in rural income, increase in sales tax in some states, increase in diesel prices, enforcement of strict emission control norms, and restraints on the issue of licenses to use soft-top vehicles as rural taxis. Demand Structure When the industry was deregulated in 1993, the global carmakers chose to operate in the high price-high value segment. However, the strategy did not work as the market for premium and luxury vehicles in India was not large enough. MUL was entrenched in the low
45

price-low value segment, and given its scale economies, it could not be dislodged. In the latter half of the 1990s, foreign car manufacturers changed their strategy. It was still difficult to remove MUL from its market leadership in the dominant low price-low value segment as scale economies formed the basis of competition in this segment. Thus, the global players changed the price-value equation by offering superior value at a price that was still higher than that of the Maruti 800 and Omni, but significantly lower than of the cars in the high price-high value segment. The process gained momentum in FY2000 when the growth in the car market was led by the Compact segment. Although the compact segment now accounts for 65% of domestic sales of passenger cars, in recent years, the mid-size segment has captured a rising share of the market, and since 2004, sales in the mid-size segment have exceeded sales in the mini-segment. The growth in this segment has been led by new launches, lower prices, and the significant success of four models - MUL's Esteem, Honda's City, HMIL's Accent, and TML's Indigo. Introduction of stripped down versions of the vehicles in the Mid-size segment, attractive pricing by manufacturers (who also offer sales incentives) coupled with lower rate of interests and easy availability of finance have facilitated the growth of this segment.

46

Low Penetration Levels Although India's 4W sales have increased in recent years, penetration levels are low at around 0.9%. Till the last decade, the industry was considered low priority as cars were thought of as 'unaffordable luxury', and treated as such through Government policies. Although reduction in excise duties, favorable Government policies, and lower prices have resulted in significant increase in penetration, India's passenger car penetration is low by global standards-1.3% in Chino, 59% in EU, and 81% in the US. Estimates from Notional Sample Survey 58th Round (2002) indicates that ownership of four-wheelers (car or jeep) is restricted to about 4.4% of urban households, and 0.6% of rural households. During 2002-03, ownership of cars/jeeps was restricted to around 0.9 million households in rural areas, and 2.57 million households in urban areas. Car penetration is high in Chandigarh, Delhi, Goa, and Kerala. However, penetration is extremely low in the eastern states of Bihar, West Bengal, Orissa; and central states such as Madhya Pradesh and Chattisgarh.

47

ABOUT LOGISTICS

Logistics is the organized movement of materials and, sometimes, people. The term was first associated with the military but gradually spread to cover business activities. Logistics Management is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment. Logistics management includes a whole gamut of processes like planning, procurement, transportation, maintenance, distribution and replacement of personnel and material. The process of logistics management differs from one firm to another. In some firms, all these activities are placed within a single logistics department; in others, they are shared among the departments. The firm may also go in for what is called third-party logistics, which is a contract with an outside party to perform specific logistics services. The following indicative list gives some of the functions that a firm's logistics management system is supposed to perform: 1. Customer Service: All the activities that are done to keep the existing customers satisfied come under the gamut of customer service. 2. Demand Forecasting: This process includes various statistical measures that enable the firm to estimate the demand in the future, which in turn helps in proper demand management. 3. Documentation Flow: This process covers the movement of the paperwork that accompanies the movement of physical product. 4. Interplant Movements: This is only applicable to those firms where
48

production process is accomplished in more than one plant, requiring the movement of semi-finished products from one plant to another. 5. Inventory Management: Inventory management requires a cost effective maintenance of stocks of goods and materials. 6. Order Processing: Order processing starts with the receipt of an order from a customer and ends when the order is ready for packaging. 7. Packaging: Packaging is done mainly to protect the product when it is being transported from the source to the destination. It can also be used for promotional purposes. 8. Parts and Service Support: This covers the whole after-sales service process. 9. Plant and Warehouse Site Selection: This function is carried to determine where the plant and the warehouse are going to be located, keeping cost-benefit analysis in mind. 10. Production Scheduling: This function's task is to balance demand for products with the existing plant capacity and availability of inputs. 11. Purchasing: This is a very important function in the logistics management as the quality of inputs that are purchased determines the quality of the finished product. Vendor selection is an important subprocess of this function. 12. Returned Products: There are many categories of returned products. A few are subjects of product recalls, meaning that a safety defect or hazard has been discovered. E.g. laptop battery recall by Dell. These products are removed from the shelves, and both retailers and consumers attempt to return them to the manufacturer. This is a form of reverse distribution, with goods moving in the opposite direction of their usual flow.
49

13. Salvage Scrap Disposal: How a firm takes care of its waste material is covered in this function. The firm might recycle its waste or sell the waste to various processors who specialize in recycling it. 14. Traffic Management: All the transport requirements needed to move a firm's freight is known as traffic management. 15. Warehouse and Distribution Centre Management: This logistics activity involves management of the locations where the firm's inventories are stored .

50

ABSTRACT
OBJECTIVE OF THE PROJECT
The Outbound Logistics Model Aims to maximize the profit, safety, quality, quantity and utilization of resources involved in the delivery of vehicles produced (CITY, CIVIC, ACCORD, CR-V) to the dealerships spread throughout the country. It is a technique followed by HSCIL to minimize the cost incurred in the delivery of vehicles to the dealerships, thereby enhancing the business relations between the company, dealers and transporters, which at last will lead to a happy and satisfied customer. The outbound logistics model will have the following value-addition to the company: y It will provide a higher degree of automation in the decision of freights to be paid for the delivery of cars to the transporters. y It will help the company to identify alternative routes and clubbing of different routes that can be followed by the transporters for the safe and in time delivery of cars. y It will reduce the transit damage of cars by a considerable amount. y It will enhance business relations with the transporters and the dealers.

51

HSCIL OUTBOUND LOGISTICS FREIGHT MODEL

There are several criteria and considerations that are analyzed in order to estimate the total cost incurred by the transporters in delivering the vehicles to the various locations and hence calculate the most appropriate freight for those locations. Following are the major criterions that are considered for calculating the net cost and thus the net freight:

 NON-NEGOTIABLE: The freight for delivering the vehicles that comes out as the output of all the calculations done is a non-negotiable sum. This means that this is the freight which all the transporters have to accept if they wish to do business with the company.  ONE WAY: Freight is paid to the transporters for a one way journey i.e delivering vehicles from HSCIL plant to the respective dealership(s).  REASONABLE PROFIT: The net freight which comes out after considering and analyzing all the factors is calculated after including a reasonable profit margin to both the company(HSCIL) and the transporter.
52

 PER CAR PER KM: The net freight which comes out for a particular location is expressed basically in terms of per car per km measure. This means that the freight is paid to the transporter for a single car per kilometer.  LOCATION TO LOCATION: The freight which is paid to the transporter is calculated based upon various other factors and the distance from HSCIL plant to the city in which the dealership is located. This means that the distance is considered from HSCIL plant to the city and not from HSCIL plant to the dealership.  CAPITAL INVESTMENT: This is the cost that is incurred as the capital investment for a particular year. It includes:            Cost of Chassis of the carrier Cost of the body of the carrier Insurance Charges Taxes(Goods Tax, Road Tax, Permit Fees) FIXED COST / ANNUM: This includes: Registration Charges Goods Tax Road Tax Basic Permit Cost National Permit
53

               

Fitness of the vehicle PUC(Pollution Under Control) Insurance Driver/Cleaner Salary Office Expenses Interest Depreciation VARIABLE COST / KM: This includes cost of: Diesel Tyres of the carrier Repairs & Maintenance Lashing Belt Cost Miscellaneous Trip Expense Toll taxes Telephone Expense GPS tracking device

 EMPTY RUNNING FACTOR: This involves the cost that is incurred when the carrier has to travel unloaded. This is basically an overhead to the transporters. This includes the cost of travelling unloaded after delivering the vehicles to the respective dealership(s) and then travelling up to the nearest auto plant to collect their vehicles as the return load for any other location(s).

54

METHODOLOGY
APPROACHES TO THE OUTBOUND LOGISTICS FREIGHT MODEL:
There are 3 approaches to the outbound logistics model:  Model based approach- In this, freight is decided based upon the vehicle model viz City, Civic, Accord or CRV. This is because each of the car is having a different price tag and subsequently the risk of damage for each model is different.  Route based approach- In this, freight is decided based upon the routes from the source (HSCIL) to the destination (dealership) followed by the transporters. The model helps to seek the most advantageous routes that can be followed by the transporters to reduce the cost incurred.  Carrier based approach- In this, freight is decided based upon the carrier in which the car is to be delivered. There are two carriers hired by the company viz: y Truck- In the truck category there is a single model namely the TR4 which has the capability of loading 4 cars. y Trailer- In the trailer category there are two models namely the TR6 and TR8 having the capability of loading 6 and 8 cars respectively.

55

CURRENT FREIGHT MODEL OF HSCIL

DIFFERENT ZONES: HSCIL has divided the entire country into

six different zones in order to ease the freight calculations and simplify the estimation of distances. All the dealerships in India are accordingly categorized in the various zones.

56

HSCIL DEALERSHIPS
57

y DELHI/NCR: Delhi, Noida, Faridabad, Gurgaon,

Ghaziabad

y NORTH: Chandigarh, Hissar, Jammu, Amritsar, Ludhiana,

Patiala, Jalandhar, Jaipur, Jodhpur, Udaipur, Agra, Bareilly, Kanpur, Lucknow, Meerut, Dehradun

y EAST: Guwahati, Bhubaneshwar, Jamshedpur, Kolkatta, Siliguri y CENTRAL: Bhopal, Indore, Jabalpur, Raipur, Nagpur y WEST: Ahmedabad, Mehsana, Rajkot, Surat, Vadodara, Aurangabad, Jalagaon, Kolhapur, Mumbai, Nasik, Pune y SOUTH: Hyderabad, Secunderabad, Vijaywada, Vishakhapatnam, Bangalore, Hubli, Mangalore, Mysore, Calicut, Cochin, Trivandrum, Chennai, Coimbatore, Madurai

58

DIESEL RATES FOR MAJOR CITIES

Applicable from: June 06, 2008 Agartala 34.43 Ahmedabad 39.99 Aizwal 34.29 Ambala 34.6 Banglore 39.8 Bhopal 39.05 Bhubhaneswar 37.89 Chandigarh 34.69 Dehradun 37.02 Gangtok 37.39 Guwahati 35.53 Hyderabad 38.25 Imphal 34.21 Itanagar 34.48 Jaipur 37.37 Jammu 35.05 Jullunder 34.27 Kohima 34.52 Lucknow 37.73 Panjim 37.61 Patna 36.79 Pondicherry 35.77 Raipur 38.63 Ranchi 36.76 Shillong 34.62 Shimla 35.49 Srinagar 35.99 Trivandrum 38.29 Delhi 34.8 Kolkata 35.81 Mumbai 39.54 Chennai 37.13

59

FREIGHT RATE TRUCK(TR4)

CAPITAL INVESTMENT
Chassis (TATA 3516) Body (TR4 - 4 CityZX eqv) Insurance Charges (taxes ) Good Tax,Road Tax,Permit Fees Fitness ect
TOTAL

890000 450000 25242 80805

20000 1,580 4000 3225 50000 2000 80805

Registration Charges Goods Tax Road Tax Basic Permit Cost (5yr validity) National Permit (avg 10 states) Fitness

1446047

FIXED C ST/ A N M O NU
Year R egistrationC harges G Tax oods R Tax oad Basic Perm C (5yr validity) it ost N ational Perm (avg10states) it Fitness PollutionUC Test C Insurance Driver / C leaner Salary OfficeExpenses Interest (spreadover 5yrs) Depreciation@ WDV - 7Yrs EffectiveN of m o onths TO L TA ModeratedShareof Fleet WeightedFixedC ost Y1 Y2 Y3 Y4 Y5 Y6 Y7

0 1,580 4000 0 50000 2000 640 21287 180000 33360 95531 303670 12 692069 25% 173017

0 1,580 4000 0 50000 2000 640 17069 180000 33360 61284 212569 12 562502 19% 104063

0 1,580 4000 0 50000 2000 640 13695 180000 33360 22693 148798 12 456766 19% 86786

0 1,580 4000 0 50000 2000 640 11266 180000 33360 0 104159 12 387005 19% 71596

0 1,580 4000 3225 50000 2000 640 9052 180000 33360 0 72911 12 356769 3% 8919

0 1,580 4000 0 50000 2000 640 7281 180000 33360 0 51038 12 329899 1% 1649

180000 33360 125924 433814 12 773098 16% 123696

TO L PERC R TA A 569726 142432

60

ost d Ne Va iable s / Fixed s / ess alvage Val e OA i@ %

.
de a ed ha e Flee Weigh ed al s %

.
%

.
%

.
%

.
%

.
%

.
% . .

ost d iesel es epai s & ai isc ip Expe se ll axes Expe ses Ne Va iable s / ess alvage Val e

.
E p i g - Va iable W eigh ed E p ig s s %

.
%

.
%

.
%

.
%

.
%

.
%

61

FREIGHT RATE TRAILER

CAPITAL INVESTMENT

( ( ( )

) ZX q ) ( (
85805

) )

TOTAL

2502364

FIXED COST / ANNUM

Year Registration Charges Goods Tax Road Tax Basic Permit Cost (5yr validity) National Permit (avg 10 states) Fitness Pollution UCC Test Insurance Driver / Cleaner Salary Office Expenses Interest (spread over 5 yrs) Depreciation @ WDV - 7Yrs Effective No of months TOTAL Moderated Share of Fleet Weighted Fixed Cost Y1 0 1,580 4000 0 50000 2000 640 43394 180000 33360 156,319 525496 12 996789 25% 249197 Y2 0 1,580 4000 0 50000 2000 640 35946 180000 33360 100,280 367847 12 775653 19% 143496 Y3 0 1,580 4000 0 50000 2000 640 29987 180000 33360 37,133 257493 12 596193 19% 113277 Y4 0 1,580 4000 0 50000 2000 640 25699 180000 33360 180245 12 477524 19% 88342 Y5 0 1,580 4000 3225 50000 2000 640 21789 180000 33360 0 126172 12 422766 3% 10569 Y6 0 1,580 4000 0 50000 2000 640 18662 180000 33360 0 88320 12 378562 1% 1893 Y7

180000 33360 206,051 750709 12 1170120 16% 187219

TOTAL 793993

PER CAR 198498

62

   C
20.37
TOTAL 19.64 PER CAR 3.27

#  C !
20.04

! C $
20.04

 ! C $
19.71

#" ! C $
19.71

% C #
19.38

 ! C "
19.38

10 F  E 9 ' ( D B A1  ' 7 9  91 2 @9 (8 2 76 5   43  1' 4 1   43  2 1 ) ' & 0 (         

Cost Head TOTAL

!   #!   ! 
Yr 7

!   #!   %$ 
Yr 6

!   #!   %$ 
Yr 5

!   #!   #" 
Yr 4

!   #!   #" 
Yr 3

!   #!   ! 
Yr 2

!   #!   ! 
Yr 1

C H ost ead

TO LR TE/ K TA A M

VARIABLE COST / KM

TO LCO / KM TA ST

41.18 38.24

Yr 1

Yr 2

34.84 31.80 30.15 29.22 28.83

Yr 3

63

Yr 4

Yr 5

Yr 6

Yr 7

TO L PERC R TA A

35.09

5.85

EMPTY RUNNING -VARIABLE COST

Cost Head Diesel Tyres Repairs & Maint Misc Trip Expense Toll taxes Comm Expenses Net Variable Cost/ KM Less Salvage Value Yr 1 11.29 2.07 1.32 1.4 1.4 0.00 17.43 0.00 Yr 2 11.29 2.07 1.32 1.4 1.4 0.00 17.43 0.00 Yr 3 11.29 2.07 1.65 1.4 1.4 0.00 17.76 0.00 Yr 4 11.29 2.07 1.65 1.4 1.4 0.00 17.76 0.00 Yr 5 11.29 2.07 1.98 1.4 1.4 0.00 18.09 0.00 Yr 6 11.29 2.07 1.98 1.4 1.4 0.00 18.09 0.00 Yr 7 11.29 2.07 2.31 1.4 1.4 0.00 18.42 0.00

TOTAL PER CAR 17.70 2.95

TOTAL RATE / KM
Empty Running - Variable Cost Weighted Empty Running Cost

17.43
16% 2.79

17.43
25% 4.36

17.76
19% 3.29

17.76
19% 3.37

18.09
19% 3.35

18.09
3% 0.45

18.42
1% 0.09

64

PROPOSED FREIGHT MODEL OF HSCIL

CURRENT DIESEL RATES
Applicable f m Januray Agartala Ahmedabad Aizwal Ambala angalore hopal hubhaneswar handigarh ehradun angtok uwahati yderabad mphal tanagar Jaipur Jammu Jullunder ohima ucknow anjim atna ondicherry aipur anchi hillong himla rinagar rivandrum Delhi 34.8 Kolkata 35.81 Mumbai 39.54 Chennai 37.13 ,

65

FREIGHT RATE TRUCK(TR4)

CAPITAL INVESTMENT
Chassis (TATA 3516) Body (TR4 - 4 CityZX eqv) Insurance Charges (taxes ) Good Tax,Road Tax,Permit Fees Fitness ect TOTAL 890000 450000 25242 80805 20000 1,580 4000 3225 50000 2000 80805 Registration Charges Goods Tax Road Tax Basic Permit Cost (5yr validity) National Permit (avg 10 states) Fitness

1446047

F IXE D C O S T / A N N U M
Year R e g is tra tio n C h a rg e s G oods T ax R oad T ax B a s ic P e rm it C o s t (5 yr v a lid ity) N a tio n a l P e rm it (a v g 1 0 s ta te s ) F itn e s s P o llu tio n UC C T e s t In s u ra n c e Driv e r / C le a n e r Sa la ry Offic e Ex pe n s e s In te re s t (s pre a d o v e r 5 yrs ) De pre c ia tio n @ WDV - 7Yrs Effe c tiv e N o o f m o n th s TOTAL Mo d e ra te d Sh a re o f F le e t We ig h te d F ix e d C o s t Y1 0 1 ,5 8 0 4000 0 50000 2000 640 21287 180000 33360 95531 3 0 3 6 70 12 6 920 6 9 25% 1 73 0 1 7 Y2 0 1 ,5 8 0 4000 0 50000 2000 640 1 70 6 9 180000 33360 61284 212569 12 5 6 25 0 2 19% 104063 Y3 0 1 ,5 8 0 4000 0 50000 2000 640 13695 180000 33360 22693 1 4 8 79 8 12 456766 19% 8 6 78 6 Y4 0 1 ,5 8 0 4000 0 50000 2000 640 11266 180000 33360 0 104159 12 38 7 0 0 5 19% 71 5 9 6 Y5 0 1 ,5 8 0 4000 3225 50000 2000 640 9052 180000 33360 0 72 9 1 1 12 35 6 7 6 9 3% 8919 Y6 0 1 ,5 8 0 4000 0 50000 2000 640 72 8 1 180000 33360 0 51038 12 3298 99 1% 1649 Y7

180000 33360 125924 433814 12 7 7 30 98 16% 123696

TOTAL 5 6 97 26

PER CAR 1 4 24 32

66

VARIABLE COST / KM
Cost Head Diesel Tyres Repairs & Maint Lashing Belt Cost Misc Trip Expense Toll taxes Telephone Expense GPS tracking device TOTAL Moderated Share of Fleet Weighted Variable Cost Yr 1 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 2 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 3 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 4 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 5 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 6 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30 Yr 7 8.82 1.07 0.12 0.11 1.40 1.35 0.41 0.30

13.58
16% 2.17

13.58
25% 3.40

13.58
19% 2.51

13.58
19% 2.58

13.58
19% 2.51

13.58
3% 0.34

13.58
1% 0.07

TOTAL PER CAR 14.78 3.70

TOTAL COST / KM
Cost Head Net Variable Cost/ KM Fixed Cost / km Less Salvage Value TOTAL Profit @10% Yr 1 14.56 10.74 25.30 2.53 16% 4.45 Yr 2 14.56 9.61 24.17 2.42 25% 6.65 Yr 3 14.84 7.81 22.65 2.27 19% 4.61 Yr 4 14.84 6.34 21.18 2.12 19% 4.43 Yr 5 15.11 5.38 20.49 2.05 19% 4.17 Yr 6 15.11 4.96 20.07 2.01 3% 0.55 Yr 7 15.39 4.58 19.97 2.00 1% 0.11

TOTAL PERCAR 6.24

TOTAL RATE/ KM
Moderated Share of Fleet Weighted Total Cost

27.83 26.59 24.91 23.30 22.53 22.07 21.96 24.97

67

EMPTY RUNNING -VARIABLE COST

Cost Head Diesel Tyres Repairs & Maint Misc Trip Expense Toll taxes Comm Expenses Net Variable Cost/ KM Less Salvage Value Yr 1 7.78 1.07 1.10 1.40 1.40 0.00 12.70 0.00 Yr 2 7.78 1.07 1.10 1.40 1.40 0.00 12.70 0.00 Yr 3 7.78 1.07 1.38 1.40 1.40 0.00 12.98 0.00 Yr 4 7.78 1.07 1.38 1.40 1.40 0.00 12.98 0.00 Yr 5 7.78 1.07 1.65 1.40 1.40 0.00 13.25 0.00 Yr 6 7.78 1.07 1.65 1.40 1.40 0.00 13.25 0.00 Yr 7 7.78 1.07 1.93 1.40 1.40 0.00 13.53 0.00

TOTAL PER CAR 12.93 3.23

TOTAL RATE / KM
Empty Running - Variable Cost Weighted Empty Running Cost

12.70
16% 2.03

12.70
25% 3.18

12.98
19% 2.40

12.98
19% 2.47

13.25
19% 2.45

13.25
3% 0.33

13.53
1% 0.07

FREIGHT RATE TRAILER(TR6,TR8)

CAPITAL INVESTMENT
Chassis (TATA 3516) Body (TR4 - 4 CityZX eqv) Insurance Charges (taxes ) Good Tax,Road Tax,Permit Fees Fitness ect TOTAL 1326182 1040000 50377 85805 25000 1,580 4000 3225 50000 2000 85805 Registration Charges Goods Tax Road Tax Basic Permit Cost (5yr validity) National Permit (avg 10 states) Fitness

2502364

68

FIXED COST / ANNUM

Year Registration Charges Goods Tax Road Tax Basic Permit Cost (5yr validity) National Permit (avg 10 states) Fitness Pollution UCC Test Insurance Driver / Cleaner Salary Office Expenses Interest (spread over 5 yrs) Depreciation @ WDV - 7Yrs Effective No of months TOTAL Moderated Share of Fleet Weighted Fixed Cost Y1 Y2 Y3 Y4 Y5 Y6 Y7

0 1,580 4000 0 50000 2000 640 43394 180000 33360 156,319 525496 12 996789 25% 249197

0 1,580 4000 0 50000 2000 640 35946 180000 33360 100,280 367847 12 775653 19% 143496

0 1,580 4000 0 50000 2000 640 29987 180000 33360 37,133 257493 12 596193 19% 113277

0 1,580 4000 0 50000 2000 640 25699 180000 33360 180245 12 477524 19% 88342

0 1,580 4000 3225 50000 2000 640 21789 180000 33360 0 126172 12 422766 3% 10569

0 1,580 4000 0 50000 2000 640 18662 180000 33360 0 88320 12 378562 1% 1893

180000 33360 206,051 750709 12 1170120 16% 187219

TOTAL 793993

PER CAR TR6 TR8 132332 99249.13

VARIABLECOST/ KM
Cost Head Diesel Tyres Repairs& Maint LashingBelt Cost MiscTripExpense Toll taxes TelephoneExpense GPStrackingdevice TOTAL ModeratedShareof Fleet WeightedVariableCost Yr 1 11.03 1.78 1.32 0.11 1.40 1.35 0.41 0.30 16% 2.83 Yr 2 11.03 1.78 1.32 0.11 1.40 1.35 0.41 0.30 25% 4.43 Yr 3 11.03 1.78 1.65 0.11 1.40 1.35 0.41 0.30 Yr 4 11.03 1.78 1.65 0.11 1.40 1.35 0.41 0.30 Yr 5 11.03 1.78 1.98 0.11 1.40 1.35 0.41 0.30 Yr 6 11.03 1.78 1.98 0.11 1.40 1.35 0.41 0.30 Yr 7 11.03 1.78 2.31 0.11 1.40 1.35 0.41 0.30

17.70 17.70

18.03
19% 3.34

18.03
19% 3.43

18.36
19% 3.40

18.36
3% 0.46

TOTAL 18.69 17.97 1% 0.09

PERCAR TR6 TR8 2.99 2.25

69

TOTAL COST / KM
Cost Head Net Variable Cost/ KM Fixed Cost / km Less Salvage Value TOTAL Profit @10% Yr 1 17.70 18.06 Yr 2 17.70 15.38 Yr 3 18.03 11.97 Yr 4 18.03 9.20 Yr 5 18.36 7.37 Yr 6 18.36 6.52 Yr 7 18.69 5.84

35.76 3.58

33.08 3.31

30.00 3.00

27.23 2.72

25.73 2.57

24.88 2.49

24.53 2.45

TOTAL 33.24

PER CAR TR6 TR8 5.54 4.16

TOTAL RATE / KM
Moderated Share of Fleet Weighted Total Cost

39.34
16% 6.29

36.39
25% 9.10

33.00
19% 6.10

29.95
19% 5.69

28.30
19% 5.24

27.37
3% 0.68

26.98
1% 0.13

EMPTY RUNNING -VARIABLE COST

Cost Head Diesel Tyres Repairs & Maint Misc Trip Expense Toll taxes Comm Expenses Net Variable Cost/ KM Less Salvage Value Yr 1 10.03 1.78 1.32 1.4 1.4 0.00 15.88 0.00
16% 2.54

Yr 2 10.03 1.78 1.32 1.4 1.4 0.00 15.88 0.00

25% 3.97

Yr 3 10.03 1.78 1.65 1.4 1.4 0.00 16.21 0.00

Yr 4 10.03 1.78 1.65 1.4 1.4 0.00 16.21 0.00

Yr 5 10.03 1.78 1.98 1.4 1.4 0.00 16.54 0.00

Yr 6 10.03 1.78 1.98 1.4 1.4 0.00 16.54 0.00

3% 0.41

Yr 7 10.03 0.11 2.31 1.4 1.4 0.00 16.87 0.00

1% 0.08

TOTAL 16.15

PER CAR TR6 TR8 2.69 2.02

TOTAL RATE / KM
Empty Running - Variable Cost Weighted Empty Running Cost

15.88 15.88

16.21
19% 3.00

16.21
19% 3.08

16.54
19% 3.06

16.54 16.87

70

VARIABLE COST / KM
Cost Head Diesel Tyres Repairs & Maint Lashing Belt Cost Misc Trip Expense Toll taxes Telephone Expense GPS tracking device TOTAL Moderated Share of Fleet Weighted Variable Cost Yr 1 11.03 1.78 1.32 0.11 1.40 1.35 0.41 0.30 Yr 2 11.03 1.78 1.32 0.11 1.40 1.35 0.41 0.30 Yr 3 11.03 1.78 1.65 0.11 1.40 1.35 0.41 0.30 Yr 4 11.03 1.78 1.65 0.11 1.40 1.35 0.41 0.30 Yr 5 11.03 1.78 1.98 0.11 1.40 1.35 0.41 0.30 Yr 6 11.03 1.78 1.98 0.11 1.40 1.35 0.41 0.30 Yr 7 11.03 1.78 2.31 0.11 1.40 1.35 0.41 0.30

17.70
16% 2.83

17.70
25% 4.43

18.03
19% 3.34

18.03
19% 3.43

18.36
19% 3.40

18.36
3% 0.46

18.69
1% 0.09

TOTAL 17.97

PER CAR TR6 TR8 2.99 2.25

Trucks or more commonly known as TR4s are the carriers having the ability to carry 4 cars (4 Honda Citys since it is the smallest in size of all the other Honda Cars).

71

Trailers or more commonly known as TR6s and TR8s are the carriers having the ability to carry 6 and 8 cars (6 and 8 Honda Citys since it is the smallest in size of all the other Honda Cars).

From the above excel worksheets it can be seen that first the cost of all the factors like Capital Investment, Fixed Cost, Variable Cost and the Empty Running Cost are estimated. Here it can be observed that the Variable Cost is included twice i.e one is for the loaded carrier and the other is for the unloaded one. This is separately estimated since the variable cost components are different when the carrier travels loaded and when it travels unloaded. Then the working part begins in which the basic calculations are based upon the diesel cost. In the above table it can be seen that carriers going to the south and west zones get themselves about 80% of the total diesel in Noida since it is the starting destination and the rest of 20% re-filled at Vapi. This partition is done in order to prevent undesired activities like theft of the diesel money or selling diesel by the driver or cleaner of the carrier. Moreover almost all the transporters have their branch offices throughout the country and are available 247 to attend any kind of emergency with the carriers.

72

Conclusion: 1. So it can be seen that by applying the current diesel rates itself the weighted rate came down from Rs 37.25 to Rs 33.09 i.e a decrease of approximately 11.17%. This had the following consequences:  TRUCK: y The diesel cost per km reduced from Rs 9.93 to Rs 8.82m i.e y The empty running diesel cost per km reduced from Rs 8.76 to Rs 7.78  TRAILER: y The diesel cost per km reduced from Rs 12.42 to Rs 11.03 y The empty running diesel cost per km reduced from Rs 11.29 to Rs 10.03 2. Also in the current model the tyres being used by the transporters in their carriers are of MRF which costs about Rs 22800 per pair, but after suggesting them to replace their tyres to CEAT which costs about Rs 19,600 per pair the tyre cost per km reduced from Rs 1.24 per km to Rs 1.07 i.e a decrease of about 13.71% in case of truck and in case of trailer from Rs 2.07 to Rs 1.78 i.e a decrease of about 14.01%.

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EMPTY RUNNING
Empty Running is a very essential component for calculating the total cost incurred and estimating the net freight per car per km to be paid for the transportation. Empty Running is critical since the carriers have to bring some or the other load in its return journey because bringing an empty carrier is a huge overhead for the transporters. Moreover since the variable cost incurred is separate for both a loaded carrier and an unloaded one, thus both the costs are separately included to calculate the net freight per car per km. This can be explained in the following steps: 1. Carrier gets the load from HSCIL plant for a dealership situated at a particular city. 2. Carrier takes the load from HSCIL plant to that dealership. 3. It delivers the cars at the dealership. 4. The carrier then travels to another nearest automobile plant to deliver their cars to a dealership located near to the HSCIL plant. 5. It picks the load from that plant and delivers to a dealership near to the HSCIL plant. 6. It again gets ready to pick further load from the HSCIL plant for delivering it to the same or any other location.

74

EMPTY RUNNING FACTOR

Empty Running Factor can be simply defined as the ratio of the distance travelled by the carrier unloaded to get the return load from a specific location and the total distance travelled from HSCIL plant to a particular location. For e.g: Suppose the carrier travels from HSCIL plant to say a location A about 500 km far. It delivers the load at that location and then it moves to the nearest plant B 100 km far to get the return load. Then mathematically Empty Running Factor = 100/500 % = 20%

500 km
HSCIL

100 km

B
EMPTY RUNNING EXAMPLE

75

CURRENT EMPTY RUNNING FACTORS

ZONE

EMPTY RUNNING FACTOR

DELHI/NCR NORTH EAST WEST CENTRAL SOUTH

100% 80% 76% 19% 59% 14%

76

PROPOSED EMPTY RUNNING FACTORS

DELHI/NCR ZONE
DEALERSHIP LOCATIONS: y Noida y Delhi y Faridabad
DESTINATION

NEAREST AUTOMOBILE PLANT

LOCATION

DELHI/NCR
NOIDA DELHI FARIDABAD GHAZIABAD GURGAON MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI GURGAON GURGAON GURGAON GURGAON GURGAON

y Ghaziabad y Gurgaon A carrier carrying the load from HSCIL plant to any of the above locations will come to Maruti Suzuki plant situated in Gurgaon, after delivering the Honda vehicles at its dealerships. This is because Maruti Suzuki is the only company other than Honda in this area which is not only nearest in distance but also the largest business provider to any of the transporter operating in the Delhi/NCR area.

77

DISTANCE(km)
DESTINATION

NEAREST RETURN LOAD(KM)

EMPTY RUNNING FACTOR

DELHI/NCR
NOIDA DELHI FARIDABAD GHAZIABAD GURGAON 115 115 115 115 115 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%

So by using the formula for calculating the empty running factor, the new empty running factor comes out to be 0% for all the locations. This is because Gurgaon comes under the same zone and hence all the carriers move to it for collecting the return load from Maruti Suzuki. Therefore, because of being situated in the same location the empty running distance from all the above locations to Maruti Suzki plant is assumed zero. Hence after taking an average of the empty running factors for all the locations, the weighted average empty running factor for the Delhi/NCR zone comes out to be 0%

78

NORTH ZONE
DEALERSHIP LOCATIONS: y y y y y y y y y y y y y y y y Chandigarh Hissar Jammu Amritsar Ludhiana Patiala Jalandhar Jaipur Jodhpur Udaipur Agra Bareilly Kanpur Lucknow Meerut Dehradun

79

For all the locations except Lucknow and Meerut, the nearest auto plant is Maruti Suzuki. However for both these exceptions the nearest auto plant is Mahindra & Mahindra.
DISTANCE(km)
DESTINATION

NEAREST RETURN LOAD(KM)

LOCATION

EMPTY RUNNING FACTOR

NORTH
CHANDIGARH HISSAR KARNAL AMMU AMRITSAR ALANDHAR LUDHIANA PATIALA AIPUR ODHPUR UDAIPUR AGRA BAREILLY KANPUR LUCKNOW MEERUT DEHRADUN 305 240 190 680 495 363 385 325 475 826 900 202 290 475 555 115 260 272 214 137 554 414 351 298 217 266 472 550 167 224 438 494 95 65 GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON HARIDWAR GURGAON HARIDWAR 89.18% 89.17% 72.11% 81.47% 83.64% 96.69% 77.40% 66.77% 56.00% 57.14% 61.11% 82.67% 77.24% 92.21% 89.01% 82.61% 25.00%

DESTINATION

NEAREST AUTOMOBILE PLANT

LOCATION

NORTH
CHANDIGARH HISSAR KARNAL JAMMU AMRITSAR JALANDHAR LUDHIANA PATIALA JAIPUR JODHPUR UDAIPUR AGRA BAREILLY KANPUR LUCKNOW MEERUT DEHRADUN MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MARUTI SUZUKI MAHINDRA & MAHINDRA MARUTI SUZUKI MAHINDRA & MAHINDRA GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON GURGAON HARIDWAR GURGAON HARIDWAR

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Hence after taking an average of the empty running factors for all the locations, the weighted average empty running factor for the North zone comes out to be 75.26%

DESTINATION

NEAREST AUTOMOBILE PLANT

LOCATION

EAST
GUWAHATI JAMSHEDPUR BHUBANESHWAR KOLKATTA SILIGURI HINDUSTAN MOTORS HINDUSTAN MOTORS HINDUSTAN MOTORS HINDUSTAN MOTORS HINDUSTAN MOTORS UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA

EAST ZONE

DEALERSHIP LOCATIONS: y y y y y Guwahati Bhubaneshwar Jamshedpur Kolkatta Siliguri

81

Hence after taking an average of the empty running factors for all the locations, the weighted average empty running factor for the East zone comes out to be 28.22%

CENTRAL ZONE
DEALERSHIP LOCATIONS: y y y y y y Bhopal Indore Jabalpur Raipur Nagpur

DISTANCE(km) NEAREST RETURN LOAD(KM)

DESTINATION

LOCATION

EMPTY RUNNING FACTOR

EAST
GUWAHATI JAMSHEDPUR BHUBANESHWAR KOLKATTA SILIGURI 2016 1350 1800 1615 1474 1081 295 441 0 606 UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA UTTARPARA,KOLKATTA 53.62% 21.85% 24.50% 0.00% 41.11%

82

DISTANCE(km)
DESTINATION

NEAREST RETURN LOAD(KM)

LOCATION

EMPTY RUNNING FACTOR

CENTRAL
BHOPAL INDORE JABALPUR NAGPUR RAIPUR 750 1035 1040 1180 1450 167 0 494 440 674 UTTARPARA(KOLKATTA) UTTARPARA(KOLKATTA) UTTARPARA(KOLKATTA) UTTARPARA(KOLKATTA) UTTARPARA(KOLKATTA) 22.27% 0.00% 47.50% 37.29% 46.48%

DESTINATION

NEA EST A TO OBI E

ANT

O ATION

CENTRAL
S S S S S M M M M M S S S S S

WEST ZONE

DEALERSHIP LOCATIONS: y y y y y Ahmedabad Rajkot Surat Vadodara Aurangabad

83

y y y y y

Jalagaon Kolhapur Mumbai Nasik Pune

84

DESTINATION

NEAREST AUTOMOBILE PLANT

LOCATION

WEST
GOA AHMEDABAD RAJKOT SURAT VADODARA AURANGABAD JALAGAON KOLHAPUR MUMBAI NASIK PUNE TATA MOTORS,G.M,MERCEDEZ BENZ SKODA,AUDI SKODA,AUDI SKODA,AUDI SKODA,AUDI SKODA,AUDI SKODA,AUDI TATA MOTORS,G.M,MERCEDEZ BENZ MAHINDRA & MAHINDRA MAHINDRA & MAHINDRA TATA MOTORS,G.M,MERCEDEZ BENZ PUNE AURANGABAD AURANGABAD AURANGABAD AURANGABAD AURANGABAD AURANGABAD PUNE MUMBAI NASIK PUNE

DISTANCE(km)
DESTINATION

NEAREST RETURN LOAD(KM)

LOCATION

WEST
GOA AHMEDABAD RAJKOT SURAT VADODARA AURANGABAD JALAGAON KOLHAPUR MUMBAI NASIK PUNE 2160 1145 1335 1350 1245 1277 1379 1905 1670 1470 1765 338 488 488 488 348 0 127 238 0 0 0 PUNE AURANGABAD AURANGABAD AURANGABAD AURANGABAD AURANGABAD AURANGABAD PUNE MUMBAI NASIK PUNE

Hence after taking an average of the empty running factors for all the locations, the weighted average empty running factor for the West zone comes out to be 16.42%

85

SOUTH ZONE
DEALERSHIP LOCATIONS: y y y y y y y y y y y y y Hyderabad Secunderabad Vijaywada Vishakhapatnam Bangalore Hubli Mangalore Mysore Calicut Cochin Trivandrum Chennai Coimbatore

86

DISTANCE(km)
DESTINATION

NEAREST RETURN LOAD(KM)

LOCATION

EMPTY RUNNING FACTOR

SOUTH
HYDERABAD SECUNDERABAD VIJAYWADA VISHAKHAPATNAM BANGALORE HUBLI MANGALORE MYSORE COCHIN TRIVANDRUM CHENNAI COIMBATORE MADURAI 1875 1875 2210 2380 2375 2080 2670 2499 3000 3210 2690 2775 2842 136 148 0 312 0 377 298 127 533 576 0 423 436 ZAHEERABAD ZAHEERABAD ZAHEERABAD ZAHEERABAD BANGALORE BANGALORE BANGALORE BANGALORE BANGALORE BANGALORE CHENNAI CHENNAI BANGALORE 7.25% 7.89% 0.00% 13.11% 0.00% 18.13% 11.16% 5.08% 17.77% 17.94% 0.00% 15.24% 15.34%

y Madurai Hence after taking an average of the empty running factors for all
D

U
SOUTH

HYDERABAD SECUNDERABAD VIJAYWADA VISHAKHAPATNAM BANGALORE HUBLI MANGALORE MYSORE COCHIN TRIVANDRUM CHENNAI COIMBATORE MADURAI

MAHINDRA & MAHINDRA MAHINDRA & MAHINDRA MAHINDRA & MAHINDRA MAHINDRA & MAHINDRA TO OTA TO OTA TO OTA TO OTA TO OTA TO OTA HYUNDAI,FORD, OLVO,BMW,HINDU TAN MOTOR ,MIT UBI HI HYUNDAI,FORD,VOLVO,BMW,HINDU TAN MOTOR ,MIT UBI HI TOYOTA

ZAHEERABAD ZAHEERABAD ZAHEERABAD ZAHEERABAD BANGALORE BANGALORE BANGALORE BANGALORE BANGALORE BANGALORE CHENNAI CHENNAI BANGALORE

87

the locations, the weighted average empty running factor for the South zone comes out to be 9.92%

FREIGHT COMPARISON

Now after all the calculations the final freight calculation per car per km is performed. Mathematically net freight per car per km is calculated by using the formula:

NET FREIGHT/CAR/KM= [(WEIGHTED EMPTY RUNNING/COST/CAR) X ( EMPTY RUNNING FACTOR)] + WEIGHTED TOTAL COST/KM/CAR

TRUCK:
88

NET FREIGHT/CAR/KM= [3.22 X Empty Running Factor] + 6.23

DELHI/NCR ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Noida Delhi Faridabad Ghaziabad Gurgaon AVERAGE

10.63 6.23 10.63 6.23 10.63 6.23 10.63 6.23 8.50 6.23 10.20 6.23 NORTH ZONE
OLD FREIGHT NEW FREIGHT

41.39% 41.39% 41.39% 41.39% 41.39% 38.46%

LOCATION

CHANGE

Chandigarh Hissar Karnal Jammu Amritsar Jalandhar Ludhiana Patiala Jaipur Jodhpur Udaipur Agra Bareilly Kanpur Lucknow

8.90 8.90 9.27 8.89 8.89 8.90 8.89 8.90 8.89 8.89 8.89 8.87 8.87 8.87 8.87
89

9.10 9.10 8.55 8.85 8.92 9.34 8.72 8.38 8.03 8.07 8.20 8.89 8.72 9.20 9.10

2.26% 2.26% 7.75% 0.41% 0.37% 4.98% 1.89% 5.84% 9.64% 9.22% 7.79% 0.25% 1.72% 3.71% 2.55%

Meerut Dehradun AVERAGE

10.63 8.89 9.01

8.89 7.04 8.65

16.37% 20.87% 3.83%

EAST ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Guwahati Jamshedpur Bhbaneshwar Kolkatta Siliguri AVERAGE

8.98 8.98 8.76 8.36 8.98 8.81

7.96 6.93 7.02 6.23 7.55 7.14

11.40% 22.79% 19.88% 25.48% 15.88% 19.08%

CENTRAL ZONE

LOCATION

OLD FREIGHT

NEW FREIGHT

CHANGE

Bhopal Indore Jabalpur Nagpur Raipur AVERAGE

9.43 7.83 9.43 8.70 9.38 8.93

6.95 6.23 7.76 7.43 7.73 8.08

26.33% 20.43% 17.71% 14.59% 16.74% 19.16%

WEST ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Goa

7.27
90

6.73

7.37%

Ahmedabad Rajkot Surat Vadodara Aurangabad Jalagaon Kolhapur Mumbai Nasik Pune AVERAGE

7.02 7.27 7.03 6.78 7.27 7.27 6.69 6.69 6.78 6.30 6.94

7.60 7.41 7.39 7.13 6.23 6.53 6.63 6.23 6.23 6.23 6.76

8.30% 1.89% 5.18% 5.16% 14.31% 10.23% 0.86% 6.88% 8.11% 1.11% 2.58%

SOUTH ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Hyderabad Secunderabad Vijaywada Vishakhapatnam Bangalore Hubli Mangalore Mysore Cochin Trivandrum Chennai Coimbatore Madurai AVERAGE

6.69 6.69 6.69 7.27 6.40 6.78 6.69 6.69 6.69 6.69 6.30 6.69 6.69 6.69

6.46 6.48 6.23 6.65 6.23 6.81 6.59 6.39 6.80 6.81 6.23 6.72 6.72 6.62

3.38% 3.08% 6.88% 8.50% 2.66% 0.50% 1.50% 4.43% 1.68% 1.76% 1.11% 0.46% 0.51% 2.05%

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TRAILER:

NET FREIGHT/CAR/KM= [2.68 X Empty Running Factor] + 5.53

DELHI/NCR ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Noida Delhi Faridabad Ghaziabad Gurgaon AVERAGE

10.15 10.15 10.15 10.15 8.28 9.78

5.53 5.53 5.53 5.53 5.53 5.53

45.52% 45.52% 45.52% 45.52% 33.21% 43.06%

NORTH ZONE

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LOCATION

OLD FREIGHT

NEW FREIGHT

CHANGE

Chandigarh Hissar Karnal Jammu Amritsar Jalandhar Ludhiana Patiala Jaipur Jodhpur Udaipur Agra Bareilly Kanpur Lucknow Meerut Dehradun AVERAGE

8.66 8.66 9.03 8.66 8.66 8.66 8.66 8.66 8.66 8.66 8.66 8.63 8.63 8.63 8.63 10.15 8.66 8.76

7.92 7.92 7.46 7.71 7.77 8.12 7.60 7.32 7.03 7.06 7.17 7.75 7.60 8.00 7.92 7.74 6.20 7.55

8.54% 8.55% 17.36% 10.93% 10.26% 6.22% 12.19% 15.48% 18.81% 18.46% 17.23% 10.25% 11.93% 7.29% 8.28% 23.71% 28.41% 13.76%

EAST ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Guwahati Jamshedpur Bhbaneshwar Kolkatta Siliguri AVERAGE

8.75 8.75 8.53 8.14 8.75 8.58

6.97 6.12 6.19 5.53 6.63 6.29

20.38% 30.11% 27.47% 32.06% 24.21% 26.85%

CENTRAL ZONE

93

LOCATION

OLD FREIGHT

NEW FREIGHT

CHANGE

Bhopal Indore Jabalpur Nagpur Raipur AVERAGE

9.18 7.49 9.18 8.47 9.04 8.67

6.13 5.53 6.80 6.53 6.78 6.55

33.26% 26.17% 25.89% 22.91% 25.05% 26.66%

WEST ZONE
LOCATION OLD FREIGHT NEW FREIGHT CHANGE

Goa Ahmedabad Rajkot Surat Vadodara Aurangabad Jalagaon Kolhapur Mumbai Nasik Pune AVERAGE

6.88 6.84 7.08 6.84 6.60 7.08 7.08 6.51 6.51 6.60 6.13 6.74

5.95 6.67 6.51 6.50 6.28 5.53 5.78 5.86 5.53 5.53 5.53 5.97

13.53% 2.45% 8.06% 4.99% 4.86% 21.89% 18.41% 9.91% 15.05% 16.21% 9.79% 11.38%

SOUTH ZONE

LOCATION

OLD FREIGHT

NEW FREIGHT

CHANGE

Hyderabad Secunderabad Vijaywada Vishakhapatnam

6.51 6.51 6.51 7.08

5.72 5.74 5.53 5.88

12.07% 11.80% 15.05% 16.93%

94

Bangalore Hubli Mangalore Mysore Cochin Trivandrum Chennai Coimbatore Madurai AVERAGE

6.20 6.60 6.51 6.51 6.51 6.51 6.21 6.51 6.51 6.51

5.53 6.02 5.83 5.67 6.01 6.01 5.53 5.94 5.94 5.80

10.81% 8.85% 10.46% 12.96% 7.74% 7.67% 10.95% 8.78% 8.74% 10.99%

95

RECOMMENDATIONS
 For calculating the net freight per car per km the distances should be taken from the automobile plant to the dealership in order to be more accurate.  The net freight per car per km should not be same for all the cars i.e City, Civic, Accord and CR-V since all of them are of different costs and simultaneously the risk associated with each of them is different.  While calculating the weighted diesel rate the refilling stations should be different for carriers going to different zones since VAPI cannot serve as the re-fill station when the carrier is going to east or central zone locations.  More emphasis should be laid on the SALVAGE VALUE

96

ATTACHMENT: QUESTIONNAIRE
PLEASE TICK THE OPTION YOU CHOOSE
Q.1 Which are the companies other than HONDA your company is currently associated with? MARUTI SUZUKI HYUNDAI TATA MOTORS GENERAL MOTORS MAHINDRA & MAHINDRA HINDUSTAN MOTORS FIAT SKODA AUDI MERCEDEZ BENZ FORD TOYOTA BMW VOLKWAGON VOLVO

97

Q.2

What is the current fleet strength of your company? TRUCK(TR4) 1-150 151-300 301-600 601-1000 >1000 TRAILER(TR6) TRAILER(TR8)

Q.3

Which company's trucks/trailers form the major part of your fleet? TATA MOTORS ASHOK LEYLAND ANY OTHER PLEASE SPECIFY________________________ 100% TOTAL

Q .4

W is the percentage contribution of below m hat entioned tyres in your total fleet? MR F A POLLO TYR ES C T EA JKTYR ES A OTHERPLEA SPEC NY SE IFY__________________________________ 100% TOTA L

98

Q.5

Which are the routes/zones your carriers operate the most? DELHI/NCR NORTH EAST WEST CENTRAL SOUTH 100% TOTAL

Q .6

W is the average waiting period of your com hat pany's carrier in each route? TR C U K(TR 4) 1-5 D YS A 6-10 D YS A 11-15 D YS A >15 D YS A TR ILER 6) A (TR TR ILER 8) A (TR

99

Q.7 Which is the maximum distance(in kms) that your company carrier travel for getting a return load from other OEM? 50-100 101-200 201-400 401-600 >600

Q .8

W h ic h a re th e lo c a tio n s a t wh ic h y o u r c o m p a n y g e ts th e c a rrie rs re fu e lle d ?

ZONE
DE LHI/NCR NO RTH E AST W E ST CE NTRAL SO UTH

LOCATIONS

100

Q.9

What is the average fuel tank capacity(in litres) of your company carrier? TRUCK(TR4) 100-250 251-500 501-750 >750 TRAILER(TR6) TRAILER(TR8)

Q W factor ism crucial toyour com duringthedeliveryof carstothedealershipsam all others? .10 hich ost pany ong SA FETY Q NTITY UA Q LITY UA COST TIME CA RRIERUTILIZA TION

101

GLOSSARY
Carrier: Over here carrier refers to the Truck or Trailer used for delivering the cars. Load: Load refer to the cars being delivered OEM: Original Equipment Manufacturer. It means that company or plant which makes the entire product like cars. Salvage Value: The cost of loss incurred per km by the company in case of an accident, theft or any other calamity. Freight: it refers to the rent for transporting the cars to the dealership. It is paid by the company to the transporters. Truck TR4: A carrier which has the ability to carry 4 cars. Trailer TR6: A carrier which has the ability to carry 6 cars Trailer TR8: A carrier which has the ability to carry 8 cars SUV: Sports Utility Vehicle i.e a vehicle used for off-road purpose while simultaneously having the luxurious feel of a car. MUV: Multi Utility Vehicle i.e a vehicle used for loading and transporting small quantities of load LCV: Light Commercial Vehicle i.e a small truck or tempo used for delivering relatively more quantity of load than the MUV. HCV: Heavy Commercial Vehicle i.e a bigger truck or trailer or more commonly known as the TR4, TR6 or TR8.

102

REFERENCES

y Marketing Management- by Philp Kotler and Kevin Lane Keller y A Practical Guide to Transportation and Logistics-by Michael B. Stroh y The Economic Times, 23-03-2009 y www.honda-logistics.co.jp y www.hondacarindia.com y y y y

www.siamindia.com www.mapsofindia.com www.mapxl.com www.google.com

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