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ORGANISATION STUDY AT HI-TECH ARAI PVT LTD By

N.VENKATRAMAN (Reg. No: 105986501058)

of

VELAMMAL COLLEGE OF ENGINEERING AND TECHNOLOGY, MADURAI 625 009

A SUMMER PROJECT REPORT Submitted to the

FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements for the award of the degree

of MASTER OF BUSINESS ADMINISTRATION June July 2011

VELAMMAL COLLEGE OF ENGINEERING AND TECHNOLOGY, MADURAI DEPARTMENT OF MANAGEMENT STUDIES MBA Summer Project June July 2011

BONAFIDE CERTIFICATE
Certified that this summer project report titled Organisation Study at Hi-tech Arai pvt ltd is the bonafide work of N.Venkatraman who carried out the project under my supervision. Certified further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Dr. M. Sivakumar Project Co-ordinator

Dr. C. Selvaraj Director -MBA

Date:

Seal:

ACKNOWLEDGEMENT

This Training was a great experience for me. I was exposed to the auto component industry for the first time. I am greatly thankful to each and everyone who assisted the tasks in any phase of its development. First and foremost, I thank the Almighty God, the light of my life granting me the strength, courage and knowledge to complete this training successfully.

I would like to express my heartfelt thanks to Hi-Tech Arai pvt ltd for giving me this opportunity to do the summer training in their organization.

I extend gratitude to Dr.C.Selvaraj Director of Department of management studies and Dr.M.Sivakumar Assistant professor of Department of management studies, Velammal College of Engineering and Technology for their constant encouragement.

I express my sincere gratitude to Mr.N.Sankara velayudham, DGM-HRD and Mrs.K.Rajeswari prince Manager-Training & Development. I thank all the Department heads for their support during my Training. I also thank the staff of Hi-Tech Arai pvt Ltd., Madurai whose support me during my Training.

Last but not the least I would like to thank my friends and family members who gave me full encouragement.

DECLARATION

This is to declare that the summer project report entitled, Organisation Study at Hi-tech Arai pvt ltd a bonafide record of the original work undertaken by me, and this has not been submitted earlier to any other university for the award of any degree, diploma, or similar title of recognition.

N.Venkatraman (105986501058)

CONTENTS
Sl. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Title Industry Profile Company Profile Organizational Structure Production Department Finance Department Marketing Department Human Resource Department Systems Department Quality Management System Observations Recommendations Conclusion Bibliography Appendix Page Number

INDUSTRY PROFILE
India's automotive components industry is the most lucrative sector for foreign direct investments. Hundreds of collaborations foreign direct investments have been made in recent years and there is tremendous potential for more. Markets are huge and growing both within India and overseas.

Overview of automotive component industry


The Indian auto component industry has been navigating through a period of rapid changes with great flamboyance. Driven by global competition and the recent shift in focus of global automobile manufacturers, business rules are changing and liberalization has had sweeping ramifications for the industry. The global auto components industry is estimated at US$1.2 trillion. The Indian auto component sector has been growing at 20% per annum since 2000 and is projected to maintain the high-growth phase of 15-20% till 2015.

The Indian auto component industry is one of the few sectors in the economy that has a distinct global competitive advantage in terms of cost and quality. The value in sourcing auto components from India includes low labor cost, raw material availability, technically skilled manpower and quality assurance. An average cost reduction of nearly 25-30% has attracted several global automobile manufacturers to set base since 1991. Indias processengineering skills, applied to re-designing of production processes, have enabled reduction in manufacturing costs of components. Today, India has become the outsourcing hub for several global automobile manufacturers.

Innovation and cost pruning hold the key to meeting the global challenge of rising demand from developed countries and competition from other emerging economies. Several large Indian auto component manufacturers are already gearing to this new reality and are in the process of substantially investing in capacity expansion, establishing partnerships in India and abroad, acquiring companies overseas and setting up Greenfield ventures, R&D facilities and design capabilities.

Industry Structure
The total turnover of the Indian auto component industry is estimated at US$9 bn in 2006. The industry has the resources to manufacture the entire range of auto products required for vehicle manufacturing, approximately 20,000 components. The entry of global manufacturers into India during the 1990s enabled induction of new technologies, new products, improved quality and better efficiencies in operations. This in turn effectively acted as a catalyst to the local development of the component industry.

The Indian auto component industry is extensive and highly fragmented. Estimates by the Department of Heavy Industries, Government of India, indicate there are over 400 large firms who are part of the organised sector and cater largely to the Original Equipment Manufacturers (OEMs). Another 10,000 firms exist in the unorganised sector that operates in a tier-format. The firms in this segment operate in low technology products and cater to Tier I and Tier II suppliers and also serve the replacement market

Around 4% of the companies operating in the auto component segment cater to 80% of the demand emanating from OEMs. Within the unorganised segment, apart from supplying in the aftermarket, a number of players are also involved in job work and contract manufacturing. The range of products manufactured, with each broad product segment having a different market structure and technology, has negated any possible concentration of the market in a few hands. The market is so large and diverse that a large number of players can be absorbed to accommodate buyer needs. However, there are a select few large companies that have integrated their operations across the value chain. The key to competing in this industry is through specialisation by product-type, and integrating operations across the related area of specialisation.

An interesting insight provided by a study conducted by the National Council of Applied Economic Research revealed that the market segments for auto components included OEMs constituting 33%, local components having 25% with the balance 42% comprising of spurious market including re-conditioned parts. A large part of the spurious or grey market companies are in the unorganised sector.

The regional base of auto component manufacturers is mostly concentrated in the West, North and South of India. This regional concentration of auto component manufacturers has been dictated by the emergence of automobile manufacturers in these regions. The set up of Tata Motors, Bajaj, Mahindra & Mahindra and TVS in the 1950s and 1960s laid the foundation for auto component manufacturers in the West and South, whilst the entry of Maruti during the 1980s created the base in the North.

Industry Growth
Production of auto ancillaries was estimated at US$10 bn in 2005-06 and has been growing at a robust 20% per annum since 2000. Exports of auto components have been strong growing at 24% per annum since 2000. This growth in exports if sustained for another five years will see Indias auto components exports will touch US$ 5 bn by 2011 from the US$ 2 bn at present.

Till the 1990s, the auto component industry was solely dependent on the domestic automobile industry to drive the demand for ancillary products. This composition of the market however is undergoing radical changes with global outsourcing gaining momentum. In recent times, exports has emerged as a significant driver of growth, and the demand emanating from global OEMs and Tier I manufacturers has opened new opportunities for the auto component industry in India. At the same time, a bright outlook for the domestic automobile industry also offers significant growth potential, given the fast rising income levels with a rapidly growing middle and high income consumers.

Share of exports in total production has risen from 10% in 1997 to 18% in 2006. The composition of exports in terms of the proportion of OEM and aftermarket has also undergone a sweeping change since the past decade. The ratio of OEM to aftermarket has changed from 35:65 in the 1990s to 75:25 in 2006. While exports have been booming, there has been a sharp rise in imports of auto components as well, especially in the last three years. From an import of US$ 250 mn in FY03, they have gone up to US$750 mn in FY06. This is a healthy trend, indicative of rising domestic demand.

Investments
Since 2000, the auto component industry has recorded an investment level of Rs 18 bn and has attracted US$ 530 mn in terms of foreign direct investment. Investments in the sector have been growing at 14% per year. In 2005-06, investments touched US$ 4.4 bn, and are expected to grow significantly in future.

The Investment Commission has set a target of attracting foreign investment worth US$ 5 bn for the next five years to increase Indias share in the global auto components market from the present 0.4% to 3-4%. This is a sizeable target considering the meager amount of FDI currently coming into the industry. The changing perception of global auto makers is however fast altering this scenario. With less than 1% share in the global market, India has tremendous potential to emerge as a supply base. Several global giants like Ford and Toyota have already set up base in India to source auto components. Outsourcing is fast catching up with domestic OEMs as well, with most Indian OEMs today sourcing nearly 70-80% of their component requirements from vendors.

This changing business scenario is leading to an inevitable outcome of consolidation within the industry. The takeover of Kar Mobiles by Rane Engine and of Gero Auto by Uma Precision are few instances. However, such mergers and takeovers will be few and far in between in the auto component industry, unlike the churn out anticipated in other emerging industries the principal factor being the vastness of the market and the range of products that need to be delivered.

Rather than domestic consolidation, the general trend at present is for the large auto component manufacturers to establish a global presence. Top auto component manufacturers have already set up base in the global markets, especially in Europe. Overall, there have already been 16 acquisitions, with six made in 2005. The industry is the third highest among the Indian industries after IT and Pharma, in acquiring overseas assets. These acquisitions have largely been in Europe and the USA. This trend has been possible as the auto ancillary industry in these countries have been collapsing, thus making it affordable to acquire these companies.

Indian auto component companies are also setting up bases in other emerging economies, who are potential competitors, for instance, Sundaram Fasteners Greenfield facility in Zhejiang and Bharat Forges joint venture with the Chinese automotive major FAW Corporation. Another auto component manufacturer with plans to enter China is PMP Components, which intends to set up a sourcing base to establish itself as a low cost supplier.

These trends are indicative of the changing business environment in the country. Top auto component manufacturers are gearing to take big risks. Their cross-border vision has established them as global companies. Though the going-global phenomenon is limited to a handful of companies, the smaller companies are also indirectly gearing to this trend by entering into formal manufacturing contracts and specialization.

Prospects
Looking forward, the industry displays tremendous potential in generating employment and boosting entrepreneurship in the country. The spate of new investment plans announced by global and domestic automobile manufacturers promises the emergence of India as a global hub for auto components. The industry is transforming, and the boost in demand will see the emergence of several new players in the industry. The vast market for auto components, and the diverse products and technology involved ensures a place and role for many. At the same time, the entry of several global automobile manufacturers will bring in more regulation into the industry and see a pruning of the spurious market. Among the smaller players in the unorganised segment, this implies moving away from being standalone companies, to entering into either contract manufacturing or being ancillary units. The newly defined rules are specialisation, development and delivery that hold the key to success in the auto component industry.

Association
The Automotive Component Manufacturers Association of India (ACMA) is the nodal agency for the Indian Auto Component Industry. It's active involvement in trade promotion, technology up-gradation, quality enhancement and collection and dissemination of information has made it a vital catalyst for this industry's development.

It's other activities include participation in international trade fairs, sending trade delegations overseas and bringing out publications on various subjects related to the automotive industry. ACMA is represented on a number of panels, committees and councils of the Government of India through which it helps in the formulation of policies pertaining to the Indian automotive industry. ACMA represents over 600 companies, whose production forms a majority of the total auto component output in the organized sector. In the domestic market, they supply components to vehicle manufacturers, Tier-1 suppliers, to state transport undertakings, defense establishments, railways and even to the replacement market. A variety of components are being exported to OEMs and aftermarket worldwide.

Industry Turnover
The Automotive Component Industry's output amounted for the financial year 2009-10 US$ 22 billion with a growth rate of 20% against financial year 2008-09

Quality
The industry has been making rapid strides towards achievement of world-class Quality Systems by imbibing ISO 9000/ISO 14001/QS 9000/TS 16949 Quality Systems. Till now 562 companies in ACMA membership have been certified to ISO 9000, 208 companies awarded to ISO 14001, 445 companies have been certified with TS 16949, 99 companies have been certified with OHSAS 18001, 15 Companies have won TPM Award, 11 companies won the Deming prize, 1 company won Japan Quality Medal, 1 company won Shingo Silver Medallion and 3 companies won the JIPM Excellence award.

Exports
The industry has been exporting around 13% of its output. In the year 2009-10, industry has exported US$ 3.8 billion. Principal export items include replacement parts, tractor parts, motorcycle parts, piston rings, gaskets, engine valves, fuel pump nozzles, fuel injection parts, filter & filter elements, radiators, gears, leaf springs, brake assemblies & bearings, clutch facings, head lamps, auto bulbs & halogen bulbs, spark plugs and body parts.

COMPANY PROFILE

Hi-Tech Arai Ltd is a Madurai based oil seals and automobile components manufacturing company. Having joint venture with Arai Seisakusho co Ltd Japan and Mitsubishi Corporation, Japan. The company previously called as Hi-Tech ancillaries ltd after joint venture with Arai Seisakusho co ltd, the company name has changed to Hi-tech Arai ltd. The company was established to produce rubber components and oil seals for the world famous companies like Maruti Suzuki, Bajaj, TVS, Honda, Yamaha, Toyota, etc.

The company was founded by Mr.R.Lakshmi Narayanan, with the capital of Rs.4.5 lakhs and with the manpower of 75 as a family owned concern. Mr. B.T.Bangera and Mr.R.Lakshmi Narayanan both were the ex-employees of Fenner (India) ltd. Their good relationship made them to form this great venture in 1985. Later the company entered into technical collaborations with m/s Mitsubishi Japan and with Arai Seisakusho ltd Japan for manufacture of oil seals, O-rings, reed valves, molded rubber product, valves stem seals etc in 1987. The percentage of collaboration is 88.84% for Arai Seisakusho Ltd and 14.29% for Mitsubishi Corporation.

Growing and achieving excellence through people is the motive of the organization. The core belief is that it is possible to achieve zero defects and achieve leadership in the market. The company also owns 23 wind mills each with the capacity of producing 11 MW power. Hi-Tech Arai is the only manufacturer of reed valves in India.

Hi-Tech Arai is controlled by 9 board of directors. Among them y y y 3 Promoter Directors 5 directors from Arai Seisakusho Ltd, 1 Director form Mitsubishi Corporation

Vision
1993: Market leader in the country in 5 years 1997: One of the top 3 in the world and in the field of Oil Seals 2007: To become the preferred supplier of all customers 2010: Aims to touch 600 crore turn over by overtaking the past one of 190crore.

Mission
To produce high quality products y y y At competitive prices Combined with on-time delivery Strictly adopting environmental friendly processes.

Quality & Environmental Policy


Strive for continual improvement of our quality performance by meeting the changing requirements of our customers and our environmental performance by prevention of pollution and maintenance of wastes. Manufactures high quality products at competitive prices by adhering to the system, processes and procedures and continually improving the same. Promote energy savings and conservation of resources. Comply with all applicable legislative, regulation and other requirements including those that apply to environmental aspects governing our activities. Achieve the above by creating awareness among our employees through proper training and providing conductive work environment.

y y

Milestones
1985: Hi-Tech Ancillaries was registered. 1986: First unit in Tanakkankulam was started. 1987: Technical collaboration with Arai Seisakusho Company Ltd, Japan. 1990: Totally professionalized. 1991: Second unit in Trichy was started. 1991: Awarded best SSI unit in the District. 1992: Awarded best SSI unit in the State. 1993: Third unit in K Pudur was started. 1994: Joint venture with Arai Seisakusho & Mitsubishi Corporation, Japan. 1994: Hi-Tech Ancillaries changed to Hi-Tech Arai Ltd. 1995: New compounding unit in Kappalur. 1995: Fourth unit in K Pudur. 1997: Fifth unit in K Pudur (dedicated to MUL) 1999: Most modern factory at K Pudur. 2000: Won 1st prize on quality circle convention at state level & regional Level. 2000: Madurai jasmine quality circle (National level) 2000: Initiation of Environment Management System certification Program & obtained the certification in July 2001 ISO: 4001. 2001: White rose quality control won 1st prize in state level & national Level. 2001: Quality award from Lucas TVS Ltd. 2002: Award from Keihin Lie Ltd Pune for cost optimization. 2003: Awarded best SSI unit in the State Level. 2003: The Company was accredited ISO 9001:2000 certification.

2005: CII & APAC awarded Best Industry practicing the HIV/AIDS Prevention for its Aids prevention and control project. 2006: First Export order from China. 2008: Received ISO TS-16949:2002. 2010: Himalaya quality circle of Hi-Tech Arai ltd won the Par Excellence Award in the national convention on quality concepts-2010 held at Visakhapatnam.

Company products:
y y y y y Oil seal O Rings Reed valve Assembly Join carburetor Moulded Rubber Products

Oil Seal:
Oil seal is a micro precision product. It is used for specific applications in two wheelers & four wheelers like wheel hubs, front fork, transmission, and gear shift arm etc., Failure of oil seal in engine parts may lead to a serious damage to the vehicle. That is the reason why high precision and care is taken while manufacturing oil seals.

Oil seal

O Rings:
Circular products having round cross-section or any customers specified sectional from which just fits in assemblies (pumps, carburetors etc) to avoid or stop leakage of fluid gas from the system. The export market for oil seals depend upon manufacturing technology. Presently, there is no other player in the market who has a technical collaboration arrangement with global player in this line of activity. This gives HTA an enormous advantage over its competitors and its exporters to various countries.

O Rings

Reed Valve Assembly:


Reed valve assembly is used in all modern two stroke engines as a device to control over air fuel mixture sent into the engine combustion chamber. It is used for fuel efficiency and optimum output. Reed valve assembly ensure complete combustion of fuel inside the engine combustion chamber for avoiding emission of unburned gases thereby contributing towards pollution control. Besides this, enough estimates indicate that petrol worth of Rs.25 crores is solved by Reed valve assemblies.

Reed Valve Assembly

Join carburetor:
It is a device that blends air and fuel for an internal combustion engine. The carburetor works on Bernoulli's principle: the faster air moves, the lower its static pressure, and the higher its dynamic pressure. The throttle (accelerator) linkage does not directly control the flow of liquid fuel. Instead, it actuates carburetor mechanisms which meter the flow of air being pulled into the engine. The speed of this flow, and therefore its pressure, determines the amount of fuel drawn into the airstream.

Join carburetor

Moulded Rubber Products:


Moulded rubber products are the products developed to suit the specifications and design of customers, so as to meet the exact working conditions of particular model of vehicles. Usually the moulded rubber products reduce the noise, stroke vibrations and protect certain other components from dust, water, oil etc. The company is the single source of supply for moulded products throughout the country.

Moulded Rubber Products

Customers of Hi-tech Arai:


The following are the customers of Hi-Tech Arai, y y y y y y y y y y Piagia (Italy) Indore (France) Ashok Leyland Limited Bajaj auto Limited Bajaj Yamaha (Japan, India) Automotive axles limited Escort Limited Honda Motors (Japan, India, Thailand, USA) TVS Suzuki Maruti Udyog limited and other leading companies.

Competitors of Hi-tech Arai:


y y y Fenner India C.R. Seals Sigma Fredenburg NOK Seals.

UNITS & THEIR LOCATION


Unit Name Shed 14 DC Shed 30, Kneader Kojo Shed 13,14,15 AS 1 Shed 44 Maruthi Kojo, E2 Shudharsanam Industries Shanthi works, Valli works Shed no 1, Shinkojo Akshaya, Vishal Industries Engineering Dept Vignesh Springs Rubber Testing lab Depot BS1 Process Carried Out QA activities Development process Mixing plant Die-casting Forming Moulding Moulding Post moulding process Location K.Pudur K.Pudur Kappalur Kappalur K.Pudur Kappalur K.Pudur Otthakadai

Post moulding process

Thirunagar

Moulding

K.Pudur

Trimming & Finishing Maintenance Spring manufacturing Testing of rubber RM Sales Parkerizing

K.Pudur K.Pudur K.Pudur Kappalur Thirunagar K.Pudur

PRODUCTION DEPARTMENT
Rubber Compound Mixing: Rubbers are the major raw materials used for the production of HTA products. Nitride rubber, Viton rubber, Poly acrylic rubber and HNBR rubber are used in HTA. Polymer, Chemical, Oil and carbon are the four ingredients needed for rubber production. These products are weighed in definite proportions and they are mixed in the rubber mill. They are made into sheets of different thickness and cut into various sizes. Then they are stored as Carbon Master Batch (CMB). These carbon master batches are then weighed and it is treated with some chemicals and packed. Rubber samples are then tested for its viscosity, hardness, tensile strength, density, specific gravity in the rubber testing lab and if they meet the requirements they are certified ok and sent to the moulding units.

Receiving, Storage & Inspection of raw materials

Selection & Weighing of raw materials

Transportation to Kneader

Primary mixing in Kneader

Storage of Carbon Master Batch (CMB)

Secondary Weighing & Mixing

Testing in RTL

Certified & Dispatch

Shell Manufacturing: The Shells are the child part of HTA products. They are manufactured by pressing process (Forming or Die- Casting). The raw material for forming is Cold rolled steel and that for die- casting is Aluminium. Cold rolled steel is available in sheet form or roll form of varying thickness (0.3 to 1.6 mm). Sheet form is used for small production and roll form is used for large production. The tools used in forming process are high carbon high chromium steels. Aluminium is available in blank form. Shells from CRS are manufactured by forming process and shells from aluminium are manufactured by casting process. The process flow for shell manufacturing is given below,

Receiving & Storage of metal sheets

Cutting of Sheets

Pressing of Sheets to required shapes & dimensions

Inspection

Storage

Dispatch Parkerizing

Parkerizing: Parkerizing is a surface treatment process carried out in the metal shells so that the rubber materials after moulding will bounded firmly to the shells. But for aluminium shells shot blasting method is carried out. The steps for Parkerizing is given below Step 1: Degreasing 1 Duration: 8 mins and Temperature: 55 to 60 oC Step 2: Degreasing 2 Duration: 8 mins and Temperature: 55 to 60 oC Step 3: Rinsing 1 Duration: 1 min at room temperature Step 4: Rinsing 2 Duration: 1 min at room temperature Step 5: Surface Conditioning Duration: 4 mins at room temperature Step 6: Parkerizing (Phosphate) Duration: 7 mins and Temperature: 50 to 55 oC Step 7: Rinsing 3 Duration: 1 min at room temperature Step 8: Rinsing 4 Duration: 1 min at room temperature Step 9: Step 10: Drying Air Cooling

Spring Manufacturing: Springs are used in some HTA products. The spring helps the seal to fix firmly to the shaft due to its compressive force. Springs are manufactured from wires of varying thickness. The various wire materials used are Stainless steel wire, Galvanized wire, SWB wire, and Piano wire. The process flow for spring manufacturing is given below,

Wires are made into coils in coiling m/c or manually

Burr Cutting

Heat Treatment

Taper Inspection & Grinding

Cutting to required length

Deburring (Cutting side)

Joining

Inspection

Dispatch

Moulding Process: Moulding is the process of manufacturing by shaping pliable raw material using a rigid frame or model called a mould. By applying heat and pressure for a specific period of time the raw materials are transformed into actual products. In this process, the shells are placed in the cavity present in the die. Rubbers are placed in between the cavities and the dies are closed then the die is placed in the press. There are 3 types of mouldings y y y Injection type Compression type Transfer type

By applying heat & pressure for a specific period of time, the rubber gets into colloidal state and it fills the cavity present in the dies. After setting time the rubber may gets hardened and it is transformed into actual shape of the cavities. Then the dies are taken out from the press and the moulded products are collected for post moulding process. The process flow for moulding process is given below

Receiving & Storage of compound sheets & shells

Cutting of rubber blanks into required shape & dimensions

Loading of shells & blanks in mould cavity

Moulding as per required specifications

Post Moulding Process:

Deflashing

Post Curing process

Trimming

Finishing

Air cleaning

Visual Inspection

Spring Loading

Audit Inspection

Greasing & packing

Dispatch

ACCOUNTS DEPARTMENT In British English included United Kingdom company law, financial statements are often referred to as accounts although the term financial statement is also used, particularly by accounts. The accounts department records, processes and maintains various financial

aspects and activities of the organization. This department is headed by Senior Manager, Mr. Lakshmanan. Financial statement provides an overview of a business financial condition in both short and long term. There are four basic financial statements.  Balance sheet.  Income statement.  Statement of retained earnings.  Statement of cash flows. The major functions are as follows. y y y y y y y y y y y y y y Accounts Receivables. Accounts Payables. Purchase Accounting. Sales Accounting. General Accounting. Fixed Assets Register. Activity Base Costing. All general cash flow movements. Maintaining cash flow movements in both Purchase and Sales. Deciding mode of payments. Capitalization, Machinery accounts progress. Processing of Sales Tax & Excise Duty. Filing of Quarterly TDS returns. Processing Salary & Labour contract accounts.

In HI- TECH ARAI they are following three main function is  General accounts.  Purchase accounts.  Sales accounts. 1. General Accounts: The main functions of general accounts is  Accounts receivable  Accounts payable In general accounting they have the details about insurance, E.B, petty cash, allocation & reimbursement of petty expenses also made

Functions:  Cash flow statement  Taxation  Final account

2. Purchase Accounts: Based on the terms and conditions specified by the suppliers in the voucher, the payments are cleared by the accounting department by issuing cheque for the specified dates. Function: To purchase the raw material in two ways 1. Indigenous purchase 2. Import purchase

1. Indigenous Purchase: These items are purchased within India. Vendor payment is done 2 times per month & 30 to 40 days of credit period is given for purchased materials. 2. Import Purchase: In HI- TECH ARAI more than 70% raw materials used for production are imported and for that credit period given to Mitsubishi Corporation is 4 to 6 months, payment is made on weekly basis. Import Suppliers:  Arai  Mitsubishi Japan  Singapore  German Purchase Order: Before purchase the raw material they give quotation or analyze the supplier (i.e.) their quality, quantity, price, timely delivery based on that they give the order to purchase. Goods Received Notes (GRN): First they verify the delivery Chalan. If the raw materials are entered the industry, then they have to entered the details of the raw material to the goods received note. The HI- TECH ARAI pays the payment for the importers through the bank only. Tax Details for Import as well as Indigenous purchase:  BED (Basic Excise Duty)  VAT (Value Added Tax)  Based on the quantity of the Material/Product 8%  Based on the Value of the Material/Product 10%  Educational Cess 2%  Higher Educational Cess 1%

3. Sales Account:  Original equipment sales  Raw material sales  Export sales  Export oriented sales

The 92% of sales done through OE market. For sales 30-45 days were given as credit period. They export only 2% of total production; the turnover of exported materials comes to 70 to 80 lacks per year. They also update the payment cheque received from sales department Their one of the major function is receiving order & schedules it. They also find whether the payment is made or not and also handle the pending bills.

1. Original Equipment Sales: According to the requisition (drawing) of the customer the HI- TECH ARAI company design and produce the goods. 2. Raw Material Sales: To replace the sales against the dealers. The dealers only responsible for the payment. 3. Export Sales: They export their product to other countries. Ex: Japan, Indonesia, China for exporting items no need to pay any customs duty.

MARKETING DEPARTMENT Purchase Department: Purchasing refers to a business organization attempting to acquire goods or service to accomplish the goals of the enterprise. Through there are several organizations that attempt to set standards in the purchasing process. Processes can vary greatly between organizations. Typically the word PURCHASING is not used inter changeably with the word PROCUREMENT since procurement typically include expediting, supplier quality, traffic and logistic (T&C) in addition to purchasing. Functions:  Identify the needs and wants.  Select the suppliers.  Place the order. Activity: There are two types of purchase activity.  Centralized Purchase Activity  Decentralized Purchase Activity Kinds Of Purchase: The purchase unit is a centralized unit responsible for the purchase of all materials required for production. The purchase can be classified into 4 categories based on nature of purchase.  Indigenous  Imports  Engineering Purchase - Purchase of locally made material - Import of required material - Purchase of machinery

 Packing Material Purchase - Purchase of material required for Packing.

Raw Material Purchase: The company is very keen that all the raw material should be purchased from approved suppliers. The detailed steps involved in Raw Material Purchase are as follows

Based on the Sales forecast of the current financial year the quantity of sales is arrived and it is converted into compound and compound is converted into raw material thus the raw material requirement for the year is arrived. Raw material requirement will be compared with the existing stock position at stores. Compounding & Respective production Units and also at bounded ware houses at Chennai (Imported items). Minimum ordering quantity and period is arrived by ABC analysis and currently they have the following purchase schedule. Type of Purchase/ Class Imports Indigenous

1.5 M 10 D

4M 1M

6M 3M

A - Goods having around 80% in terms of value.

B - Goods having around 15% in terms of value.

C - Goods having around 05% in terms of value.

D - Days.

M - Months.

After considering the stock % the actual requirement for the month, enquiry for required materials will be sent to suppliers. Quotations received from the suppliers will be compared in respect of the price charged, Lead time, quality & the credit period offered. Sample lots are ordered & on approval from the Quality Assurance Department the source is finalized. After finalizing the source confirmed Bulk purchase order will be issued to the supplier with the indication of delivery schedules. Regular follow up for getting the material will be made based on the emergencies. Materials required for development purpose (Small Quantity) will be procured based on the indents by the Technical Centre.

y y

Other Major Functions: Obtaining purchase indent from every unit. Scheduling purchase. Selection of suppliers based on quality & quantity Marketing. Cost estimation & Negotiation. Allotment of scheduled order to supplier. Decision of Mode of Transport. Receiving & Dispersion goods to required units. Vendor development activities. Cost saving at sources.

y y y y y y y y y

Sales Department: The Sales Department is classified into two based on the nature of customer they handle. They are Original Equipment (OE) Sale & Replacement Marketing (RM) Sales. 1. OE Sales The major part of the turnover (around 90%) is through OE market. The company gets into a legal binding with OE customers (new product) which states that the parts supplied to OE should not be released in the replacement market for the next 2-3 years, etc. and the major customers are.  Hero Honda  Maruti Udyog Ltd.  Bajaj Group  TVS Motor  Endurance.

2. RM Sales The Replacement Marketing Sales is done to the retail end Customers and is headed by Mr.C.V.Chidambaram, Manager, RM sales; this is done through authorized regional distributors. This department runs the business in complete cash and carry method. The packing & dispatch activities of the RM sale is done through a depot. This RM Sales department has been recently shifted to Kappalur Unit. Other major customers are:  Piagio (Italy)  Indore (France)  Ashok Leyland Limited  Birla Yamaha(Japan, India)  Automotives Axles Ltd  Escort Ltd.  Gabriel India Ltd.

HUMAN RESOURCE DEPARTMENT The HR department is headed by Mr. N. Sankaravelayudham, DGM HR, controls and monitors the processes involving the human resource related activities throughout the organization. HR activities include: y y y y y y y y y Recruitment and training for new employees. Allocation of employees for various departments and units. Process any employee related problem. Employee performance management. Culture Building. Formulating Organizational Strategy. Library maintenance. Promote learning circles. Maintain audit and process employee related data like attendance, salary and other specific functions related to HR management.

Man Power Planning: There are two types of man power involved in the Company they are, y y Company Staff Contract Labor

In both the cases the man power request is made by the concerned UNIT HEAD and the HRD HEAD would sanction the same with the approval of the Managing Director. For contract labour the interview is made by the unit persons but for the company staff in addition to unit persons the head office persons will also conduct interview. One important aspect is that the company would give preference to the people who are approaching with the reference of the existing employees. The company started its operations with manpower of around 75 and now it has manpower of around 1000.

Training Measures: The first and the fore most of the Training measures are to identify the training needs of the employees in systematic manner and provide relevant training. The same is done in the following method. y y y y y y Training requirements are identified with performance appraisal form. Training need of the operators is identifies by the supervisors. List of required training is received by the HRD from various sources. Training Budget is made by HRD and is approved by the MD. Then Training Schedule is prepared. List of Internal & External faculties is maintained by the HRD and is approved by the MD. y All the employees of the company should attend at least 32 hours of training program in a year. y In case a particular employee is not able to attend the given schedule of training an alternate schedule would be given. y On completion of the training program Training Feed Back Questionnaire is circulated to arrive at various decisions regarding the next training program. y Training evaluation questionnaire is made to assess the impact on the employees and it is filed in the employees personal file and is maintained till their presence in the organization. HRD measures: 1. HRD Practices: y y y y y Team Building. Transparency in decision making Developing Leadership. Facilitating Team Work. Counselling for Addicts.

2. Culture Building: y y y y y Transparency. Change in attitude toward the self & work to unfold the inner potentials. Committed work force. More emphasis on team work to get maximum outputs. Own the whole family.

3. Welfare Measures: y Twice Coffee or Tea is provided to their workers in each shift but in summer additionally buttermilk is provided. y y y y y y Two uniforms per year for each confirmed workers. In case of family planning operation Rs 500 is provided. Two soaps to be provide for workers Accident compensation is provided. Conducting sports & games program once in a year. Forming quality circles for their workers & providing counseling to their family members. y Sudden visit by the MD to the production units to know the workers grievances.

4. Quality Circle: Its main function is to facilitate Process Control, Mutual & Self Development of Employees, Improvement of their Workplace & Productivity by full participation of all members. QC is conducted regularly once in a week and they will conduct this meeting.

y y y

To contribute to the improvement and development of the organization. To respect humanity and to build worthwhile lives and cheerful work areas. To give fullest recognition to human capabilities and to draw out each individuals finite potential.

Steps in QC: y y y y y y Problem Identification. Observation. Analysis of problem. Action. Checking the results. Standardizing the Systems.

SWOT Analysis: 1. Strength: y y y y This company is the Indian Market Leader in oil seal manufacturing. The company has a very good reputation for its products. The company has a very good internal customer satisfaction. Japanese technological collaboration is the biggest strength of the company.

2. Weakness: y y In case of shell manufacturing around 50 to 60 percent of the input (steel) wasted. In case of moulding the company wastes around 30 to 40 percent of the rubber compound which is an imported one.

3. Opportunities: y y The company can become the World Market Leader in the near future. The rubber waste can be converted into a motor belt with slight modifications in the mould design.

4. Threats: y y
y

There is very less promotion opportunity for the operations people. The starting pay package offered is very low. Still the company has not entered into new projects to expand by diversification.

SYSTEMS DEPARTMENT EDP/ ERP department: The Electronic Data Processing (EDP) department handles all activities regarding Hardware and software throughout the organization. The Enterprise Resource Planning (ERP) unit is responsible for coordinating various departments and plants like Purchasing, Discrete Manufacturing, Inventory, Finance & Order Management and the technical highlights are as follows. Database management system Mail server Operating system Communication

Oracle11.12

IBM Lotus Linux BSNL

Main functions of ERP:  Software development and maintenance.  Procurement of hardware and breakdown services.  System management including allocation of memory and providing access.  File maintains.  Virus protection, system crash etc.  Back-up services.  Purchase of computer related consumer goods.

Other functions of ERP:  Working towards profit.  Ensure cost saving from scratch through ABC analysis (activity based costing).

Types of Network: 35 computers are linked using LAN for smooth connection. Internet and Intranet:  Department has both internet and intranet facility.  Limited control is imposed on access.  Transparency is ensured. Development Center: The DC is the most important unit in the organization under the direct administration of the Chairman.  To monitor all progress & process in all the units of the organization  To act as a window to customer.  Development of new products.  Customer supportive marketing  Solving customer related queries.  To monitor purchase, manufacturing, sales & dispatch activities.  To maintain the quality state of the organization DC is divided into four main sections. They are

   

Arai Communication Drawing Section Material Section Marketing Section

1) Arai Communication: This section is solely responsible for communication activities with Arai Seisakusho Ltd. The communication regarding Design, Engineering & Technology of the moulds and moulding processes are done by this department.

2) Drawing Section: This section is solely responsible for drafting various design regarding the product mould and maintaining the same. It is also responsible for recording engineering change over activities.  OE Drawing.  Arai Drawing.  Internal Production Drawing.  Shell Drawing.  Profile Drawing.  Customer Reference Drawing.  Spring Drawing.  A3 Drawing.

3) Material Section: This section handles all the material related aspects related to the Manufacturing department. The term material means the Compound (Rubber) used for manufacturing the end product. Its main functions are as follows.  Deciding the compound for manufacturing.  Analysis of compound used for manufacturing.  Analysis of sample products.  Inspection of quality at all stages.  Auditing test reports of compound used for producing end products.

4) Marketing Section: This section headed by DGM marketing & manager customer support controls all the marketing activities of the organization. This section handles all the customer oriented activities too. The functions of this Department can be described as follows:  Receiving enquiry from customer end.  Analysis of enquiry and related data.  Feasibility Study.  Quotation preparation.  Receiving purchase order from customer end.  Ordering mould.  Sample submission to customer with related documents.  Receiving customer end report.  Initiate mass production based on customer report.

ADMINISTRATIVE DEPARTMENT The administrative department is headed by Mr. S. Sankarakailasam, SGM administration, is responsible for all administrative activities in all departments in any general issues. Environmental safety activities are administered by this department as per TNPCB norms. The air and water pollution control is administered by this department based on AIR AND WATER ACT stated by TNPCB. Its main functions include.  Handling of environmental legal issues.  Interaction with Governmental Organizations.  Magazine subscription.  Grant of scholarships.  Sponsorship for tournaments.  Transport arrangements.  Arranging the visit & convenience of foreign delegates.  EB expenses Audit.  Mail & Courier handling.

Secretarial Functions: Any organization with a paid up capital of 2 crores should have qualified secretary. The organizations secretary is Mr. R. R. Gnanasekaran. The secretary is responsible for convening and conducting the Board of Directors meeting. This meeting should be conducted once in every 3 months. One annual meeting should be held. Other major functions are:  Compiling the annual report of the organization.  Liaison between the Board of Directors and the Management.  Liaison between the organization and the Shareholders.  Maintaining the Statutory records.  Handling all the legal activities of the organization based on the companys Act.

EXCISE DEPARTMENT Excise can be defined as an indirect tax imposed and levied by the Central Government of India. It is under the control of Central Board of Excise & Customs (CBEC).Any goods purchased, manufactured, and sold excise toward the CBEC. Functions:  Calculating and maintaining the excise duty.  To file the excise return documents yearly.  To support the periodic audit done by authorities.  The Excise department act in co-ordination with all the other departments in the matter of excise duties.

ENGINEERING DEPARTMENT Engineering department is the only department responsible for engineering maintenance activities in the organization. This is done on the basis of y y y Functions: y y y y Solving maintenance problems. Machine installation, design and production of required spares, jigs & fixtures. Spare maintenance and fabrication of required parts. New plant development. Breakdown maintenance Preventive maintenance Predictive maintenance

QUALITY MANAGEMENT DEPARTMENT This department checks the quality and quantity of the raw material. The QA Department is responsible for validation, problem solving & maintaining the quality aspects of the products and processes. This department is controlled by SGM Technical and SM quality assurance. Major functions are.  Inspection of Moulds, raw materials and finished goods.  Technical specification validation.  Statistical process control.  Issuing & auditing of various parameters. The general processes of quality assurance department are as follows.  Input inspection shells  Input inspection springs  Technical specification validation  Re-Validation  Moulding process sheet  Metal treatment process sheet  Calibration

Quality & Environmental Policy


 Strive for continual improvement of our quality performance by meeting the changing requirements of our customers and our environmental performance by prevention of pollution and maintenance of wastes.  Manufactures high quality products at competitive prices by adhering to the system, processes and procedures and continually improving the same.  Promote energy savings and conservation of resources.

Strategies
The Organization strives to excel by strictly adopting the following aspects. Growing and achieving through people, by Training, Bench Marking, Employee Involvement, Employee Empowerment, Root Cause Corrective Action, Team Work, Universal Responsibility, Statistical Thinking, Organizational Culture Building & Sustained Management Methods. Quality Excellence is achieved by adopting the two major strategy: Kaizen y y y Kaizen is a Japanese word meaning Change for better or Improvement . The common English usage is Continual improvement. Kaizen refers to a work place Quality strategy and related to various quality control systems. Kaizen aims to eliminate waste. This often followed by standardization of this better way with others through standardized work.

5s Quality Principle 5S is a method of organizing a workplace and keeping it organized. The 5S are, y SEIRI  Sort and dispose unwanted items.  Follow red tag system.  Fixed point photograph.  Standard for deciding the required things. y SEITON  Organizing.  Proper lay out.  Tools shadow board cupboard/racks.  Proper arrangements.  Filing in cabinet.

SEISO  Cleaning.  Set time for cleaning and checking standard.  Development cleaning and checking standard.  Follow standards.

SEIKETSU  Standardizing.  Develop check list and display.  Position mark.  Jewellery box system.  Visual control. SHITSUKE  Training and discipline  Train men at all level  Planned audit  Motivation by recognition .

The above mentioned quality aspects are being followed throughout the organization to uphold its quality. These are followed by its employees as their way of life. Quality Circle: Quality Circle is a small group of 6 to 12 employees doing similar work, who voluntarily meet together on a regular basis to identify improvements in their respective work areas using proven techniques for analyzing and solving work related problems coming in the way of achieving and sustaining excellence leading to mutual upliftment of employees as well as the organization. It is a way of capturing the creative and innovative power that lies within the work force.

The modern concept of quality control is designed in such a manner that, employees of an organization have the opportunity to perform effectively and mesh well with the plan and activities of the management, thereby facilitating a very conducive work environment. Certifications: The company has got the following certifications.  For Quality management system y y ISO 9001:2000 ISOTS 16949:2002

 For Environment management system


y

ISO 14001:2004

OBSERVATIONS

 Quality excellence is achieved by adopting the kaizen and 5S principle strategies.  An Overview about the quality concepts, training and development and various policies of Human Resource Department.

 Payroll and Performance appraisal procedure.  The application of individual sprit in team and their responsibilities is enhancing the management performance.

 The effectiveness of planning, organizing, controlling in the organization.  The way of recruiting personnel, the 360 degree appraisal and growth of organization.  The Electronic Data Processing (EDP) department handles all activities regarding hardware and software throughout the organization.

 The goods which are exported to other countries are insured which are sent through ship and also through Air transport as a safety measures.

RECOMMENDATIONS

 To give more information about company to trainees and to give Training in ERP/EDP department.

 To make changes in workers timings.  To increase salary for the employees.  To improve the communication channel between all departments.  To increase the production in order to retain the customers.  To reduce grievances of the employees separate committee should be formed.

CONCLUSIONS

The visit gave an industrial exposure to me. I was able to observe various activities regarding all the departments. Through the visit, I had a chance to interact with the people in the various departments and also with the students from various colleges. The management shows added trust to their employees and the employees also work with full spirit and enthusiasm.

The practically implemented when compared to the theoretical aspects and practical way of official dealings dealing with workers. Handling grievances and maintaining a cordial and proper industrial relationship. Other than the practical things I also learned some new concepts like KAIZEN, 5s and got view as those things and how it will help for the organization effectiveness.

Motivation is an important factor in every organization. Giving more importance for employee motivation by its own innovative way. I learned such motivating factors in this concern. Particularly to say, quality circle is a very important concept that is implemented in this organization. It is a way of problem solving technique answer as side the unity becomes very strong among the employees.

BIBLIOGRAPHY

Websites: 1. www.asklaila.com/Madurai/Manufacturing 2. www.slideshare.net/vparakhiya/hi-tech-arai-ltd-madurai 3. www.tntdpc.com/pdf/bangera_Hitecharai.pdf

Articles: 1. Companies Newsletter 2. Departments report