SUMMER TRAINING PROJECT REPORT

ON
STUDY ON THE AWARENESS OF RICO
PRODUCTS AND MATERIAL MANAGEMENT
In partial fulfillment of the requirement for the award of the degree of
MASTERS OF BUSINESS ADMINISTRATION
Se!!ion "##$%"#&&'
A (ro)e*t Done at
RICO AUTO INDUSTRIES LTD
UNDER THE SUPERVISION OF: SUBMITTED By:
Mr. M.K.RAGHAV SUMIT DHINGRA
Divisi!"# M"!"$%r M.B.A SEC&B'
&Fi!"!(% ) T"*"+i!' R## N,-./01-23
INSTITUTE OF MANAGEMENT
MAHARISHI MARKENDESHWA UNIVERSITY
MULLANA&AMBALA'
&
PREFACE
+la!!room !tud, i! the foundation- whi*h i! e!!ential- .ut getting down
*at from a tree i! different whene/er it *ome!0 To .ridge the gap
.etween the theor, and pra*ti*al- it i! e!!ential for the !tudent to !tep
out of the *la!!room and mo/e around the *orporate world0 +la!!room
theor, *an pa!! on 1nowledge .ut attitude and !1ill! *an .e enhan*ed
from a*tual mar1et e2po!ure with them0 RI+O AUTO INDUSTRIES
3TD0 pro/ided me an opportunit, to e2perien*e an a*tual indu!tr,
*ondition0
It i! *orre*tl, !aid that mar1et e2po!ure i! nearl, a *i/ili4ed form of
warfare where mo!t of the .attle! are won ., *i/ili4ed thin1ing and the
attitude0
The pre!ent training report gi/e! a detailed /iew of the indu!trial training underta1en
at RI+O AUTO INDUSTR5 3IMITED from 6th 7une "#&# to 8&
th
7ul, "#&#0 The
training helped me in ha/ing a /iew of implementing m, theoreti*al 1nowledge to
indu!trial en/ironment0 The training at RI+O AUTO INDUSTR5 3IMITED i!
definitel, going to pla, an important role in de/eloping an attitude for hard wor1 and
!elf *onfiden*e for m, future0
"
8
ACKNOWLEDGEMENT
On !u**e!!ful *ompletion of m, !ummer training report material management in
manufa*turing indu!trie!'- I am grateful to the management of the RICO AUTO
INDUSTRIES LTD0 For gi/ing me thi! opportunit, to undergo m, !ummer training
in there e!teemed pre!tigiou! organi4ation0
For ma1ing thi! pro)e*t po!!i.le- I e2pre!! m, deep !en!e of the gratitude to Mr M.K.
R"$4"v "s Divisi!"# M"!"$%r &Fi!"!(% ) +"*"+i!' for pro/iding their /alua.le
help- !upport 9 pre*iou! time in the !u**e!!ful *ompletion of the pro)e*t0
Al!o- I am than1ful to the fa*ult, of m, *ollege for their *ontinued guidan*e and
in/alua.le en*ouragement0
Finall, I am than1ful to all the re!pondent! who!e re!pon!e! were of utmo!t important
for the pro)e*t0 3a!t .ut not the lea!t- I would li1e to pla*e a word of
appre*iation on re*ord for all tho!e who!e dire*tl, and indire*tl, ha/e
helped me for the !u**e!!ful *ompletion of the pro)e*t0
SUMIT DHINGRA


:
DECLARATION
I here., de*lare that the (ro)e*t Report titled ; T<E MATERIA3 MANA=EMENT
OF RI+O AUTO INDUSTRIES 3IMITED > In the partial fulfillment of the
requirement for the degree of ;Ma!ter! in Finan*e 9 +ontrol!> and !u.mitted to the
MA<ARIS<I MA?ENDES<@ER INSTITUTE OF MANA=EMENT. Thi! i! m,
original wor1 and ha! not .een !u.mitted for an, other !tream- an, other *our!e-
degree or fellow!hip0
A
TABLE OF CONTENT
TOPICS PAGE NO.
PREFACE .
ACKNOWLEDGEMENT 2
CHAPTER, - INTRODUCTION 5
CHAPTER ,. LITERATURE REVIEW --
CHAPTER,6 METHODOLOGY -7
CHAPTER,2 AUTOMOBILE INDUSTRY PROFILE -5
US AUTOMOBILE
INDUSTRY
..
CHINA AUTOMOBILE
INDUSTRY
.6
AUTOMOBILE INDUSTRY IN INDIA
.1
CHAPTER,7 COMPANY PROFILE 60
COMPANY PROFILE
AND HISTORY
2.
COMPANY
ORGANI8ATION
STRUCTURE
7/
SWOT ANALYSIS 7.
CHAPTER, 3 MATERIAL MANAGEMENT 73
DOCUMENTATION OF
MATERIAL MANAGEMENT
1-
CHAPTER,1 EVALUATION 53
FINDING AND ANALYSIS
51
CHAPTER,5 CONCLUSION 0/
B
CHAPTER,0 BIBLOGRAPHY 0.
INDE9 OF TABLE
TOPICS PAGE NO.
AUTOMOBILE PRODUCTION TRENDS
66
AUTOMOBILE DOMESTIC SALES TERNDS
62
AUTOMOBILE E9PORTS TRENDS
67
INDE9 OF GRAPHIC
TOPICS PAGE NO.
GLOBAL TRENDS
.-
TOP ./ MOTOR VEHICLES PRODUCING
COUNTRY IN .//1
.7
TURNOVER OF AUTOMOBILE INDUSTRY IN
YEAR .//2,/7 TO .//5,/0
.0
MARKET SHARE OF DIFFERENT VEHICLES
IN .//0,-/
6-
RICO GROUPS TURNOVER -001 TO .//5
22
6
CHAPTER -
INTRODUCTION
C
The training report i! a.out the Different a!pe*t! of material management of RI+O
Auto Indu!trie! 3td0
RI+O AUTO i! a d,nami* world *la!! engineering *ompan, !uppl,ing a .road range
of high pre*i!ion full, ma*hined ferrou! and aluminium *omponent! and a!!em.lie!
to automoti/e OEMD! glo.all,0
Material and it! management i! not a new thing- it i! there from the !tarting of the
.u!ine!! -unfortunaetl, earlier no.od, reali!e it! importan*e .ut it ha! gained a lot of
importan*e for the pa!t few ,ear! .e*au!e of the .enefit! offered ., it0
It ha! emerged a! the mo!t *riti*al *omponent a! *orporation! glo.ali4e their
operation!0
Material management i! an intera*ti/e Material! requirement- planning and *ontrol
!,!tem 0 The o.)e*ti/e of the !,!tem i! to ma1e it ea!ier to deal with *omple2itie! of
operating a manufa*turing *ompan, ., ta1ing into a**ount /ariou! a!pe*t! of
information flow of management0 The material management help!E
To *ontrol in/e!tment in material! at the optimum le/el ., effi*ientl,
organi4ing the pur*ha!e and !ale! operation!0
To maintain a !uffi*ient and large !i4e in/entor, to meet the demand of
fini!hed good! and to meet the demand of raw material! ., produ*tion
department0
To ma1e the .e!t utili4ation of the a/aila.le !pa*e- ., managing the material
in !u*h a wa, !o that it *an .e ea!il, a/aila.le0
To de*ide the right lead time0
$
To ma1e Right *ontrol ., properl, *he*1ing ea*h and e/er, a!pe*t of material
thi! led to uninterrupted !uppl, of material! from e2ternal and internal
!our*e!- whi*h led to in*rea!e in profit0
In right <andling ., ta1ing mea!ure! to redu*e wa!tage0 The wa!te material!
are *ontinuou!l, di!po!ed of- whi*h in*rea!e the wor1ing *apital and in*rea!e
the !pa*e for the in*oming material!0
&#
CHAPTER,.
LITERATURE REVIEW
&&
I!v%!+ry M"!"$%:%!+; J! S(4r%i<=%>%r
???.(4i(%:"$"@i!%.(:
In thi! arti*le- the author a!1! a! to <ow the *ompanie! 1now whether the, ha/e too
mu*h- too little- or )u!t the right amount of !to*1 in/entor,F One wa, i! to *ompare
the /alue of ,our *urrent in/entor, to an Gideal in/entor, in/e!tment0G In thi! arti*le
we will di!*u!! how to *al*ulate the /alue of thi! GrightG amount of in/entor,0 A! with
man, of our other in/entor, anal,!i! tool!- *al*ulating the ideal in/entor, in/e!tment
require! that we fir!t !eparate tho!e in/entor, item! with re*urring demand from tho!e
item! with !poradi* u!age0
R%(Arri!$ Us"$% I+%:s
Re*urring u!age produ*t! are !old or u!ed on a regular .a!i!0 T,pi*all, the!e item!E
<a/e had u!age in at lea!t eight of the la!t twel/e month!0
<a/e had u!age in at lea!t four *ontinuou! month! in the la!t twel/e month!
thi! !e*ond *ondition identifie! !ea!onal item! that are onl, !old during
*ertain time! of the ,ear'0
Repleni!hment of the!e item! i! normall, .a!ed on !afet, !to*1 quantitie!- order
point!- line point!- and !tandard order quantitie!E
S"=%+y S+(B CA"!+i+y: The Gin!uran*eG in/entor, maintained in !to*1 to
prote*t ,ou from !to*1 out! re!ulting from une2pe*ted *u!tomer demand or
/endor !hipment dela,!0
Or>%r Pi!+: The Safet, Sto*1 Huantit, plu! predi*ted demand during the
anti*ipated lead time0
Li!% Pi!+: The Order (oint plu! predi*ted demand during the !upplier
re/iew or order *,*leI the normal length of time .etween t,pi*al
repleni!hment order! with the !upplier0
&"
A r%vi%? = i!v%!+ry :"!"$%:%!+ r%s%"r(4 i! :"Dr #$is+i(s
DAr!"#s: T4%:%s "!> =A+Ar% >ir%(+i!s
AA+4r&s': Brent D0 @illiam!- Department of Mar1eting and
3ogi!ti*!- Sam M0 @alton +ollege of Bu!ine!!-
Uni/er!it, of Ar1an!a!- Fa,ette/ille- Ar1an!a!- USA'-
Tra/i! To1ar- The Ohio State Uni/er!it,- Fi!her
+ollege of Bu!ine!!- Mar1eting and 3ogi!ti*!-
+olum.u!- Ohio- USA'
In &$$"- !ome food manufa*turer! and gro*er! formed Effi*ient +on!umer Re!pon!e
to !hift their fo*u! from *ontrolling logi!ti*al *o!t! to e2amining !uppl, *hain! ?ing
9 (humpiu- &$$B'0 +u!tomer !er/i*e al!o .e*ame a 1e, *ompetiti/e differentiation
point for *ompanie! fo*u!ed on /alue *reation for end *on!umer!0 In !u*h an
en/ironment- firm! hold in/entor, for two main rea!on!- to redu*e *o!t! and to
impro/e *u!tomer !er/i*e0 The moti/ation for ea*h differ! a! firm! .alan*e the
pro.lem of ha/ing too mu*h in/entor, whi*h *an lead to high *o!t!' /er!u! ha/ing
too little in/entor, whi*h *an lead to lo!t !ale!'0
A<s+r"(+: Purpose J The purpo!e of thi! paper i! to pro/ide a re/iew of in/entor,
management arti*le! pu.li!hed in ma)or logi!ti*! outlet!- identif, theme!
from the literature and pro/ide future dire*tion for in/entor, management
re!ear*h to .e pu.li!hed in logi!ti*! )ournal!0
Design/methodology/approach J Arti*le! pu.li!hed in ma)or logi!ti*!
arti*le!- .eginning in &$6B- whi*h *ontri.ute to the in/entor, management
literature are re/iewed and *ataloged0 The arti*le! are !egmented .a!ed on
ma)or theme! e2tra*ted from the literature a! well a! 1e, a!!umption! made
., the parti*ular in/entor, management model0
Findings J Two ma)or theme! are found to emerge from logi!ti*! re!ear*h
fo*u!ed on in/entor, management0 Fir!t- logi!ti*! re!ear*her! ha/e fo*u!ed
*on!idera.le attention on integrating traditional logi!ti*! de*i!ion!- !u*h a!
tran!portation and warehou!ing- with in/entor, management de*i!ion!-
u!ing traditional in/entor, *ontrol model!0 Se*ond- logi!ti*! re!ear*her!
ha/e more re*entl, fo*u!ed on e2amining in/entor, management through
*olla.orati/e model!0
&8
Originality/value J Thi! paper *atalog! the in/entor, management arti*le!
pu.li!hed in the ma)or logi!ti*! )ournal!- fa*ilitate! the awarene!! and
appre*iation of !u*h wor1- and !tand! to guide future in/entor,
management re!ear*h ., highlighting gap! and une2plored topi*! in the
e2tant literature0
T4%:%s "!> =A+Ar% >ir%(+i!s A r%vi%? = Pr>A(+i! )
I!v%!+ry M"!"$%:%!+ JAr!"#.
AA+4r: DAE#"$"; E>?"r> A.F Pi!+; P%+%r A.
Manufa*turing firm! are fa*ing in*rea!ed *ompetition and rapidl, *hanging mar1et
*ondition! in toda,K! glo.al mar1etpla*e0 +ompanie! mu!t pro/ide produ*t! that
!ati!f, *hanging *on!umer preferen*e! while maintaining !tringent *o!t and qualit,
!tandard!0 It i! important for manufa*turing manager! to adapt their produ*tion
pro*e!!e! and !,!tem! to re!pond to *hange! in mar1et requirement!0 That i!-
manager! mu!t .e aware of the importan*e of *orre*tl, mat*hing manufa*turing
*apa.ilitie! with mar1eting requirement!0
The following *a!e !tud, i! a de!*ription of the e/olutionar, *hange! in mar1et
*ondition! and produ*t and pro*e!! te*hnologie! that o**urred during a &A%,ear period
for one *ompan,0 The !u.!equent anal,!i! di!*u!!e! the!e *hange! ., tra*ing the
mat*h or mi!mat*h .etween mar1et requirement! and manufa*turing *apa.ilitie! that
o**urred o/er time0 More !pe*ifi*all,- thi! !tud, fo*u!e! on the produ*tion of one
produ*t famil,- taillight a!!em.lie! for automo.ile!- at one produ*tion fa*ilit, in the
organi4ation0
&:
CHAPTER,6
METHODOLOGY
&A
An opinion !ur/e, wa! underta1en and enquir, wa! tran!lated in under!tanding the
/ariou! a!pe*t! of the organi4ation0 The data wa! *olle*ted through
de!*ripti/e re!ear*h methodolog,0 Re!ear*h in*lude! field !ur/e,
and inter/iew of the offi*ial! of /ariou! department! of the *ompan,0
OBJECTIVE
Pri:"ry O<D%(+iv%
To !tud, the material management of RI+O Auto Indu!trie!0
S%(!>"ry O<D%(+iv%s
To pro*ure the in/entor, le/el
To !tore the in/entor,
To i!!ue the in/entor, of the *ompan,
To e2plore the !tatu! of in/entor,
RESEARCH DESIGN
A per!onal inter/iew with !enior! and pra*ti*al wor1 in *ompan, wa! held while the
/i!it in !tore department 0
INSTRUMENTS
Lerifi*ation of !u.%*omponent with qualit, guage!0
Material handling in!trument! trolle,- *on/e,or!mo/ment of material'-
pipeline!0et*0
&B
TOOLS AND TECHNICUES OF ANALYSIS
U!e SA( !oftware
(ie *hart!
Bar graph!
LIMITATIONS
3e/el! of material! minimum le/el- ma2imum le/el- reorder le/el'
Fund! !a/ing upto !ome e2tent onl,0
Spa*e utili4ation !hould .e with in a fi2ed *reteria of material0
DATA COLLECTION:
SOURCES OF DATA
PRIMARY, The data needed for thi! !tud, ha! .een deri/ed mainl, from
primar, !our*e the primar, !our*e! of the data in*lude the information
pro/ided to me ., the head of a**ount! department- other !enior! in the
*ompan, at the time of inter/iew0 An un!tru*tured inter/iew wa!
*ondu*ted0
SECONDARY, Se*ondar, !our*e! of data% thi! t,pe of data ha/e .een
*olle*ted from the !e/eral !our*e!- !u*h a!E
Lariou! quarterl, re/iew of the *ompan,
Appli*ation form!
Bro*hure!- )ournal!- new!paper et*
&6
CHAPTER G 2
AUTOMOBILE INDUSTRY PROFILE
&C
6.- His+ry = +4% AA+:<i#% I!>As+ry
In the ,ear &6B$- a Fren*h engineer ., the name of Ni*ola! 70 +ugnot in/ented the
fir!t automo.ile to run on road!0 Thi! automo.ile- in fa*t- wa! a !elf%powered- three%
wheeled- militar, tra*tor that made the u!e of a !team engine0 The range of the
automo.ile- howe/er- wa! /er, .rief and at the mo!t- it *ould onl, run at a !tret*h for
fifteen minute!0 In addition- the!e automo.ile! were not fit for the road! a! the !team
engine! made them /er, hea/, and large- and required ample !tarting time0 Oli/er
E/an! wa! the fir!t to de!ign a !team engine dri/en automo.ile in the U0S0
A S*ot!man- Ro.ert Ander!on- wa! the fir!t to in/ent an ele*tri* *arriage .etween
&C8" and &C8$0 <owe/er- Thoma! Da/enport of the U0S0A0 and S*ot!man Ro.ert
Da/id!on were among!t the fir!t to in/ent more appli*a.le automo.ile!- ma1ing u!e
of non%re*hargea.le ele*tri* .atterie! in &C:"0 De/elopment of road! made tra/eling
*omforta.le and a! a re!ult- the !hort ranged- ele*tri* .atter, dri/en automo.ile! were
no more the .e!t option for tra/eling o/er longer di!tan*e!0
The Automo.ile Indu!tr, finall, *ame of age with <enr, Ford in &$&: for the .ul1
produ*tion of *ar!0 Thi! lead! to the de/elopment of the indu!tr, and it fir!t .egun in
the a!!em.l, line! of the *ar fa*tor,0 The !e/eral method! adopted ., Ford- made the
new in/ention that i!- the *ar' popular among!t the ri*h a! well a! the ma!!e!0
A**ording the <i!tor, of Automo.ile Indu!tr, US- dominated the automo.ile mar1et!
around the glo.e with no nota.le *ompetitor!0 <owe/er- after the end of the
Se*ond @orld @ar in &$:A- the Automo.ile Indu!tr, of other te*hnologi*all,
ad/an*ed nation! !u*h a! 7apan and *ertain European nation! gained momentum
&$
and within a /er, !hort period- .eginning in the earl, &$C#!- the U0S Automo.ile
Indu!tr, wa! flooded with foreign automo.ile *ompanie!- e!pe*iall, tho!e of
7apan and =erman,0
6.. G#<"# Tr%!>s
The *urrent trend! of the =lo.al Automo.ile Indu!tr, re/eal that in the de/eloped
*ountrie! the Automo.ile Indu!trie! are !tagnating a! a re!ult of the drooping *ar
mar1et!- wherea! the Automo.ile Indu!tr, in the de/eloping nation!- !u*h a!-
India and Bra4il- ha/e .een *on!i!tentl, regi!tering higher growth rate! e/er,
pa!!ing ,ear for their flouri!hing dome!ti* automo.ile mar1et!0
In 1eeping with the Automo.ile Indu!tr, Trend!- the leading automo.ile
manufa*turer! are turning to the A!ian mar1et! that appear !et to grow immen!el,
o/er the ne2t de*ade0 The automo.ile mar1et! in the U0S0- Europe and the 7apan
ha/e almo!t matured a! a re!ult of !aturation and appear !et to de*line through
the ne2t de*ade0 In *ontra!t- the automo.ile mar1et! !pread o/er the entire A!ian
*ontinent with the e2*eption of 7apan'- are *on!tantl, in*rea!ing in !i4e and will
.e the de!tination for mo!t of the glo.all, leading automo.ile manufa*turer!0
The rapid growth of the national e*onom, of the BRI+ *ountrie! in*luding Bra4il-
Ru!!ia- India- and +hina' ha/e ena.led a growing !e*tion of the population of the!e
*ountrie! to pur*ha!e automo.ile!0 =lo.al !ur/e,! *ondu*ted re*entl, re/eal that
within the ne2t ten ,ear!- the!e emerging automo.ile mar1et! will a**ount for nearl, a
whooping $# per*ent of the glo.al automo.ile !ale! growth0 A! a re!ult of thi!-
leading Automo.ile manufa*turer! of the world are !etting up fa*torie! in the
emerging mar1et!- in order to !er/e the potential *on!umer! .etter a! well a! redu*e
manufa*turing and !hipping *o!t!0 In addition- the!e arrangement! are ena.ling the
leading glo.al automo.ile manufa*turer! to *ompete with the lo*al automo.ile
manufa*turer!- whi*h were flouri!hing in the a.!en*e of qualit, *ompetition0
The pro!perit, of the national e*onom, i! refle*ted in the ri!ing per *apita in*ome of
the de/eloping nation!0 Therefore- in*rea!ing =ro!! Dome!ti* (rodu*t and per *apita
in*ome ha/e rai!ed the pur*ha!ing a.ilit, of the population that *on!titute! the!e
emerging mar1et!0
"#
In "##6- a total of 6&0$ million new automo.ile! were !old worldwideE ""0$ million in
Europe- "&0: million in A!ia%(a*ifi*- &$0: million in North Ameri*a- :0: million in
3atin Ameri*a- "0: million in the Middle Ea!t and &0: million in Afri*a0
M"N
The
mar1et! in North Ameri*a and 7apan were !tagnant- while tho!e in South Ameri*a and
A!ia grew !trongl,0 Of the ma)or mar1et!- Ru!!ia- Bra4il and +hina !aw the mo!t
rapid growth0
"&
U.S. AA+:<i#% I!>As+ry
The manufa*turer! of the U.S. AA+:<i#% I!>As+ry will ha/e to loo1 to the
de/eloping mar1et! around the glo.e- if the, are to regain their Knumero unoK po!ition
in the @orld Automo.ile Indu!tr,- that ha! .een re*entl, ta1en o/er ., the 7apane!e
automo.ile manufa*turer!0
The U0S0 Automo.ile Indu!tr,- whi*h i! mainl, .a!ed upon the *om.ined .u!ine!! of
the Detroit Three J =eneral Motor! +orporation- Ford Motor! +orporation- and
+hr,!ler 33+ whi*h i! an unit of Daimler+hr,!ler A=- ha! .een !urrendering
dome!ti* mar1et !hare to foreign *ompanie! in the automo.ile !e*tor- e!pe*iall, tho!e
.elonging to 7apan0
The dome!ti* mar1et! in the U0S0 .eing almo!t !aturated- the manufa*turer! of the
U0S0 Automo.ile Indu!tr, need to mo/e out of North Ameri*a- to the emerging
mar1et! where automo.ile !ale! are growing ., leap! and .ound!0
In addition- the produ*tion *o!t! in the U0S0 are mu*h higher in *ompari!on to the re!t
of the world- and thi! i! the main rea!on .ehind the U0S0 Automo.ile Indu!tr,
manufa*turer! *lo!ing fa*torie!- redu*ing the num.er of emplo,ee! on their pa,roll in
the U0S0 it!elf0
Asi"! M"rB%+
The A!ian *ountrie! were al!o regi!tering growth in the demand for new /ehi*le!0
Indone!ia and India !howed !ignifi*ant growth in the regi!tration of new /ehi*le!0
A**ording to the UNIDO whi*h follow! the international !tandard for indu!trial
""
*la!!ifi*ation that *ategori4e! the automo.ile !e*tor a! manufa*ture of motor /ehi*le!-
.odie! for motor /ehi*le! and manufa*turer! of part! and a**e!!orie! of motor
/ehi*le! and their engine!- In the leading de/eloping *ountrie! of A!ia the li!t i!
topped ., ?orea -Iran0
Bra4il hold! the fifth po!ition followed ., Indone!ia- Tur1e,- Argentina - Thailand -
Singapore - +hina - Mala,!ia - UAE and +olom.ia0
C4i!" AA+:<i#% I!>As+ry
+hina automo.ile indu!tr, *an .e regarded a! one of the large!t growing
automo.ile indu!trie! in the world0 The mar1et i! *ontinuall, flouri!hing and a! a
*on!equen*e- automa1er! are ha!tening to in/e!t in +hina automo.ile indu!tr,0
A !ur/e, report al!o !how! that in "##"- the *ar !ale! aro!e to B"O with a high
profita.ilit,- that i! wh, leading automa1er! li1e <onda attain highe!t unit margin! in
+hina0
The report al!o !how! that .etween "##& to "##A- the annual growth rate of +hinaK!
*ar *on!umption wa! A:0:"O0 In the ,ear "##A- motor /ehi*le produ*tion and !ale! in
+hina in*rea!ed ., "608"O and "AO re!pe*ti/el,0 In the ,ear "##B- motor*,*le
produ*tion and !ale! in +hina *ro!!ed "& Million Unit! mar10
C4i!" "A+:<i#% :"rB%+ s(%!"ri
The automo.ile produ*tion *o!t in +hina i! higher that in 7apan- Europe or
U0S0 The tariff! are al!o higher than other leading automo.ile manufa*turing
*ountrie!0 The in*ome le/el! in +hina !eem to .e *lim.ing and *on!equentl, the
potentialit, of automo.ile mar1et i! al!o ri!ing0
J"E"! AA+:<i#% I!>As+ry
The J"E"!%s% AA+:<i#% I!>As+ry ha! grown *on!tantl, o/er a long time and ha!
finall, o/erta1en the U0S0 Automo.ile Indu!tr, a! the num.er one produ*er of
automo.ile! in the world0 The Ma)or manufa*turer! of automo.ile! in 7apan J To,ota-
<onda- Ni!!an- Su4u1i- and Ma4da are al!o among!t the large!t manufa*turer! of
automo.ile! in the world0
"8
O/er*oming the ill effe*t! of the defeat in the Se*ond @orld @ar -that had de!tro,ed
the national e*onom,- wa! not an ea!, pro*e!! on the part of the 7apane!e indu!trie!0
The *ar manufa*turer! .elonging to the 7apane!e Automo.ile Indu!tr, were
*ommi!!ioned to !uppl, arm, tru*1! to South ?orea ., the Federal =o/ernment of
the U0S0 during the ?orean @ar .etween &$A# and &$A80 Thi! wa! the main rea!on
.ehind the up!wing of the 7apane!e Automo.ile Indu!tr, that .egan in the &$B#!0
The produ*t! of the J"E"!%s% AA+:<i#% I!>As+ry- that i!- the 7apane!e
automo.ile!- are of a !uperior grade and la!t for longer period!- in addition to .eing
fuel effi*ient0 The 7apane!e *ar! are primaril, pri*ed at afforda.le rate! whi*h are
*omparati/el, mu*h lower than the automo.ile! produ*ed ., their foreign
*ompetitor! e!pe*iall, tho!e .a!ed in the U0S0 and @e!tern Europe0

To,ota ha! re*entl, o/erta1en =eneral Motor! of the U0S0 a! the leading produ*er a!
well a! !eller of automo.ile! in the world0 The To,ota Motor +orporation i! therefore
the .e!t .et of the 7apane!e Automo.ile Indu!tr,0 And <onda ha! o/erta1en Ni!!an to
.e*ome the !e*ond large!t produ*er of automo.ile! of the 7apane!e Automo.ile
Indu!tr,0
":
Top 20 motor vehicle producing countries in 2007
"A
3.3. C4"##%!$%s F"(%> <y +4% I!>As+ry
0 2000 4000 6000 8000 10000 12000 14000
Japan
United States
China
Germany
S. Korea
France
Brazi
Spain
Canada
!ndia
"e#ico
UK
$%ssia
!tay
&haiand
&%r'ey
!ra(
Czech $ep%)ic
Be*i%m
+oand
C
o
u
n
t
r
y
Production(1000 units)
"B
The automoti/e indu!tr, toda, i! in the middle of a dramati* and largel,
unpre*edented tran!formation0 The heart of thi! tran!formation i! not a.out
how the auto *ompan, doe! it! wor1 .ut rather how it define! it!elf0
The glo.al automoti/e indu!tr, toda, i! deli/ering unpre*edented le/el! of *u!tomer
/alue0 Lehi*le! toda, are /a!tl, !uperior to and more relia.le than tho!e produ*ed )u!t
a de*ade ago in term! of e*onom,- !afet,- *omfort- fun*tionalit, and performan*e0
Fier*e glo.al *ompetition for *on!umer! i! the prime mo/er .ehind thi! in*rea!e in
*u!tomer /alue0
But the automoti/e indu!tr, !tru*ture that ha! endured for eight, ,ear! ma, .e
rea*hing the limit of it! potential0 For deli/ering the ne2t !ignifi*ant in*rement of
/alue- to automoti/e *on!umer!- while remaining profita.le will require dramati*
in*rea!e in produ*ti/it, a*ro!! the /alue *hain0
In "##C- with rapidl, ri!ing oil pri*e!- indu!trie! !u*h a! the automoti/e indu!tr,- are
e2perien*ing a *om.ination of pri*ing pre!!ure! from raw material *o!t! and *hange!
in *on!umer .u,ing ha.it!0 The indu!tr, i! al!o fa*ing in*rea!ing e2ternal *ompetition
from the pu.li* tran!port !e*tor- a! *on!umer! re%e/aluate their pri/ate /ehi*le u!age0
Some of the *hallenge! are a! follow!E%
Bu!ine!! tran!a*tion! to !u!tain and grow *ore re/enue! 0
+o!t redu*tionPperforman*e impro/ement 0
Emerging mar1et! 0
E2*e!! la.our- produ*tion *apa*it,- in/entor,- and predator, pre!!ure!
on margin! 0
Impro/ing !uppl, *hain effi*ien*, 0
Managing retiree health *are *o!t! 0
Retail and di!tri.ution performan*e 0
New regulation! a**ounting !tandard!- go/ernment regulation! % e0g0-
.lo*1 e2emption reform- IFRS- E3L- +AFE- EU a**e!!ion- +O"
regulation!'0
AUTOMOBILE INDUSTRY IN INDIA
"6
His+ry O= I!>i"! AA+:<i#% I!>As+ry
"C
Automo.ile! were introdu*ed to India in the late &C$#K!- the manufa*turing indu!tr,
onl, too1 off after independen*e in &$:60 The prote*tioni!t e*onomi* poli*ie! of the
go/ernment ga/e ri!e in the &$A#K! to the <indu!tan Motor! Am.a!!ador- .a!ed on a
&$A#K! Morri! O2ford- and- i! !till u.iquitou! in the road! and highwa,! of India0
<indu!tan Motor! and a few !maller manufa*turer! !u*h a! (remier Automo.ile!-
Tata Motor!- Ba)a) Auto- A!ho1 and Standard Motor! held an oligopol, until IndiaK!
initial e*onomi* opening in the &$C#K!0 Tata Motor! laun*he! it! fir!t tru*1 in
*olla.oration with Mer*ede!%Ben40 The great Indian politi*ian San)a, =andhi
*hampioned the need for a GpeopleK! *arGI the pro)e*t wa! reali4ed after hi! death with
the laun*h of a !tate%owned firm Maruti Ud,og whi*h qui*1l, gained o/er A#O
mar1et !hare0 The Maruti C## .e*ame popular .e*au!e of it! low pri*e- high fuel
effi*ien*,- relia.ilit, and modern feature! relati/e to it! *ompetition at the time0 Tata
Motor! e2ported .u!e! and tru*1! to ni*he mar1et! in the de/eloping world0
The li.erali4ation of &$$& opened the flood gate! of *ompetition and growth whi*h
ha/e *ontinued up to toda,0 The high growth in the Indian e*onom, ha! re!ulted in all
ma)or international *ar manufa*turer! entering the Indian mar1et0 =eneral Motor!-
Ford- To,ota- <onda- <,undai and other! !et up manufa*turing plant!0 Roll! Ro,*e-
Bentle, and Ma,.a*h are e2ample! of the few high end automo.ile manufa*turer!
whi*h entered India in the re*ent ,ear!0 The Tata Nano i! at the lower end of the pri*e
range *o!ting appro2 USQ "-A## and Bugatti Le,ron at the other with a pri*e tag of
o/er USQ " million0
IndiaK! lo/e affair with the automo.ile i! famou!l, em.odied in the &$"#K! Roll!
Ro,*e *olle*tion! of the er!twhile mahara)a!0 The growing middle *la!! a!pire! for
the automo.ile for it! *on/enien*e and a! a !tatu! !,m.ol0 Upper middle *la!! and
wealth, *ar owner! emplo, full%time *hauffeur! to na/igate the aggre!!i/e and
!eemingl, lawle!! traffi* pattern! of mo!t *itie!0 The *on!tru*tion of e2pre!!wa,!
!u*h a! the Mum.ai%(une e2pre!!wa, ha/e opened up new touring opportunitie!0 The
e2pe*ted laun*h of a Formula One *ir*uit in New Delhi i! e2pe*ted to !par1 pu.li*
enthu!ia!m for a motor !porting indu!tr,0
CArr%!+ S(%!"ri
"$
O/er a period of more than two de*ade! the Indian Automo.ile indu!tr, ha! .een
dri/ing it! own growth through pha!e!0
India i! one of the large!t automo.ile indu!trie! in A!ia 0 The automo.ile indu!tr, in
India i! the tenth large!t in the world with an annual produ*tion of appro2imatel, "
million unit!0 A**ording to the UNIDO report - India ha! made it to the top &A
automa1er! of the world and o**upie! the fourth po!ition in the leading de/eloping
*ountrie! *ategor, of motor /e*hile manufa*turer! 0 It ha! .e*ome a huge attra*tion
for *ar manufa*turer! around the world0
M8N
Though !e/eral ma)or foreign automa1er!- li1e Ford- Su4u1i- =M-and <onda ha/e
their manufa*turing .a!e! in India- Indian automo.ile mar1et i! dominated .,
dome!ti* *ompanie!0 Maruti Su4u1i i! the large!t pa!!enger /ehi*le *ompan,- Tata
Motor! i! the large!t *ommer*ial /ehi*le *ompan, while <ero <onda i! the large!t
motor*,*le *ompan, in India0 Other ma)or Indian automo.ile manufa*turer! in*lude
Mahindra 9 Mahindra- A!ho1 3e,land and Ba)a) Auto0
The entr, of Su4u1i +orporation in Indian pa!!enger *ar manufa*turing i! often
pointed a! the fir!t !ign of India turning to a mar1et e*onom,0 Sin*e then the
automo.ile !e*tor witne!!ed rapid growth ,ear after ,ear0 B, late%$#K! the indu!tr,
rea*hed !elf relian*e in engine and *omponent manufa*turing from the !tatu! of large
!*ale importer0
@ith *omparati/el, higher rate of e*onomi* growth rate inde2 again!t that of great
glo.al power!- India ha! .e*ome a hu. of dome!ti* and e2port! .u!ine!!0 The
automo.ile !e*tor ha! .een *ontri.uting it! !hare to the !hining e*onomi*
performan*e of India in the re*ent ,ear!0
@ith the Indian middle *la!! earning higher per *apita in*ome- more people are read,
to own pri/ate /ehi*le! in*luding *ar! and two%wheeler!0 (rodu*t mo/ement! and
manned !er/i*e! ha/e .oo!ted in the !ale! of medium and !i4ed *ommer*ial /ehi*le!
for pa!!enger and good! tran!port0 Side ., !ide with fre!h /ehi*le !ale! growth- the
automoti/e *omponent! !e*tor ha! witne!!ed .ig growth0 The dome!ti* auto
*omponent! *on!umption ha! *ro!!ed rupee! $### *rore! and an e2port of one half
!i4e of the figure0
TURNOVER
8#
TAr!v%r = AA+:<i#% I!>As+ry
.//2,/7 + .//5,/0
TAr!v%r = AA+:<i#% M"!A="(+Ar%rs
Y%"r &Rs.I! Mi##i!'
.//2,/7 ./;503
.//7,/3 .1;/--
.//3,/1 62;.57
.//1,/5 63;3-.
.//5,/0 65;.65
AA+:<i#% I!>As+ry P%r=r:"!(% >Ari!$ .//3, .//1
D:%s+i( S"#%s
The *umulati/e growth of the (a!!enger Lehi*le! !egment during April % Mar*h "##6 wa!
"#06# per*ent0 (a!!enger +ar! grew ., ""0#& per*ent- Utilit, Lehi*le! ., &80"& per*ent and
8&
Multi (urpo!e Lehi*le! ., "A0"# per*ent in F5 "##C%#$0
The +ommer*ial Lehi*le! !egment grew ., 880"C per*ent0 =rowth of Medium 9 <ea/,
+ommer*ial Lehi*le! wa! 8"0C: per*ent and 3ight +ommer*ial Lehi*le! re*orded a growth of
880$8 per*ent0
Three @heeler! !ale! grew ., &"0"" per*ent with !ale! of =ood! +arrier! in*rea!ing ., &80A"
per*ent and (a!!enger +arrier! ., &&088 per*ent during April% Mar*h "##6 *ompared to the
*orre!ponding period la!t ,ear0
The Two @heeler mar1et grew ., &&0:" per*ent during April% Mar*h "##6 o/er the !ame
period la!t ,ear0 Motor*,*le! grew ., &"06$ per*ent- S*ooter! grew ., 80:C per*ent and
Moped! regi!tered a growth of B0$A per*ent0
E*Er+s
Automo.ile E2port! regi!tered a growth of "A0:8 per*ent during April% Mar*h "##6 o/er the
!ame period la!t ,ear0
(a!!enger Lehi*le! E2port! grew ., &80#A per*ent- +ommer*ial Lehi*le! e2port! in*rea!ed .,
""0AC per*ent- Three @heeler! e2port! ., C60&6 per*ent and Two @heeler! E2port! grew .,
#0BA per*ent
M"rB%+ s4"r% O= Di==%r%!+ v%4i(#%s
D:%s+i( M"rB%+ S4"r% =r .//0,-/
8"
CVs 2.6.H
T+"# P"ss%!$%r V%4i(#%s -7.53H
T+"# T? W4%%#%rs 13..6H
T4r%% W4%%#%rs 6.75H
TRENDS
AA+:<i#% Pr>A(+i! Tr%!>s
NA:<%r =
V%4i(#%s'
C"+%$ry .//2,/7 .//7,/3 .//3,/1 .//1,/5 .//5,/0 .//0,-/
P"ss%!$%r
V%4i(#%s
&-"#$-C6B &-8#$-8##
&-A:A-""8 &-666-AC8 &-C8C-A$8
"-8A&-":#
88
C::%r(i"#
V%4i(#%s
8-A8-6#8 8-$&-#C8 A-&$-$C" A-:$-##B
:-&B-C6#
A-BB-B#C
T4r%%
W4%%#%rs
8-6:-::A
:-8:-:"8 A-AB-&"B A-##-BB#
:-$6-#"# B-&$-#$8
T?
W4%%#%rs
B-A"$-C"$
6-B#C-B$6
C-:BB-BBB C-#"B-BC& C-:&$-6$" &#-A&"-CC$
Gr"!> T+"# C-:B6-CA8 $-6:$-A#8 &&-#C6-$$6 &#-CA8-$8# &&-&6"-"6A &:-#:$-C8#
8:
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
Passenger Vehices Co!!ercia Vehices
"hree #heeers "$o #heeers
AA+:<i#% D:%s+i( S"#%s Tr%!>s
&NA:<%r
=
V%4
i(#%s
'
C"+%$ry .//2,/7 .//7,/3 .//3,/1 .//1,/5 .//5,/0 .//0,-/
P"ss%!$%r
V%4i(#
%s
&#B&A6" &&:8#6B &86$$6C &A:$CC" &AA"6#8 &$:$66B
C::%r(i"#
V%4i(#
%s
8-&C-:8# 8-A&-#:& :-B6-:8A :-$#-:$: 8-C:-&$: A-8&-8$A
T4r%% 8-#6-CB" 8-A$-$"# :-#8-$&# 8-B:-6C& 8-:$-6"6 :-:#-8BC
8A
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
Passenger Vehices Co!!ercia Vehices
"hree #heeers "$o #heeers
W4%%#
%rs
T? W4%%#%rs B-"#$-6BA 6-#A"-8$& 6-C6"-88: 6-":$-"6C 6-:86-B&$ $-86&-"8&
Gr"!> T+"# 6-C$6-B"$ C-$#B-:"C &#-&"8-$CC $-BA:-:8A $-6":-":8 &"-"$"-66#
THE KEY FACTORS BEHIND THE UPSWING:
Sale! in*enti/e!- introdu*tion of new model! a! well a! /ariant! *oupled with ea!,
a/aila.ilit, of low *o!t finan*e with *omforta.le repa,ment option! *ontinued to
dri/e demand and !ale! of automo.ile! during the fir!t two quarter! of the *urrent
,ear0 The ri!1 of an in*rea!e in the intere!t rate!- the impa*t of dela,ed mon!oon! on
rural demand- and in*rea!e in the *o!t! of input! !u*h a! !teel are the 1e, *on*ern! for
the pla,er! in the indu!tr,0
A! the pla,er! *ontinue to introdu*e new model! and /ariant!- the *ompetition ma,
inten!if, further0 The a.ilit, of the pla,er! to *ontain *o!t! and fo*u! on e2port! will
.e *riti*al for the performan*e of their re!pe*ti/e *ompanie!0
The auto *omponent !e*tor ha! al!o po!ted !ignifi*ant growth of "# per *ent in "##8%
#:- to a*hie/e a !ale! turno/er of R!08#-B:# *rore USQ B06 .illion'0 Further- there i! a
8B
potential for higher growth due to out!our*ing a*ti/itie! ., glo.al automo.ile! giant!0
Toda,- thi! !e*tor ha! emerged a! another !unri!e !e*tor0
Indian Automo.ile Indu!tr, i! growing0 Al!o- the Automo.ile indu!tr, ha! !trong
.a*1ward and forward lin1age! and hen*e pro/ide! emplo,ment to a large !e*tion of
the population0 Thu! the role of Automo.ile Indu!tr, *annot .e o/erloo1ed in Indian
E*onom,0 All 1ind! of /ehi*le! are produ*ed ., the Automo.ile Indu!tr,0 India
Automo.ile Indu!tr, in*lude! the manufa*ture of tru*1!- .u!e!- pa!!enger *ar!-
defen!e /ehi*le!- two%wheeler!- et*0 The indu!tr, *an .e .roadl, di/ided into the +ar
manufa*turing- two%wheeler manufa*turing and hea/, /ehi*le manufa*turing unit!0
CHALLENGES
(re!entl, - the indu!tr, ha! to fa*e a lot of pre!!ure due to in*rea!ing inflation 0 The
in*rea!ing inflation ma, affe*t the ea!il, a/aila.le finan*e for the pur*ha!e of
/ehi*le! whi*h *an de*rea!e the pur*ha!ing power parit, ((('of *u!tomer! and
hen*e the mar1et0
The hi1ing inflation al!o in*rea!e the *o!t of input! whi*h in turn in*rea!e the *o!t the
produ*t! 0 !o- the!e are the *hallenge! whi*h the automo.ile mar1et i! *urrentl,
fa*ing0
FA+Ar% S(%!"ri
The Indian automo.ile indu!tr, i! going through a pha!e of rapid *hange and high
growth0 @ith new pro)e*t! *oming up on a regular .a!i!- the indu!tr, i! undergoing
te*hnologi*al *hange0 India i! e2pe*ted to o/erta1e +hina a! the worldK! fa!te!t
growing *ar mar1et
M&N
in term! of the num.er of unit! !old and the automoti/e indu!tr,
i! one of the fa!te!t growing manufa*turing !e*tor! in India0
M"N
Be*au!e of it! large
mar1et India ha! a population of &0& .illionI the !e*ond large!t in the world'- a low
.a!e of *ar owner!hip and a !urging e*onom,0
At pre!ent the indu!tr, i! en)o,ing a growth rate of &:%&6O per annum- with dome!ti*
!ale! growth at &"0CO0 The growth rate i! predi*ted to dou.le ., "#&A0
The total !ale! of pa!!enger /ehi*le! % *ar!- utilit, /ehi*le! and multi%utilit, /ehi*le! %
86
in the ,ear "##A rea*hed the mar1 of &0#B million0 The *urrent growth rate indi*ate!
that ., "#&" India will o/erta1e =erman, and 7apan in !ale! /olume!0
In the .eginning of the ,ear "##C the indu!tr, had fa*ed a !low down - .ut the
!lowdown in the indu!trial wa! a !hort term phenomenon and the *ountr, i! e2pe*ted
to re*ord a &#O growth in indu!trial produ*tion during "##C%"##$ a! again!t of C08O
in the pre/iou! fi!*al -+entre for Monitoring Indian E*onom,+MIE'0
2.2 M"Dr M"!A="(+Ar%rs i! AA+:<i#% I!>As+ry
The ma)or +ar manufa*turer are <indu!tan Motor!- Maruti Ud,og- Fiat India (ri/ate
3td0- Ford India 3td 0- =eneral Motor! India (/t0 3td0- <onda Siel +ar! India 3td0-
<,undai Motor! India 3td0- S1oda India (ri/ate 3td0- To,ota ?irlo!1ar Motor 3td0- to
name a few0
The two%wheeler manufa*turing i! dominated ., *ompanie! li1e TLS- <onda
Motor*,*le 9 S*ooter India (/t0' 3td0- <ero <onda- 5amaha- Ba)a)- et*0 The hea/,
motor! li1e .u!e!- tru*1!- defen!e /ehi*le!- auto ri*1!haw! and other multi%utilit,
/ehi*le! are manufa*tured ., Tata%Tel*o- A!ho1 3e,land- Ei*her Motor!- Ba)a)-
Mahindra and Mahindra- et*0
8C
CHAPTER 7
COMPANY PROFILE
8$
RICO AUTO INDUSTRIES LTD
R R%#i"<i#i+y
I I!!v"+i!
C C:E%+i+iv%!%ss +
$ G#<"#
O OE+i:i@"+i! =
:#
S("r(% R%sAr(%s
Visi! ) G"#
Visi!s
To .e the preferred !upplier to Original Equipment Manufa*ture! a*ro!! the glo.e0
G"# - I --
To .e a US Q & .illion Enterpri!e ., "#&&>
:&
7.- C:E"!y Pr=i#% "!> His+ry
RI+O AUTO i! a d,nami* world *la!! engineering *ompan, !uppl,ing a .road range
of high pre*i!ion full, ma*hined ferrou! and aluminium *omponent! and a!!em.lie!
to automoti/e OEMD! glo.all,0
RI+O =roup i! to .e defined a! a *orporate in *ommer*ial- organi4ational- and
te*hni*al term!- whi*h i! a !elf *ontained unit in the S,!tem with it! own ma!ter data
and pro*e!!e!0
THE EARLY YEARS
:"
RICO GrAE wa! founded in the ,ear &$66 with a ferrou! foundr, and a ma*hining
!hop at LA>4i"!" under the pre!ent *ompan, name RI+O +a!ting! 3td0 In &$C:-
RI+O di/er!ifie! into Aluminum high pre!!ure Die +a!ting ., !etting up it! plant at
D4"rA4%r" under the *ompan, RI+O AUTO INDUSTRIES 3TD0 In &$$"-RI+O
AUTO !tarted it! plant at D4"rA4%r"0 B, in!talling Automati* <igh (re!!ure
Moulding Ferrou! Foundr, and Ma*hining !hop0 Su.!equentl, the Aluminum <igh
(re!!ure Die *a!ting and Ma*hining fa*ilit, at GAr$"!- Ri*o !oft te*h 3TD
GAr$"!- RI+O AUTO INDUSTRIES In* USAI RI+O AUTO INDUSTRIES &UK'
3TD- U? were added to it! fold in the ,ear "##&- "##&- "##& 9 "##: re!pe*ti/el,0
RICO GrAE C:E"!i%s
A**ount Management- 3ogi!ti*! 9 @arehou!ing- A!!em.l, Operation!
&0 Mi*higan USA
"0 3ondon U?
M"!A="(+Ari!$ F"(i#i+i%s i! I!>i"
-. RI+O Dharuhera' JAluminium Die +a!ting 9 Ma*hining
"0 RI+O =urgaon' JAluminium R Ferrou! R Die! 9 Mould!- R9D- Te!ting 9
Lalidation- +AD +AM +AE
80 7oint Lenture JF++ RI+O Mane!ar' J+lut*he!
:0 =roup +ompan, JR+3 3udhiana' JFerrou! +a!ting 9 Ma*hining 3ow Lolume)
A0 =roup +ompan, JR+3 Mane!ar' JAluminum +a!ting 9 Ma*hining Small to
Medium Si4e (art!'
B0 7oint Lenture JF++ Ri*o +ha1an (une' R (lanning New (lant RI+O (une'
7. New (lant RI+O @e!t Bengal'
C0 New (lant RI+O +hennai'
:8
TURNOVER
RICO GrAEJs TAr!v%r
-/ Ti:%s Ov%r L"s+ -/ Y%"rs
From &$$6 to "##C'
::
RICO AA+ I!>As+ri%s GJi!+ V%!+Ar%s ) SA<si>i"ri%s
FCC RICO
50% F
50% !"O C#A+(4 Ass%:<#y
T? W4%%#%rs )
%ross turno&er '( ) !iion
21
28
,4
-8
80
114
12-
16.
220
2-0
28-
,10
0
-0
100
1-0
200
2-0
,00
,-0
:A
FAr W4%%#%rs
CONTINENTAL
RICO
7/H
CONTINENTAL
7/H RICO
<,drauli* Bra1e
(rodu*t! 9 Ser/i*e!
Lehi*le! of all +la!!e!
MAGNA P?%r
+r"i! RICO
7/H MAGNA P?%r
+r"i!
7/H RICO
Oil (ump
@ater (ump
Automoti/e Engine!'
India 9 Europe
RICO JINFEI
1.7H JINFEI
0..7H RICO
Aluminum Allo,
@heel!
Two @heeler!
RICO USA ) UK
@holl, Owned
Su.!idiar,
&##O RI+ORI+O
A!!em.l,- 3ogi!ti*!
+u!tomer Support
M"!A="(+Ari!$ ) E!$i!%%ri!$ C"E"<i#i+i%s
In the Aluminium di/i!ion- the RI+O AUTO INDUSTRIES 3TD0 ha! *ontinued to
e!ta.li!h it! leader!hip in the high pre!!ure die *a!ting <(D+'0 Toda, it i! one of the
large!t <(D+ *ompanie! with 6B <(D+ ma*hine! from &8A tn! to &C## tn! lo*1ing
for*e'0 It! effort! for de/eloping *omple2 and intri*ate *omponent! li1e high%pre!!ure
die *a!t +,linder Blo*1- along with it! te*hnolog, pro/ider Te1!id Aluminium are on
:B
tra*10 During the ,ear "##B%#6 it !tarted implementation of low pre!!ure and gra/it,
*a!ting pro*e!!e! and *ommen*ed wor1ing on +,linder <ead! and Allo, @heel!0
In the Ferrou! di/i!ion it ha! : moulding line!0 During the ,ear "##B%#6 it
!u**e!!full, laun*hed Ferrou! +,linder Blo*1! for Maruti Su4u1i0 It al!o !tarted
!upplie! of *omple2 tur.ine *enter hou!ing for <one,well and laun*hed new
metallurgie! u!ed for higher temperature appli*ation!0 It ha! !et up *a!ting *apa*it, in
ad/an*e and i! wor1ing toward! .ringing /alue *reating .u!ine!! for the !ame0
PRODUCT RANGE
Following are the ma)or *omponent!- whi*h are manufa*tured in RI+O AUTO Following are the ma)or *omponent!- whi*h are manufa*tured in RI+O AUTO
INDUSTRIES 3TD0E % INDUSTRIES 3TD0E %
Fr M+r(y(#% P"r+s
<UB A!!em.l,
<UB Front
<UB Rear
+lut*h A!!em.l,
Flange A!!em.l,
(anel A!!em.l,
Rotor Oil Filter
=ear Shift Drum
Fr C"r P"r+s
Oil (ump A!!em.l,
+a!e Di!tri.utor
Ro*1er Arm
Brea1 Drum
:6
Manifold
CURRENT GLOBAL CUSTOMERS
T? W4%%#%rs

P"ss%!$%r C"rs

:C

:$
C::%r(i"#
V%4i(#%s

Sys+%: SAEE#i%rs

BUSINESS AND MARKETING STRATEGIES

To re*ei/e order from different automo.ile *arPmotor*,*le *ompanie!0
No retail P !ale mar1eting ., *ompan, and !pare part! al!o !uppl, to !pare
part! di/i!ion of herohonda and maruti udhog et*0
GOVERNMENT POLICIES RELATED TO BUSINESS
3egal requirement a! per law0
Regi!tration with all go/ernment department! for legal o.ligation! li1e%
e2*i!e- !aleta2- pollution- la.our department et*0
Benefit poli*, ., the go/ernment li1e% !aleta2 e2emption ., the
go/ernment- ta2 in*enti/e !*hme!- e2*i!e dut, e2emption et*0
TA9 ASPECTS
In *a!e of manufa*turer OEM orignal equipment manufa*turer' *ompan,
*on*e!!ion rate of ta2 *harged ., the *ompan, again!t ta2 re.ate! u!ed .,
the firm! li1e% C,FORM; D,FORM in har,ana0
7... Or$"!is"+i!"# S+rA(+Ar%
E/er, organi4ation ha! a !tru*ture of it! own a**ording to it! need and requirement!0
RI+O al!o ha! it! own organi4ational !tru*ture whi*h ha! .een de!*ri.ed .elowE%
Fi!"!(% D%E"r+:%!+
It i! *on*erned with effi*ient planning and *ontrolling of finan*ial- affair! of
enterpri!e0 Finan*e !e*tion maintain! all t,pe! of a**ount!- all pa,ment! and re*eipt!
are dealt in thi! !e*tion 0In the RI+O the finan*e department i! di/ided into two part!
Finan*e !e*tion and E2*i!e !e*tion0
PAr(4"s% D%E"r+:%!+
In RI+O pur*ha!e department i! pla,ing ma)or and 1e, role0
+entrali4ed pur*ha!e !,!tem ha! .een adopted ., it! pur*ha!e department0 (ur*ha!e
department i! *on*erned with the pur*ha!e Raw material!- ma*hinerie!- and !tationar,
and other .ought part! required in the *ompan,0
Pr>A(+i! D%E"r+:%!+
The fun*tion of produ*tion department i! to effe*ti/el, plan and regulate the
operation! of that part of an organi4ation whi*h i! re!pon!i.le for the a*tual
tran!formation of material! into fini!hed produ*t!0
In Ri*o- the produ*tion a*ti/it, i! loo1ed after ., the Engineer! whi*h dire*tl, report!
to the *hief engineer0
The raw material u!ed ., the Ri*o i! aluminium and other /ariou! .ought part!0 The
produ*tion department i! *la!!ified into /ariou! department! !u*h a!E
Die *a!ting
Fettling
Ma*hining
A!!em.ling
(rodu*tion planning and *ontrol
HA:"! R%sAr(% D%v%#E:%!+ D%E"r+:%!+
The prin*ipal *omponent of an organi4ation i! it! S<uman Re!our*e S0 Moti/ated
wor1for*e i! the mo!t /alua.le a!!et of an organi4ation0 Same i! the philo!oph, at
RI+O0 Endea/or to under!tand it! people their )o.!- their attitude toward! the
organi4ational pro.lem! and lo,altie! i! the !heer *on*ern of it! per!onal poli*ie!0
CA"#i+y
Hualit, i! the department whi*h i! re!pon!i.le for maintaining the qualit, of the
produ*t0 Thi! department thoroughl, *he*1! the qualit, of the material whether it i! a
raw material- .ought out part- good! in pro*e!! or the final produ*t0
SWOT ANALYSIS
OF
RICO !TO IN"!#TRIE# $T".
STRENGTHS
Inno/ation
Optimum utili4ation of !*are re!our*e!
Adapta.ilit, in relation to *hanging en/ironment
Spe*iali4ation ph,!i*al a!!et! ., pro/iding training and de/elopment
program
Future /i!ionar,
(erfe*tion in wor1 through *ooperation and *oordination within group
or department a! *om.ined team0
=rowth and di/er!ifi*ation and e2pan!ion of unit! through
glo.ali4ation
Ami*a.le relation!hip with the !hareholder0
Regular dealing with the *u!tomer! *reate! a !trong .onding0
Effe*ti/e and effi*ient wor1ing of top and middle management
through in*orporation of SA( Software0
+ertifi*ate honored ., @orldwide Organi4ation for- @orld *la!!
qualit,%
ISO TS&B$:$- ISO &:##&- Total (rodu*ti/e Maintenan*e- Si2 Sigma0
At Ri*o- it! people ha/e alwa,! .een it! mo!t /alua.le re!our*e0 It
!upport! it! people with *ontinuou! training and edu*ation fa*ilitie!0
There are :&"$ emplo,ee! in*luding &A&A *ontra*tual emplo,ee! in the
*ompan, a! on 8&
!t
Mar*h "##$0
RI+OD! IT Infra!tru*ture ha! .een 1eeping pa*e with the .e!t in the indu!tr,0
RI+O ha! .een !u**e!!full, running SA( !in*e the la!t two ,ear!0
WEAKNESSES
+omputation in *urren*, in relation to other e*onomie! of world0
Determining the le/el of material minimum and ma2imum le/el!'0
Due to minimum le/el of material whi*h lead! to hurdle in produ*tion0
On other hand- due to ma2imum le/el of material the fund! are .eing
.lo*1ed0
Same 1ind of material *ode! a!!igned to different material t,pe! RO<
and <A3B' due to whi*h /aluation of material *o!t i! .eing effe*t
OPPORTUNITES
The *ompan, !ee! opportunitie! .oth in the dome!ti* mar1et! and o/er!ea!
mar1et! with e2i!ting and new *u!tomer!0 To full, e2plore opportunitie! with
all *u!tomer!- the *ompan, ha! de/eloped dedi*ated a**ount team! to fo*u! on
ea*h *u!tomer0 The *ompan, ha! al!o ta1en !tep! to e2pand at /ariou!
lo*ation! in India *lo!e to it! new *u!tomer! plant!0
The +ompan, i! implementing a !trategi* plan to .uild glo.al !*ale and
*apa.ilitie! to meet the requirement of it! e2i!ting a! well a! it! new
*u!tomer!0 In the ,ear "##B%#6 two 7oint Lenture! ha/e .een !igned- one
with *ontinental A= of =erman, for <,drauli* Bra1e S,!tem! and other with
7infei of +hina for Aluminum Allo, @heel!- whi*h would *ontri.ute toward!
growth 9 profita.ilit, of the *ompan, in the *oming ,ear!0
On the e2port front the +ompan, ha! ta1en initiati/e! to de/elop new e2port
mar1et! for it! produ*t! and !er/i*e!0
THREATS
The ri!ing rate of intere!t i! a matter of *on*ern a! it impa*t! the automoti/e
demand for /ehi*le! two wheeler! and pa!!enger *ar!' and al!o the *o!t
!tru*ture of auto *omponent manufa*turer!0
A/aila.ilit, and *o!t of power i! another area of *on*ern for the indu!tr, 0The
*ompan, ha! .een ta1ing !tep! in thi! regard to impro/e .oth the a/aila.ilit,
and *o!t of power0
Ri!ing input *o!t! and /olatilit, in material i! a *hallenge that impa*t!
margin!0 The +ompan, i! pur!uing appropriate inde2ation me*hani!m! with
it! *u!tomer!- howe/er there i! alwa,! a lag effe*t0
The Indian Rupee appre*iation /i!%T%/i! the US Q i! an area of *on*ern for
e2port!0 Thi! impa*t! margin for e2port re/enue!
+hina *ontinue! to .e a *hallenge at a glo.al le/el on a**ount of it! pri*e!0
The +ompan, i! e2po!ed to !trong *ompetiti/e pre!!ure! .oth dome!ti* and
o/er!ea!0
The +ompan, i! al!o e2po!ed to finan*ial ri!1 from *hange! in intere!t rate!-
foreign e2*hange rate!- and *ommodit, pri*e
CHAPTER,3
MATERIAL MANAGEMENT
3 .-. I!+r>A(+i!
Material! management i! the .ran*h of logi!ti*! that deal! with the tangi.le *omponent!
of a !uppl, *hain0 Spe*ifi*all,- thi! *o/er! the a*qui!ition of !pare part! and
repla*ement!- qualit, *ontrol of pur*ha!ing and ordering !u*h part!- and the !tandard!
in/ol/ed in ordering- !hipping- and warehou!ing the !aid part!0
Material Management i! the fun*tion re!pon!i.le for the *oordination of material
planning - !our*ing and pur*ha!ing - !to*1ing and *ontrolling Material! in an optimum
manner !o a! to pro/ide a pre de*ided !er/i*e to the organi4ation at a minimum *o!t 0
Material Management and Hualit, *ontrol ha/e not .een gi/en their due pla*e earlier -
.ut toda, the!e fun*tion! ha/e a*quired an important po!ition in the organi4ation 0
Organi4ation! now !tate! ;MATERIA3S ARE EHUILA3ENT TO MONE5>
Material management i! re*ogni!ed a! one of the /er, important fun*tion! of the
organi!ation and Hualit, a!!uran*e !er/i*e for the !ati!fa*tion of the *u!tomer 0
Man, organi4ation in India are !wit*hing on to the integrated Material! Management
*on*ept .e*au!e of the man, ad/antage! offered ., it 0 <owe/er thi! ha! al!o ne*e!!iated
profe!!ional de/elopment of manager! !o that the, *an fulfill the requirement! of
integrated material! management fun*tion whi*h demand! an a.ilit, to .ring together
*onfli*ting and ,et interrelated fun*tion!0 The e*onomi* pre!!ure !u*h a! inflation and
*redit !quee4e will pla*e e2a*ting demand! on Material Management in future 0
Material Management i! ideal for indu!trie! !ee1ing foolproof tra*1ing of the flow of
management of material information in their enterpri!e! from pur*ha!e - in/entor,
management to a!pe*t! of produ*tion and !ale! 0 It *an al!o .e a !tepping !tone for future
ER( implementation
Ea*h ,ear- an entire wee1 i! dedi*ated to *ele.rating re!our*e and material! management
profe!!ional! for their out!tanding *ontri.ution! to health*are and the o/erall !u**e!! of
the !uppl, *hain0 National <ealth*are Re!our*e 9 Material! Management @ee1 MM
@ee1' pro/ide! an opportunit, to re*ogni4e the integral role material! management
profe!!ional! pla, in deli/ering high%qualit, patient *are throughout the health*are
indu!tr,0 In "##C Material Management @ee1 i! O*to.er C%&" O*to.er0
M"+%ri"#
Material! are ph,!i*al !u.!tan*e! u!ed a! an input to produ*tion or manufa*turing0
The, are of different t,pe! E
i' Raw material
It in*lude! the unpro*e!!ed good whi*h i! pro*e!!ed to ma1e the final good or produ*t 0It
in*lude! good! li1e iron ore- aluminum et*0
ii'Semi fini!hed produ*t!
The!e are the good!- whi*h are under pro*e!!ing0 The, are al!o *alled a! @I( @or1 in
pro*e!!' good!0
iii' Bought out part!0
The, are the part!- whi*h are pur*ha!ed 9 are dire*tl, u!ed in the good! to ma1e the final
produ*t0 The, are li1e !pring- oil !eal- .rea1 !hoe et*00
M"!"$%:%!+
Management in !imple term mean! the a*t of getting people wor1 together to a**ompli!h
de!ired goal!0 Management *ompri!e! planning- organi4ing- re!our*ing- leading or
dire*ting or *ontrolling an organi4ation- or effort! for the purpo!e of a**ompli!hing a
goal0
So- Management i! an art of getting thing! done through other!0
On the .a!i! of Sys+%:E ;Material Management i! the .a!i* data /iew for maintaining
material de!*ription- unit of mea!ure- and *onfigura.ilit, of material- de!ign
do*ument and allo*ation !tru*ture0K
On the .a!i! of Fi!"!(%E ;Material Management i! the pur*ha!ing /iew for maintaining
unit of mea!urePdimen!ion- .a!i* pur*ha!e data- material !tatu!- ta2 indi*ator- pur*ha!e
order te2t!- foreign trade data- defining pur*ha!ing /alue! and !our*e de!tination0K
On the .a!i! of P4ysi("# ?rBi!$: LMaterial Management i! the !torage /iew to
maintain unit of mea!urePdimen!ion data- ha4ardou! material num.er- !torage *ondition-
!helf life- good! re*eiptPi!!ue- *,*le *ounting- general !tore! data- define- !trateg, for
!to*1 pla*ementP!to*1 remo/al and palleti4ation data0K
Material management i! defined a! the integrated fun*tion of pur*ha!ing 9 allied
a*ti/itie!- !o a! to a*hie/e the ma2imum *oordination and optimum e2penditure in the
area of material!0
In other word! it *an al!o .e defined a!E
;Fun*tion re!pon!i.le for the *oordination of planning- !our*ing- pur*ha!ing- mo/ing-
!toring and *ontrolling material! in an optimum manner !o a! to pro/ide a pre Jde*ided
!er/i*e to the *u!tomer at a minimum *o!t0>
3.6.- M"+%ri"# P#"!!i!$
Ba!ed on the !ale! fore*a!t and produ*tion plan!- the material requirement planning and
*ontrol i! done0 Thi! in/ol/e! e!timation of indi/idual requirement! of part!- preparing
material .udget!- fore*a!ting le/el of in/entorie!- !*heduling order! and monitoring the
performan*e in relation to produ*tion and !ale!0
3.6.. M"+%ri"# BA>$%+i!$
A .udget i! an in!trument of defining departmental o.)e*ti/e! and *ontrolling
performan*e!0
A material .udget i! a *oordinated e!timate of the *on!umption and pur*ha!e! in an
organi4ation relating to !pe*ified period0 It en!ure! .etter and effe*ti/e material! planning
whi*h in turn! help! in attaining the o.)e*ti/e! of the organi4ation in an effe*ti/e manner0
The EArEs% of material .udget i!E
To plan the pur*ha!e0
To *ontrol the pur*ha!e0
To a!!e!! the finan*e a! per the requirement!0
To ma1e pro/i!ion for finan*e a! per the requirement!0
To *ontrol the *on!umption of the material0
To plan the *on!umption of the material! in the *on*erned department0
To ta1e into a**ount the produ*tion !*hedule while planning and
*ontrolling the *on!umption of material!0
To wat*h the performan*e of the pur*ha!e and material *ontrol
department0
To dete*t the de/iation! - tra*e the defe*t! and appl, *orre*ti/e!0
To !ugge!t wa,! and mean! for impro/ement in the ne2t .udget0
F"(+rs ?4i(4 $v%r! >r"?i!$ AE " :"+%ri"# <A>$%+
a0 The pa!t rate of *on!umption and it! ratio with produ*tionE
The rate of *on!umption pla,! a /ital role in framing a material .udget a!
it help! in e!timating *orre*tl, the material! for en!uing period 0
.0 The produ*tion program of a future !pe*ified period for whi*h the material!
.udget i! intended 0
*0 The finan*ial .urden and in/e!tment pattern E
The mean! in e/er, organi4ation are limited and the u!e! are numerou! 0
Ta*tful and intelligent utili4ation will le!!en the finan*ial .urden and !et out a
well planned and effe*ti/e in/e!tment pattern0 So the main ta!1 of the framer of
material! .udget i! to allo*ate a/aila.le fund! in a manner in whi*h ma2imum
/alue i! e2tra*ted from them without di!tur.ing the produ*t program0
d0 The material! *o!t E
Thi! fa*tor too affe*t! the material .udget in the !en!e that it dire*tl,
influen*e! the finan*ial *ommitment of the organi4ation 0 a !tud, - therefore - of
the *o!t trend of the material i! required 0 future trend ha! al!o to .e !tudied and
in*orporated while preparing a material .udget0
e0 The demand and Suppl, +ur/e E
The !tud, of mar1et *ondition! pertaining to the demand and !uppl,
trend! i! to .e made .efore /enturing to draw up a material! .udget 0 The
produ*tion !*hedule and finan*ial *ommitment! ha/e to ad)u!ted a**ording to the
trend in the mar1et0
M"+%ri"# <A>$%+i!$ "!> "((A!+i!$
A**ounting pla,! a /er, important role in material .udgeting0 The adequate help of *o!t
and !tore! a**ounting ., wa, of pro/iding up%to Jdate- relia.le and required data to the
material! *ontrol department ena.le! it to .a!e it! fore*a!t! on the data !upplied 0 the *o!t
and !tore! a**ounting are .oth to !uppl, the required information 0 Both of them are
*omplementar, to ea*h other in thi! re!pe*t 0 To wat*h the performan*e and to !ugge!t
*orre*ti/e mea!ure! - the help of a**ounting ha! to .e ta1en0 <en*e a**ounting and
material! .udgeting go together for a*hie/ing the !et o.)e*ti/e! of the organi4ation0
Material .udgeting help! in *ontrolling the *o!t and thu! ma1e! the org *o!t *on!*iou!0
+o!t *on!*iou! - in turn ma1e! the organi4ation produ*ti/it, *on!*iou! 0 E/er, material
requi!ition i! *on!idered a**ording to it! ne*e!!it, - e/er, man%hour i! utili4ed to it!
fulle!t *apa*it, and e/er, hour !pent i! made to pro/e it! worth 0 thi! i! a*hie/ed through
*o!t and re!ult anal,!i! whi*h i! po!!i.le onl, through a**ounting0 Sin*e material!
.udgeting aim! at *o!t redu*tion- a**ounting again *ome! to the fore for ma1ing the
.udget re!ult produ*ing0
T%(4!iMA%s = >r"?i!$ M"+%ri"# <A>$%+
BA>$%+ sA::"ri%s
The, are !ummarie! of /ariou! indi/idual .udget! of the organi4ation 0
The, are pla*ed in proper relation with another 0 The, are /iewed and anal,4ed
and help i! ta1en from them in arri/ing at a *ertain *on*lu!ion for the purpo!e of
in*orporation of figure in a .udget e!timate and for drawing up *on*lu!ion for the
ne2t .udget0
M"!A="(+Ari!$ "!> Tr">i!$ A((A!+
Thi! te*hnique i! *omparati/el, re!ult%oriented a! it i! .a!ed on the
performan*e of the .udget /i!%T%/i! re!ult! 0 thi! a**ount! re/eal! in detail /ariou!
item! relating to the opening !to*1- pur*ha!e! - e2pen!e! on pur*ha!e! -
produ*tion - *lo!ing !to*1 - wor1 in progre!! et*0 and finall, the *o!t of
produ*tion and profit made out of manufa*turing or trading pro*e!!0
S"vi!$s ! i!v%s+:%!+ i! :"+%ri"#s
The o/erall performan*e of an, organi4ation *an .e )udged ., the profit it ha! made
during a !pe*ified period and a .udget i! a mean! to !etting the o.)e*ti/e of ;profit
ma1ing ; in the right per!pe*ti/e! through it! e!timate! .a!ed on return on in/e!tment 0
The material .udget *on!ume! the ma)or portion of fund! a/aila.le in the organi4ation I it
i! appropriate to mea!ure the performan*e of a material .udget ., finding out the
!a/ing! on the in/e!tment made in the pa!t and po!!i.le e2pe*ted !a/ing! in the future 0
The amount of !a/ing! a*hie/ed ., an, material .udget effe*ti/el, i! a mea!ure of it!
!u**e!! and thi! *an .e .etter )udged ., the ratio of !a/ing! in in/e!tment in material!0
3.6.6 PAr(4"si!$
(ur*ha!ing i! the a*qui!ition of needed good! and !er/i*e! at minimum *o!t from
*ompetent and relia.le !our*e 0
It in*lude! E
Sele*tion of !our*e! !uppl,
Finali4ation of term! of pur*ha!ing 0
(la*ement of pur*ha!e order follow%up 0
Maintenan*e of !mooth relation! with !upplier!
Appro/al of pa,ment to !upplier!
E/aluation and rating of !upplier!0
So- the o.)e*ti/e of pur*ha!ing i! en!uring *ontinuit, of !uppl, of raw material! - !u.%
*ontra*ted item! and !pare part! and at the !ame time redu*e the ultimate *o!t of the
fini!hed good!0
3.6.2 R%(%ivi!$
Another fun*tion of the material management i! to re*ei/e the good! !ent ., the /endor!
and properl, in!pe*t their qualit, and quantit, and gi/e proper !pa*e to it in the !tore!0
3.6.7 S+ri!$
In the !tore! material! are properl, !tored until drawn ., the /ariou! department!0
Material! are equi/alent to Mone, and great attention mu!t .e paid to the proper !torage
!o that the, are free from damage and po!!i.ilit, of pilferage0
The right t,pe of equipment i! u!ed for !torage and handling !o that material handling
e2pen!e! are 1ept to the minimum0
The fun*tion of !tore! i! to re*ei/e - !tore and i!!ue material!0
The !tore! are di/ided intoE
Re*ei/ing !tore! 0
Tool! !tore!0
=eneral !tore!0
Raw Material !tore!0
Fini!hed part! !tore!0
Re*ei/ing !tore! re*ei/e! all in*oming material! - *he*1! the *orre*tne!! of quantit,
re*ei/ed- arranging for in!pe*tion - then !end! to re!pe*ti/e !tore! along with a note
*alled material re*eipt note0
Store! are re!pon!i.le for E%
(h,!i*al handling and *ontrol of material!0
(re!er/ation of !tore!0
Minimi4ation of o.!ole!*en*e and damage- through
timel, di!po!al and effi*ient handling0
/erifi*ation of !to*1! and re*on*iling for the .oo1 figure!
3. 6. 3 I!v%!+ ry C!+ r#
In/entor, i! the !to*1 of item! or re!our*e! required in an organi4ation for running
produ*tion !moothl,0
In/entor, i! ne*e!!ar, .e*au!e of the following rea!on!E
To meet the *u!tomerD! requirement! 0
Smooth fun*tioning of produ*tion pro*e!!
Un*ertaint, due to irregular demand and !uppl, 0
E*onomie! of !*ale0
Be!t utili4ation of equipment and re!our*e!0
Ma)or in/entor, related *o!t! *an .e *la!!ified into four *ategorie!E
I!v%!+ry ("rryi!$ (s+
+arr,ing in/entor, *o!t! mone, 0 Thi! i! the *o!t a *ompan, ha! to in*ur for
maintaining !to*1! to run the wor1! !moothl, 0It in/ol/e! the following *o!t! E
i' Blo*1ing wor1ing *apital !u*h a! intere!t on *apital and depre*iation
et*0
ii' O**up,ing !pa*e there., in*urring warehou!e rent and *o!t of
fa*ilitie! li1e .in!- ra*1! - et*0
iii' in*rea!ing ri!1! of !poilage - o.!ole!*en*e - theft - lea1age et*0
i/' Salar, of !tore !taff- et*0
/' In!uran*e premium0
Or>%ri!$ (s+s
E/er, time an order i! pla*ed for repleni!hment - *ertain *o!t! are in/ol/ed whi*h areE
(aper wor1 e2pen!e!- follow up *o!t- *o!t of tran!porting the material and it! re*eipt
and in!pe*tion 0
U!>%r s+(Bi!$ (s+s
It i! the *o!t in*urred when an item i! out of !to*10 It in*lude! the *o!t of lo!t
produ*tion during the period of !to*1 out and the e2tra *o!t per unit whi*h might ha/e
to .e paid for an emergen*, pur*ha!e 0
Ov%r s+(Bi!$ (s+
The ma)or pro.lem fa*ed ., in/entor, management i! to determineE
T,pe of *ontrol required for ea*h t,pe of in/entor,0
3e/el of in/entor, at whi*h new pur*ha!e !hould .e pla*ed0
Huantit, of material whi*h !hould .e pur*ha!ed ., ea*h pur*ha!e order0
Lariou! t,pe! of in/entor, management are adopted to find the an!wer! of the!e
pro.lem!0 The main te*hnique! areE
ABC A!"#ysis
It i! one of the well 1nown method of *la!!if,ing item!0
Thi! method i! .a!ed on annual *on!umption /alue whi*h i! o.tained ., the
multipli*ation of unit pri*e ., the quantit, *on!umed annuall, 0 For e2ample - on the
ad ho* .a!i! - the item! a**ounting for an annual *on!umption of more than R! one
la1h ma, .e *la!!ified a! A *ategor, - the item! .elow ma, .e + *ategor, and the in%
.etween item! then .e the *ategor, 0
The high *on!umption /alue A *ategor, item! !hould .e more !tri*tl, *ontrolled 0the
poli*, for A item! !hould .e to maintain /er, low in/entor, *om.ined with frequent
ordering - norm! of *on!umption !hould made tight 0Medium *ontrol will .e
e2er*i!ed for the moderate *on!umption /alue B item! and /er, little *ontrol on the
low *on!umption /alue + item!0
E(!:i( r>%r MA"!+i+y&EOC'
E*onomi* order quantit, i! that quantit, of material for whi*h ea*h order i! pla*ed0
@hene/er the in/entor, le/el *ome! down to the re%order point- a fre!h order i! pla*ed
for pro*uring the in/entor, equal to the EOH0
EOHUmin of ordering *o!t R*arr,ing *o!t'
Ordering +o!t U Ordering *o!t 2 no0 of order pla*ed during
Order ,ear'
Ordering +o!t in*lude!%
+o!t of pla*ing order!
+o!t of re*ei/ing deli/er, li1e tran!portation e2pen!e!- re*ei/ing e2pen!e!-
in!pe*tion e2pen!e! and re*ording e2pen!e!0
+arr,ing *o!t! in*lude!%
+o!t of maintaining in/entor,- in!uran*e e2pen!e! again!t fire and theft- o.!ole!*en*e of
in/entor, - *leri*al and a**ounting *o!t of handling in/entor, - opportunit, *o!t of fund!
lo*1ed up in the in/entor,0
Mathemati*all, EOH *an .e determined ., the formulaE
EOHU
V
"2R2O' P+
@hereE
R UAnnual (ur*ha!e Requirement
O UOrdering *o!t per order
+ U+arr,ing *o!t per order
+o!t
In R!
+arr,ing *o!t
Ordering *o!t
Total *o!t
Minimum total *o!t
EOH
Order !i4e in unit!
WrB Or>%r C!+ r#
A wor 1 or der *ont r ol i ! an i nt er nal f a*t or , or gani 4at i on t o .ui l d a
! pe*i f i ed quant i t , of a ! u. a! ! em.l , ., a ! pe*i f i ed dat e 0 Al l wor 1
or der ! r equi r e t he i ! ! ue of on hand i n/ent or , f or t hei r *ompl et i on 0
(r i or r e! er /at i on of on hand i n/ent or , i ! t he .e! t met hod of
pr e/ent i ng ! hor t age! at t he t i me of i ! ! ue 0 The a*t ual i ! ! ui ng of
par t ! and wor 1 or der ! and t he a*t ual r e*ei pt of f i ni ! hed pr odu*t i !
a**ompl i ! hed u! i ng t he mat er i al i ! ! ue! and r e*ei pt ! modul e0
@a!t e Management
I t i n*l ude! E
di ! po! al of ! ur pl u!
o.! ol et e i t em!
! *r ap
! al /age
Ther e ar e *er t ai n mat er i al t hat ar e t o .e di ! po! ed of f r om t i me t o
t i me i ndu*e! a gr eat er /i gi l an*e on t he par t of t he mat er i al
depar t ment ot her wi ! e t he, .l o*1 t he ! pa*e and mone,0 I t i ! handl ed
., t he mat er i al depar t ment .e*au! e i t ha! t he .et t er 1nowl edge of
t he mar 1et *ondi t i on! and of t he deal er ! and u! er ! who pur *ha! e
! u*h i t em! 0 I t put ! pr e! ! ur e on t he or i gi nal ! uppl i er ! t o a**ept t he
r et ur n of ! ur pl u! ! t o*1! 0
SArE# As :"+ %ri "#
Sur pl u! mat er i al i ! t he ! t at e of an i t em when t he ! t o*1 i ! t o l a! t
l onger t han a r ea! ona.l e per i od or when i t i ! no l onger r equi r ed f or
t he ) o.0
Rea! on! of ! ur pl u! ! t o*1 E
@hen the pur*ha!e i! made in larger quantitie! than the a*tual produ*tion
requirement!
@hen .u,ing of .ul1 quantit, i! una/oida.le - e0g0 if one require allo, !teel! & ton
onl, - wherea! *ompan, li1e SAI3 !ell! onl, A ton minimum amount0
@hen operation! are !uddenl, *urtailed0
@hen there i! *hange in the !pe*ifi*ation! or !i4e0 Then the original material
.e*ome! !urplu!0
@hen pro)e*t i! *ompleted0
O<s#%+% i+%:s
O.!olete item! are tho!e material whi*h are neither damaged nor otherwi!e !poiled and
whi*h ha/e e*onomi* worth .ut the!e one! are no longer u!eful for the *ompan,D!
operation owing to man, rea!on! !u*h a! *hange! in produ*t line- pro*e!!- material! and
!o on0
S(r"E
S*rap i! !alea.le0 All !*rap material! are *olle*ted- properl, !egregated and !tored in one
pla*e a! far a! po!!i.le0
Di!po!al of !*rap W
&0 In/iting offer! of !*rap from time to time0
The li!t of !*rap with appro20 quantit, are *ir*ulated among the intere!ted partie! or
ad/erti!ed in the new!paper! 0
"0 Annual *ontra*t
In the annual *ontra*t !,!tem - the *ontra*t i! gi/en to the !ingle ma)orit, part, or two
to three !mall partie! 0 The .enefit i! that !*rap generated goe! off from the u!a.le at
the earlie!t and hen*e /alua.le !pa*e in the fa*tor, i! !a/ed0
80 (u.li* Au*tion
The following are !ome of the *ategorie! of material! whi*h *ome under the !*rap
areE
W"s+"$%
(ie*e! *ut out of raw material! during manufa*turing pro*e!! are *alled wa!tage 03i1e
while die *a!ting the die produ*ed *on!i!t of e2tra material then the a*tual die whi*h i!
required0
SEi#"$%
The item! whi*h are !poiled during the *our!e of manufa*ture or !torage are *alled
!poilage 0 the !poilage in manufa*ture in/ol/e! lo!! of ma*hine hour! a! well a! man
hour! 0 Spe*ial *are !hould al!o .e ta1en to a/oid !poilage during !torage0
TAr!i!$s ; <ri!$s %+( :
@hen operation! !u*h a! turning! .oring! and - drilling! et*0 are *arried out on metal
.ar! - !heet! -et* a *ertain portion of material i! remo/ed ., !u*h operation 0 Su*h
ari!ing are !tored !eparatel, and !old a! !*rap0
Irr%E"r"<#% E"r+s = %MAiE:%!+
+ertain part! of equipment! .e*ome irrepara.le after !ome ,ear! e0g0 are *ran1 !haft-
*onne*ting rod!- .earing! et*0 of an engine
E:E+i%s :
Empt, drum! - .ag! - pa*1aging *a!e! - et*0 whi*h are non J returna.le to !upplier!
are treated a! !*rap and !old 0
S"#v"$%
Sal/agea.le material! are tho!e whi*h *annot .e u!ed for the original purpo!e .ut out of
whi*h *ertain part! *an .e remo/ed and u!ed - pro.a.l, after rewor10 Eg - an air*raft
whi*h ha! met with a !eriou! a**ident and whi*h i! .e,ond repair! i! a t,pi*al e2ample 0
It *an no longer .e u!ed for original purpo!e of fl,ing .ut it ma, .e po!!i.le to ta1e out
*ertain part! whi*h *an .e u!ed a! !pare part!0
DOCUMENTATION
OF
MATERIAL MANAGEMENT
MATERIAL
RECUIREMENT
CUOTATION
PUCHAS
E ORDER
DELIVERY
OF GOODS
GATE ENTRY
GOODS
RECEIPT
INSPECTION
REPORT
CENVAT SETOFF
INVOICE
VERIFICATION
STORING
GOODS
GOODS
ISSUED
PRODUCTION
PAYMENT
TO
VENDORS
PRE DISPATCH
INSPECTION OF
GOODS
DISPATCH OF
GOODS
N O T O K
FINA3
(RODU+T
GOODS
SENT TO
CUSTOMER
PAYMENT
RECEIVED
FROM
CUSTOME
R
O
?




DIS(AT+<
TO LENDOR
CUALITY
REJECTION
N R G P
MATERIAL RECUIREMENT
Material requirement! are identified either in the u!er department! or /ia material!
planning and *ontrol0 MR( !timulate! the *omple2 flow of material required to
manufa*ture produ*t! and generate! a material plan 0MR( planning !tart! with up to date
information a.out *urrent in/entor, le/el! and the planned produ*tion requirement
In the RI+O there i! requirement of good! li1e Raw material- tool!- .ought out part!- oil
and lu.ri*ant from e2ternal !our*e! and good! in pro*e!! are required from one ma*hine
!hop to another and to a!!em.l, line0 Both the requirement! whether from internal or
e2ternal !our*e are *ontrolled ., the Material Management Department0
CUOTATIONS
A MA+"+i! i! an offer ., a /endor to a pur*ha!ing organi4ation regarding the !uppl, of
material! or performan*e of !er/i*e! !u.)e*t to !pe*ified *ondition!0
A MA+"+i! *on!i!t! of item! in whi*h the total quantit, and the deli/er, date of an
offered material or !er/i*e are !pe*ified0
An item of a quotation ma, *ontain a deli/er, !*hedule made up of a num.er of !*hedule
line! in whi*h the total quantit, i! .ro1en down into !maller quantitie! to .e deli/ered on
the !pe*ified date! o/er a *ertain period0
R%MA%s+ =r MA+"+i!
A reque!t for quotation RFH' i! an in/itation e2tended to a /endor ., a pur*ha!ing
organi4ation to !u.mit a quotation .id' for the !uppl, of material! or performan*e of
!er/i*e!
Reque!t for quotation! from /endor! i! done manuall, either through ordinar, letter-
mail- FAX or /er.all, through phone in RI+O AUTO INDUSTRIES 3TD0
V%!>r Ev"#A"+i!
@hen the quotation! are re*ei/ed from the /endor! the, are then e/aluated to !ele*t the
.e!t option for the organi4ation 0(re!entl, Lendor Rating i! done in RI+O AUTO
INDUSTRIES 3TD0 manuall,0
A>v"!+"$%s = +4% MA+"+i!
&0 @ith the help of the quotation we *an predi*t the pri*e i! !uita.le for our
.u!ine!! 0
"0 Ea!, to identif,ing the quantit, and qualit, 0
80 Ea!, to anal,4ing and !ummari4ing 0
:0 Una.le u! to find the /endor who i! pro/iding the .etter qualit, of material at
the *heape!t rate0
A0 7IT J )u!t in time !uppl, of material 0
Dis">v"!+"$%s = +4% MA+"+i!
&0 Time wa!te to finding the li!t of the /endor 0
"0 Be*au!e of a/aila.ilit, of the li!t of /endor!- donDt tr, to ha/e a**e!! to the
/endor who !upplie! good qualit, of the material at the *heaper rate0
PURCHASE ORDER
A EAr(4"s% r>%r i! a formal reque!t or in!tru*tion from a pur*ha!ing organi4ation to
a /endor or a plant to !uppl, or pro/ide a *ertain quantit, of good! or !er/i*e! at or ., a
*ertain point in time0
The (ur*ha!ing !,!tem adopt! information from the quotation to help to *reate a pur*ha!e
order0
Order *an .e *reated dire*tl, or indire*tl,
LDir%(+#yK mean! that the reque!t for the good! i! dire*tl, !ent to the /endor! ., the
organi4ation0
LI!>ir%(+#yK mean! that the pur*ha!e requi!ition i! initiated /ia !ome medium li1e gi/ing
ad/erti!ement in the new!paper et*0
In the RI+O the reque!t for the pur*ha!e i! !ent to the /endor dire*tl, ., entering the
requirement need in the !,!tem anal,!i! program0
There are two t,pe! of pur*ha!e orderE
Si:E#% r>%r:
It i! the order in whi*h .oth rate and quantit, are !pe*ified0
OE%! r>%r
It i! the t,pe of order in whi*h quantit, i! not mentioned onl, the rate i! !pe*ified0 In thi!
ending date i! not mentioned and per da, !*heduling i! done 0 Thi! t,pe of ordering i!
applied in RI+O0
DELIVERY OF GOODS
A! per the order of the organi4ation the /endor !end the good! or deli/ered the good! in
the organi4ation u!ing an, mode of tran!port 0
GATE ENTRY
@hen the good! !ent ., the *ho!en /endor rea*he! at the gate of the organi4ation an
entr, i! done on the gate of the organi4ation whi*h i! *alled a! gate entr,0 It i! a re*ord to
1eep an a**ount that !omething i! entering in the premi!e! of the organi4ation0
GOODS RECEIPT
It i! an entr, whi*h !how! that !ome good! are re*ei/ed ., the organi4ation -whi*h are
!ent ., the /endor0
A good! re*eipt lead! to an in*rea!e in the warehou!e !to*10 In RICO AUTO
INDUSTRIES LTD0 fir!t gate entr, i! done again!t the (ur*ha!e Order- +hallan No0- et*
and detail! of e2*i!e in/oi*e- *ommer*ial in/oi*e- et* are entered0 Bill! of Entr, detail!
are entered in *a!e of Imported Material!0 After entring the!e detail!- good! are allowed
to mo/e in to !tore premi!e!0 0 In !tore MRR i! prepared with referen*e to the =ate Entr,
No0
INSPECTION REPORT
=enerall, in/ol/e! the *he*1ing of the good! re*ei/ed from the /endor a! per the
pur*ha!e order pla*ed0 It in*lude! a re*eipt- whi*h *ontain! the de!*ription of good
qualit,- quantit,- rate- pre!*ri.ing the date of deli/er, !*hedule' on the .a!i! of that the
good! are in!pe*ted0 Hualit, In!pe*tion i! *arried out - the material whi*h !ati!fie! the
!tandard! are a**epted and the other one i! re)e*ted 0
A**epted material quantit, i! entered in the !,!tem and !to*1 updating i! done0
Re)e*ted material! *an .e re%offered for qualit, in!pe*tion depending upon the
requirement and urgen*, 0Otherwi!e non%returna.le gate pa!!NR=(' i! prepared and the
re)e*ted material i! !ent .a*1 to the /endor along with the NR=( and outgoing e2*i!e
in/oi*e 0
If one want to return the deli/ered good! to the /endor for !ome rea!on For e20 Due to
poor qualit, or .e*au!e the, are damaged'- !o thi! fun*tion of return of the good! *an .e
u!ed- e/en if one ha! alread, po!ted the good re*eipt0
CENVAT SET OFF
@hene/er a manufa*turer ha! pro*ured input! or *apital good! for manufa*turing of
final produ*t!- the e2*i!e dut, ha! to .e paid0
A manufa*turer or produ*er! of final produ*t or pro/ider of ta2a.le !er/i*e !hall .e
allowed to ta1e *redit of dut, of e2*i!e a! well a! of !er/i*e ta2 paid on an, input or
*apital good! re*ei/ed in the fa*tor, or an, input !er/i*e re*ei/ed ., manufa*turer of
final produ*t0 The dut, of input! in*lude!E
I0 Ba!i* E2*i!e Dut,
II0 Spe*ial E2*i!e dut,
III0 Additional Dut, of E2*i!e Te2tile! 9 te2tile arti*le!'
IL0 Additional Dut, of E2*i!e =ood! of !pe*ial importan*e'
L0 National +alamit, +ontingent Dut,
LI0 Edu*ation +e!!
LII0 Additional dut, of *u!tom! equi/alent to dutie! mentioned a.o/e- and
LIII0 Additional dut, of E2*i!e 3e/i a.le under !e*0&A6 of the Finan*e A*t- "##8'
INVOICE VERIFICATION
3ogi!ti*! In/oi*e /erifi*ation i! a part of Material Management MM'0 It i! !ituated at
the end of the logi!ti* !uppl, *hain0The In*oming In/oi*e! are /erified in term! of their
*ontent- pri*e! and arithmeti*0 @hen the in/oi*e i! po!ted- the in/oi*e data i! !a/ed in the
!,!tem0 The !,!tem update! the data !a/ed in the in/oi*e do*ument! in Material
Management and Finan*ial A**ounting0
7OURNA3 ENTR5E%
=ood! Re*eipt AP+ Dr0
To Lendor AP+
Being good! re*ei/ed from the /endor'
An in/oi*e *ontain! /ariou! data- !u*h a!E
@ho i!!ued the in/oi*eF
@hi*h tran!a*tion doe! the in/oi*e refer toF
<ow mu*h ta2 one ha! to pa,F
PAYMENT TO VENDORS
After the /erifi*ation of In/oi*e- in the RI+O the in/oi*e i! entered in the SA( through
MIRO In/oi*e- whi*h help! in o/erall *al*ulation of the amount to .e paid to the
/endor!0 The pa,ment i! made a! per the agreement .etween the *ompan, and the
/endor0 The pa,ment i! made through *heque0
Following entr, i! pa!!edE%
Lendor AP+ Dr0
To Ban1 AP+
Being pa,ment made to the /endor!'
S+ri!$ G>s
Af t er t he i n! pe*t i on - t he O0 ?0 or a**ept ed good! ar e ! ent t o t he
! t or e! 0 The ! t or e! t hanE
+l a! ! i f , and *odi f , al l i t em! 0
+ar r , out AB+ anal ,! i ! 0
Fi 2 mi ni mum and ma2i mum l e/el f or /ar i ou! i t em! 0
De*i de a.out t he r epl eni ! hment a.out t he /ar i ou!
i t em! at r i ght t i me0
(o! t or der ! on ! t o*1 *ont r ol *ar d!
i mmedi at el , 0
(o! t =ood! i nwar d! Not e! =I ND ! ' and r equi ! i t i on
dai l , 0
(r epar e ! hor t age r epor t ! 0
(r epar e l i ! t ! of o.! ol et e and ! ur pl u! i t em! t i me t o
t i me0
S+ r"$% L("+ i !
Thi! i! the !malle!t organi4ational unit in material management where !to*1! are /i!i.le
and are managed on quantit, .a!i!0 Separate Blo*1! are made for different t,pe of good!
who!e entr, and e2it are maintained ., the !tore 1eeper0
There are different t,pe! of !torage lo*ation 0
S0No0 Name of Store Material! that are Stored
& Main Store All the item! In*luding RM- BO(- (ro)e*t-
+on!uma.le et*0 are !tored
" Fini!h =ood! Store Fini!hed material are 1ept in the !ame
8 Re)e*tion Store All t,pe! of re)e*tion! are 1ept in the !ame
: Under In!pe*tion Store Material !tored whi*h are under In!pe*tion
A S*rap Store Store! for handling wa!te material!
Different t,pe! of !torage lo*ation in RI+O D<ARU<ERA (3ANT
SN Storage
3o*ation
Name of Storage 3o*ation Material that are Stored
D(O5 Open 5ard 3o*ation JDharuhera Oil 9 3u.ri*ant!- fuel et*0
& D(D+
" D(MS Main Store%Dharuhera D(D+ All other! e2*ept defined in the
*hart
8 D(DO DO3 item! Store%Dharuhera D(D+ Item! whi*h doe! not required Hualit,
In!pe*tion i0e0 Bearing!- Spro*1et!-
!eal! et*0
: D(RS Re)e*tion Store %Dharuhera
D(D+
All t,pe! of re)e*tion! are to .e
1ept in the !ame
A D(F= Fini!hed =ood! Store
%Dharuhera D(D+
Fini!hed material to .e 1ept in the
!ame
B D(NM Non Mo/ing 9 O.!olete item
Store J Dharuhera D(D+
Non Mo/ing 9 O.!olete Other
than Spare!'
6 D(HS Hualit, Rewor1 9 Segregation'
Store % Dharuhera D(D+
Under Rewor1 Material to 1ept in
the !ame
C D((+ (ro)e*t 9 +apital item Store J
Dharuhera D(D+
Item whi*h i! related to wor1
orderP(ro)e*tP+apital are to .e 1ept
in the !ame
$ D(S5 S*rap 5ard J Dharuhera D(D+ Material whi*h i! to .e !*rapped
&#
D(MM Maintenan*e item Store J
Dharuhera D(D+
Maint0Spare! to .e !tored
re!pon!i.ilit, Maintenan*e
Deptt0'
&& D(EM Maintenan*e item Store J
Dharuhera D(D+
Maint0Spare! to .e !tored
re!pon!i.ilit, Maintenan*e
Deptt0'
ISSUE OF RAW MATERIAL
(ro*edure for i!!uing material /ar, to !ome e2tent li1e raw material! and fini!hed
*omponent! are i!!ued on requi!ition0
To get the material i!!uedE
U!er will prepare the i!!ue !lip re!er/ation'0
Inform it to !tore!- where it i! /erified- for !to*1 quantit, and
for other parameter!0
Material i! i!!ued to the u!er and =I i! po!ted again!t the *o!t *enter whi*h i!!ue
i! required0
After getting the material i!!ued from main !tore! u!er 1eep! the material in their
!u. !tore !torage lo*ation' there after whene/er needed material i! *on!umed in
the plant dire*tl, from !u. !tore!0
There are two wa,! in whi*h good! are i!!ued - the, are
FIFO S,!tem
3IFO S,!tem
FIFO I W%i$4+%> Av%r"$% M%+4>
The FIFO formula a!!ume! that the item! of in/entor, whi*h we pur*ha!ed or produ*ed
fir!t are *on!umed or !old fir!t- and *on!equentl, the item remaining in
in/entor, at the end of the period are tho!e mo!t re*entl, produ*ed or
pur*ha!ed0
FIFO method pro.a.l, gi/e! the *lo!e!t appro2imation to the a*tual *o!t flow!- !in*e it i!
a!!umed that when !to*1! are !old or u!ed in a produ*tion pro*e!!- the olde!t are
!oldPu!ed fir!t- and therefore- the .alan*e of the !to*1 on hand at an, point
repre!ent! the mo!t re*ent pur*ha!e! or produ*tion0 Thi! would generall, .e the
*a!e in .u!ine!! whi*h deal! with peri!ha.le good! or whi*h ha/e a moderate to
rapid turno/er of good!0 B, allo*ating the earlie!t *o!t! in*urred again!t
re/enue- a*tual *o!t flow! mat*h the ph,!i*al flow of good!0
FIFO ma, .e more appropriate method- whi*h will re!ult in proper mat*hing of *o!t! and
re/enue and i! followed in RI+O0
LIFO M%+4>
A method of in/entor, /aluation .a!ed on the a!!umption that the la!t good pur*ha!ed
are the fir!t good u!ed or !old - thi! allow! mat*hing *urrent *o!t with *urrent
re/enue flow e/er unle!! *o!t remain relati/el, un*hanged - the 3IFO method
will u!uall, mi!!tate the ending in/entor, .alan*e for a**ounting purpo!e!- due
to the fa*t that in/entor, t,pi*all, in/ol/e! *au!ed from earlier period!0
It al!o *au!e! lot of material wa!tage 0So it i! not a !uita.le method 0
PRODUCTION
(rodu*tion ma, .e defined a! the *on/er!ion of input! Jmen- ma*hine- material!- mone,-
method! and management into output through tran!formation pro*e!!00 Output ma, .e a
good! or !er/i*e rendered0
iiiiiiiiiiIIIIIIIIIIIIIIIIII IN(UT
IN(UT
MEN
MATERIAL,
METHOD,
MACHINE
MONEY
MANAGEMENT
MELTING
DIE CASTING M/C
FETTLING
MACHINING
PAINTING
PROCESSING (RO+ESSIN=
OUTPUT OUT(UT
In RI+O AUTO INDUSTRIES 3TD0 The !pare! part! are produ*ed ., pro*e!!ing the
/ariou! input! ., the pro*e!!%
M%#+i!$ = "#A:i!A:
Melting i! the ma)or fa*tor whi*h *ontrol! the qualit, of the *a!ting!0 Metal! ma, .e
melted in /ariou! t,pe! of furna*e! !u*h a! open hearth furna*e - ele*tri* ar* furna*e -
rotar, furna*e -*upola furna*e et*0 0The *hoi*e of metal depend! on the 1ind of metal -
qualit, of metal to .e melted et*0 Furna*e are *on!tru*ted !o that raw material and fuel
and air if needed ma, enter and produ*t ma, lea/e 0 there !hould .e !ome mean! for
maintaining temperature and *hemi!tr, *ontrol of metal0
The aluminum ore i! melted at the temperature of a.out $##% &###**- whi*h i! then
tran!ferred to the *a!ting ma*hine0
ASSEMBLING
FINAL
PRODUCT
C"s+i!$
Metal *a!ting pro*e!! *on!i!t of ma1ing mould! - preparing and melting the metal -
pouring liquid metal into the mould! and then allowing it to !olidif,0 @hen !olidified the
metal will ta1e the !hape of *a/it,0 It i! then ta1en out from the mould0 The !olidified
o.)e*t i! *alled *a!ting0
F%++#i!$
After .rea1ing the mould when *a!ting i! remo/ed from mould I !and - unwanted
pro)e*tion!- ri!er! et*0 are adhering at it! !urfa*e0 Fettling i! the pro*e!! of *leaning and
fini!hing *a!ting0
M"(4i!i!$
In the ma*hining the fini!hing tou*h i! gi/en to the *a!ting! !o a! to ma1e it proper for
u!e li1e ma1ing hole! for the !*rew! et*0
P"i!+i!$
After ma*hining the *a!ting! are read, 0The, are then painted in the paint !hop0
Ass%:<#i!$
The a!!em.l, of *omponent i! done after the *omponent! are painted and the final
produ*t i! read, 0
Pr% DisE"+(4 I!sE%(+i! Pr% DisE"+(4 I!sE%(+i!
Before di!pat*hing the material or final produ*t to the /endor the, are fir!t in!pe*ted to Before di!pat*hing the material or final produ*t to the /endor the, are fir!t in!pe*ted to
*he*1 the qualit, of the final produ*t produ*ed then onl, it i! DIS(AT+<ED to the *he*1 the qualit, of the final produ*t produ*ed then onl, it i! DIS(AT+<ED to the
*u!tomer 0 (re di!pat*h in!pe*tion i! /er, e!!ential a! it *he*1! the qualit, whi*h i! the *u!tomer 0 (re di!pat*h in!pe*tion i! /er, e!!ential a! it *he*1! the qualit, whi*h i! the
foremo!t demand of ea*h and e/er, *u!tomer in thi! *ompetiti/e era and al!o it help! in foremo!t demand of ea*h and e/er, *u!tomer in thi! *ompetiti/e era and al!o it help! in
ma1ing the goodwill of the organi4ation0 ma1ing the goodwill of the organi4ation0
P"y:%!+ r%(%iv%> =r: +4% (As+:%r
Finall, the final produ*t! are !ent to the *u!tomer and pa,ment i! re*ei/ed from the
*u!tomer0 The pa,ment *an .e re*ei/ed through *heque or through Ban1 to .an1
tran!a*tion!0
CHAPTER,1
EVALUATION
1.- Fi!>i!$s A!> A!"#ysis
The goal and o.)e*ti/e of the organi4ation! -*an .e different li1e the one
organi4ation i! wor1ing for Sale! Ma2imi4ation other for wealth Ma2imi4ation
and the another one for re/enue ma2imi4ation et* 0 - .ut the foremo!t o.)e*ti/e of
an, organi4ation i! to ma1e profit i0e0 to earn mone, for the organi4ation0 The
o/erall performan*e of an, organi4ation i! )udged ., the profit it ha! made during
a !pe*ified period0 To *he*1 the performan*e of the organi4ation different t,pe!
of a**ount! and .udget! are prepared and the material .udget *on!ume! the ma)or
portion of fund! a/aila.le in the organi4ation0
A<A+ .I6 = +4% ++"# ?rBi!$ ("Ei+"# = +4% r$"!i@"+i! "#?"ys <#(B%> i!
+4% :"+%ri"# =r +4% EArEs% = Er>A(+i! and logi!ti*! in the form of raw
material! - good! in pro*e!! and fini!hed good!0
For e2E %
If the *o!t of Raw material U R!0""-##-###
+o!t of Bought out material U R!0 :#-###
+o!t of Oil and 3u.ri*ant U R!0 A#-###
Total *o!t on material! U R!0""-$#-###
E2penditure on Emplo,ee !alar, U R!0&"-##-###
Total E2penditure U R!08:-$#-###
Thu!- total *o!t on material U ""-$#-###
Total E2penditure 8:-$#-###
U BA0BOUBBO
U "P8
T4% E*E%!>i+Ar% ! M"+%ri"#s is "<A+ .I6 = +4% ++"# E*E%!>i+Ar% = +4% (:E"!y
.e*au!e of whi*h it i! re*ogni4ed a! one of the important fun*tion of the organi4ation0
The turno/er of Ri*o group! in "##C i! u! 8&# Q million a! *ompare to la!t &# ,ear! 0the
produ*tion trend of automo.ile indu!tr, in /ariou! *ategor, !u*h a! pa!!enger /e*hi*le-
*ommer*ial /e*hile- three wheeler!-two wheller!0 In "##$%&# the produ*tion of pa!!enger
/e*hile i! more than a! *ompare to "##C%#$ i! "8-A&-":# 0on the other !ide the produ*tion
trend of *ommer*ial- two- three wheeler in "##$%&# i! more than a! *ompare to "##C%#$0
The dome!ti* !ale! trend of automo.ile indu!tr, in "##$%&# i! more than than a! *ompare
to "##C%#$0The !ale! trend of pa!!enger /e*hile i! &$-:$-66B0 !ame wa, !ale trend! of
*ommer*ial-three- two wheeler! i! more a! *ompare to la!t ,ear "##C%#$0
The automo.ile indu!trie! ha! /ariou! e2port pro*edure0 The e2port trend of automo.ile
indu!tr, in "##$%&# i! al!o greater than a! *ompare to la!t ,ear "##C%#$ i! :-:B-&:B 0 the
e2port trend of *ommer*ial /e*hile in "##$%&# i! :A-##6 whi*h i! more than from "##C%
#$0
The turno/er of automo.ile indu!tr, in "##C%#$ i! greater than from la!t fi/e ,ear0 In
"##C%#$ the turno/er of automo.ile indu!tr, i! 8C-"8C million0 The turno/er of
automo.ile indu!tr, !how! upward trend0
The dome!ti* mar1et !hare in "##$ %&# i! in *ommer*ial /e*hile i! :08"O - total
pa!!enger /e*hile i! &A0CBA- total two wheeler i! 6B0"8O- three wheeler i! 80ACAO i!
greater than la!t ,ear!0
The *umulati/e growth of the (a!!enger Lehi*le! !egment during April % Mar*h "##6
wa! "#06# per*ent0 (a!!enger +ar! grew ., ""0#& per*ent- Utilit, Lehi*le! ., &80"&
per*ent and Multi (urpo!e Lehi*le! ., "A0"# per*ent in F5 "##C%#$0
The +ommer*ial Lehi*le! !egment grew ., 880"C per*ent0 =rowth of Medium 9 <ea/,
+ommer*ial Lehi*le! wa! 8"0C: per*ent and 3ight +ommer*ial Lehi*le! re*orded a
growth of 880$8 per*ent0N 2008
I!v%!+ry TAr!v%r R"+i =r #"s+ y%"r &i! (rr%s'
Fr:A#" N (s+ = $> s#>
Av$. s+(B
S"#% N --2.0.
Av%r"$% s+(B N 1-.75O11.-5 N 12.65
.
INVENTORY TURNOVER RATIO N COST OF GOODS SOLD
AVG. STOCK
N --2.0. N -.72
12.65
C4"E+%r,5
CONCLUSION
Material management i! an important management tool whi*h will .e /er, u!eful in
getting the right qualit, and right quantit, of !upplie! at right time- ha/ing good
in/entor, *ontrol and adopting !ound method! of *ondemnation and di!po!al will
impro/e the effi*ien*, of the organi4ation and al!o ma1e the wor1ing atmo!phere health,
an, t,pe of organi4ation - wheather it i! pri/ate- go/ernment- !mall organi4ation- .ig
organi4ation and hou!ehold0
E/en a *ommon man mu!t 1now the .a!i! of material management !o that he *an get the
.e!t of the a/aila.le re!our*e! and ma1e it a ha..it to adopt the prin*iple! of material
management in all our dail, a*ti/itie!0
C4"E+%r,0
BIBLIOGRAPHY
JAr!"#s
Brent D0 @illiam!- Tra/i! To1ar- "##C' GA re/iew of in/entor, management re!ear*h in
ma)or logi!ti*! )ournal!E Theme! and future dire*tion!G- International 7ournal of 3ogi!ti*!
Management- The- Lol0 &$ I!!E "- pp0"&" % "8"
BBs:
?hanna O0( Material management Sahit,a (u.li*ation "##8
=il.ert0= Material management ?al,ani pu.li*ation "##&
N%?sE"E%rs "!> M"$"@i!%s:
The Time! of India
Bu!ine!! Toda,
India Toda,
W%<si+%s Us%>:
www0a*ma0*om
www0autoindia0*om
www0automo.ile!0india.i4*lu.0*om
www0*mie0*om
www0e*onom,wat*h0*om
www0finan*iale2pre!!0*om
Ar+i(#%s
Br%!+ D. Wi##i":s
???.4i$4<%":.(:
J! S(4r%i<=%>%r
???.(4i(%:"$"@i!%.(:
DAE#"$"; E>?"r> A.F Pi!+; P%+%r A .