Professional Documents
Culture Documents
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In initial years no overseas company thought of setting up a manufacturing facility in India,
Burma, Aden, Silone, many of them merchandising & contracting the rough their local agent
in India, like kilburn & company Martin & company , Killick, Nixon, F&C, Osder &
company. Balmer Lawree, Jessup & company, John Fleming ect. Understanding the growing
demand for electricity particularly in textile mills grieves, s hotel, biggest group of spinning
mills, set up its electric engineering department in 1904 holding agencies for Crompton F&C,
parkinson & variety&company&took up contract jobs for electrification.
Over the past two decades the power plant equipment industry has been witnessing a process
of consolidation in the late 1970¶s, there were 10 to 12 players and now a day¶s only 4 to 6.
The consolidation or merger or acquisition has resulted in stronger companies in increased
size, Economies, wider product rang & enhanced financial strength.
They now have greater access to market & higher bargaining power as a result of companied
technologies strength.
Heavy Industry in India comprises of the heavy engineering industry, machine tool
industry, heavy electrical industry, industrial machinery and auto-industry. These industries
provide goods and services for almost all sectors of the economy, including power, rail and
road transport. The machine building industry caters the requirements of equipment for basic
industries such as steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping,
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The industrial sector recorded a healthy growth of 10.3% (measured in terms of the
Index of Industrial Production) during the period April-Oct. 2006-07 as compared to 8.6
percent achieved during the corresponding period last year. Capital goods sector, which
posted a robust growth of 16.9 per cent in 2005-06, has maintained its growth momentum
during the current year as well. According to the Index of Industrial Production, capital goods
sector posted a growth of 15.0 per cent during April-Oct. 2006-07.c
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India is the only other developing country besides China, which produces a full range
of electric power generation and transmission equipment. In fact, the history and growth of
Bharat Heavy Electricals Ltd.(BHEL), a public sector enterprise under in the country,
symbolizes the overall growth pattern of heavy electrical industry in the country. BHEL has
the unique distinction of being one of the very few companies in the world, manufacturing all
major power generating equipment under one roof.
The industry has been upgrading the existing technology and is now capable of taking
up turnkey contracts also for export markets. The industry has been delicensed. Foreign
collaborations are allowed with 100 percent FDI. The country is planning to add 150,000
MW power generation capacity in the next 10 years. This will generate substantial demand
for heavy electrical equipments.
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The heavy electrical industry is capable of manufacturing transmission and
distribution equipment up to 400 KV AC and high voltage DC. The industry has taken up the
work of up gradation and transmission to the next higher voltage system of 765 KV and have
upgraded their manufacturing facilities to supply 765 KV class transformers, reactors, CTS,
CVT, bushing and insulators, etc.
The investments in R & D by the electrical industry are amongst the largest in the
corporate sector in India. Large electrical equipment used in steel plants, petrochemical
complexes and other such heavy industries are also being manufactured in the country. The
domestic heavy electrical equipment manufacturers are making use of the developments of
the global market with respect to product designs and upgrading of manufacturing and testing
facilities. The heavy electrical industry has established its reference in the global arena also.
These encompass thermal, hydro and gas based power plants, substation projects,
rehabilitation projects, besides a wide variety of products like transformers, photo voltaic
equipments, insulators, switchgears, motors, etc.
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Incorporation 2005
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c Installed base of 2.6 million motors in Petrochemicals,refineries,steel,cement
plants,aluminum, fertilizer and agro based industries etc.
c Supplied over 15000 MVA of transformers operating in T&D network up to 100MVA
220kv Class for utilities, captive and industrial users.
c Supplied traction electrics, power car generators and Batteries to the Indian Railways.
Every employee is given an equal opportunity to develop himself and grow in his career.
Continuous training and retraining, career planning, a positive work culture and participative
style of management have engendered development of a committed and motivated workforce
setting new benchmarks in terms of productivity, quality and responsiveness.
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Radhabhai Kirloskar, who later headed KEC operations. Having a degree in Electrical
Engineering from the Worcester Polytechnic Institute, U.S.A. he began his professional
career in Kirloskar Brothers. In 1942
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The business carried by KEC is production of industrial goods viz., A.C motors, D.C
motors, generators etc. KEC produces the motors, generators and transformers in national as
well as export to many foreign countries. The KEC Company mainly manufactures high
voltage motors and generators as per the customer requirements. The company has no
competitors for the kind of manufacturing. It only faces competitions from foreign
companies. This company has a kind of monopoly in producing big motors and generators in
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Mission
c To remain a leading producer of electrical technology products in India.
c To continuously grow in our business and became a significant player in the world
market.
c To maximize return on investment.
Quality Policy
KEC is committed to achieve customer's delight by effective deployment of its
Business Process. Quality performance demonstrated is the result of optimization of design,
effective process control in manufacturing together with testing and approval process in the
environment of Quality management system. Furthermore, our trained and competent team
striving towards continuous improvement paves our steps towards sustaining the interest of
our valued customers.
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standards in design, manufacturing, marketing and service at competitive prices, products, of
such quality resulting in customer satisfaction and market leadership´
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The product range in capacity and variety caters to multitude applications. KEC has electric
motors for every conceivable application and industry. The wide industrial range is from 0.12
to 20000 kW in frames 63 to 1250. Motors are offered in open type, closed type and heat
exchanger typeenclosures. Voltages range from 340 to13800V Class F insulation being
standard for all motors, class H insulation is also offeredfor low voltage motors.
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The rugged and highly reliable higher range motors are specifically designed for exacting
duties. The modular design totally enclosed air to air heat exchanger is the first choice of
industry for the more arduous applications. Compact rib cooled motors with unique internal
cooling are used for duty atmospheres.
DC Motors
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Kirloskar Electric forms its fabled stable of DC Motors have put into international use more
than 0.1 million motors since 1969. The wide product range in capacity and variety satisfies
the needs of a multitude of applications. The Industrial Laminated Yoke range starting from
frame 80 to 1250 with outputs of 0.75 to 3250 kW caters to the industry requirement of
torques up to 200 km. The rugged and reliable higher range of motors are specifically
designed for exacting duties in a hot and cold metal rolling mill drive, the sticky rubber
mixer drive and continues duty cement kiln drive. These products come from an in house
developed technology based on the best of world class international design and
manufacturing concepts.
Continuing our efforts in supplying clean & efficient motive power to the
environment friendly electric material handling equipment, it is only natural that KEC
moves on to electric passenger vehicles. The prestigious CERN Super Particle Accelerator
project in Geneva uses Kirloskar Electric Super Conducting DC Corrector Magnets in very
large numbers. This is a high precision product of extreme reliability and has to work in a
cryogenic environment.
The constant pursuit of newer applications has pushed KEC to enter space
applications. Our space duty Brush less DC Servo Motors will provide the Rocket Nozzle
control force in Indian space launch vehicle for the future.
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The unique strength of the company in customizing AC generators for special needs
of missiles projects, warship, battle tanks, and fighter aircrafts makes KEC the only company
to offer AC generators for the widest of applications. Continuous product development has
kept pace with corresponding prime mover availability like wind mills, gas turbines ,water
turbines, steem turbines and variety of makes of diesel engines.
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Yemen Africa
Kuwait France
Syria Sweden
Malaysia Germany
Dubai Greece
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Sri Lanka Turkey
Kualampur Italy
Singapore Hungary
Lucknow Bangalore
Jaipur Hubli
Cochin
Coimbatore
Madurai
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Kolkata Mumbai
Guwahati Pune
Patna Ahmadabad
Bhubaneshwar Indore
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Share holding of promoters 43.40
Foreign holdings 00.00
Public shareholding institutions 22.33
Non-institutions 34.37
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Kirloskar is facing competition mainly from un organized sectors. The various
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Competitors of kirloskar are as follows
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Communication:
The internal mail service is operated by personnel department. Telex,fax and courier
services are available in postal section of marketing department. Interunits and branches
communication is through E ±mail. Personal call can be made from the public telephone
booth situated near the security gate.
Security checks:
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Any material official/otherwise that is being brought in taken must have
appropriate documentation. Regular security checks are conducted to prevent unauthorized
material leaving entering the organization. Employees required to leave the factory on
official/personal work during working hours are to be submit an authorized gate pass to the
security.
Medical facilities:
The medical centre is staffed by a resident Doctor and trained attendants and supported by
efficient Ambulance service.
Library:
Canteen Facilities:
Transportation Facilities:-
Transportation facilities are rendered by the KEC to all the Daily Rated Employees and also
Monthly Rated Employees based on their shifts.
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Proud scientists celebrated the successful tracking of India 's first satellite. The meticulously
planned event was held in Hassan, Karnataka. The team had finalized the specifications for
AC generators with Kirloskar Electric Co., taking care of intricate details like transient
loading and transient voltage regulation performance.
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The first ever indigenously built missile was test fired in early 90's, year before; premiere
defense organizations perfected the intricate performance requirement of the power supply
unit. KEC played a key role in building the entire power supply unit. The AC Generators of
KEC were customized for arduous duty.
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The research wing of India Railways worked with specialists:From KEC to design highly
reliable AC Generators that would take that heat, dust, smoke and the acceleration of the
bogie and continue to function giving passengers of the Rajdhani greater speed, greater
comfort and increased safety.
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The ISO 9001-2000 certificates awarded to: KEC - 1", #, 0, )
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The strategy that we laid out is bearing fruits now. We are now laying down a
process to ensure long term enduring sustained growth with stable revenue growth. We want
to enhance our market share in all the areas which we cater to. This can be had only with
continuous hard work and by being globally competitive. The Company is setting growth
directions with assiduous planning for each of its segments with processes to ensure
implementation and monitoring. The operating standards are being set and reset to bring in
competitiveness on all fronts and to bring in all round enhancement of efficiency. Every
dimension of our operations is being measured.
The growth that the company has witnessed over the past five years has been sustained in a
strong and steady way. After completing the restructuring activities in 2004, the company has
grown to its highest ever turnover of Rs. 728 Crores with a profit after tax of Rs. 23.7 Crores
in 2007-2008. These correspond to a growth rate of 23% in turnover and a 32% in profit. The
Company¶s order books stood at a record high of 132.55 Crores. To capitalize on the demand
for our products, we have increased our marketing presence by addingnew sales offices in the
previous year. We continue to invest in new infrastructure and strengthen our human
resources to meet this growing demand. We are focusing our energies in particular on our
transformer and rotating machine business where we strive to make bigger and larger
machines for our esteemed customers in India and abroad. Similarly, we continue our
increase our presence in the Switchgear and Electronics area. Our new businessof diesel
generating sets under the brand name BLISS continues to grow well and we plan to expand
the existing range of products.
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The board of directors of Kirloskar Electric, at their meeting held on (August 20, 2008)
approved the acquisition of nearly 95 per cent stake in German manufacturing company,
Lloyd Dynamowerke GmbH & Co (LDW) and 100% holding in Lloyd Beteiligungs. The
acquisition is expected to cost around 3.2 billion Indian rupees (¼ 50 million). The acquisition
is through the wholly owned subsidiary of the Company Kirsons B.V. - in the
Netherlands.LDW manufactures electrical rotating machines and drive systems which are
sought in a market where performance and efficiency are desired for industrial applications
for extraordinary requirements. LDW has cultivated a regular customer list which includes
companies such as Siemens, Alsthom, and Thyssen Krupp andGottwald.
According to Vijay R Kirloskar, Chairman & Managing Director of the Company, the
acquisition is of strategic interest to the Company. It will give Kirloskar Electric
complementary engineering skills, a unique footprint in Europe and an important customer
base built over the last few decades. KEC will benefit from LDW's technology and ongoing
research work with German universities. KEC will be able to sell LDW's products under the
AEG brand name in the Indian subcontinent andASEAN countries and address themarket for
high voltage electrical machines over 50 Megawatts.
KEC and its group Companies have factories located in Bangalore, Mysore, Hubli, Pune and
Tumkur. The Company has over 30 sales offices in India and offices in Singapore, Malaysia
and the U.A.E. With a gross turnover of Rs7.65bn in 2007-08, Kirloskar Electric is a leading
manufacturer of electrical equipment in India.
Lloyd Dynamowerke GmbH & Co KG (LDW) located in Brenien, founded in 1915, was a
former member of AEG. In 2006, a private equity Company, CMP Funds I GmbH from
Berlin, Germany acquired the new majority ownership of LDW and provided additional
capital for the manufacture of motors, generators and drive systems. For the year ended
December 31, 2007, LDW's revenues were US$78mn. It is a profitable entity with positive
operating cash flows and growth trends.
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" the plan devised to maintain and build competitive advantage over the
competition.
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the way the organization is structured and who reports to whom.
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the daily activities and procedures that staff members engage in to get the
job done.
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cX called "super ordinate goals" when the model was first developed,
these are the core values of the company that are evidenced in the corporate culture
and the general work ethic.
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the style of leadership adopted.
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the employees and their general capabilities.
c the actual skills and competencies of the employees working for the company.c
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Pricing of kirloskar:
The name ³kirloskar´ itself is the mark of quality for the customer. The company has
across different price terminologies/price strategies. They are as follows:
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In KEC/KSL management follows the top down decision making at the time
of taking any decision relating to management.
Board of directors and chief executive of the company give decisions about
the management relating problems of the company. The decision taken is flow from top to
down, (to Middle Level and Lower Level Management) in KEC they follow the participative
leadership in case of recruitment.
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The head of the department takes some decisions there may by consulting the
other employees. In this type of leadership all the level of management participate in taking
decisions. In case recruitment A.G.M personnel department consult the entire department
head to take decision regarding recruitment of new employees.
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It refers to the people working in an organization. thecompany¶s people resources and
how they are developed,trained and motivated. The process of staffing includes various
processes like recruitment and selection procedures, training etc.It refers to how the
people are developed,trained, socialized, integrated, motivated and how the employees¶
career is shaped in an organization.
Corporate - 349
Manager - 175
Worker - 615
Temporary - 556
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These are the staffs they are responsible for the work related to technical
aspect. In this company they are appointing well ±qualified and experienced persons
as technical staff. So these staff will have good knowledge about the working
environment.
These are the persons who are in charge with supervising the other employees in
the organization. In this company they are employing experienced staff as supervisor.so
they can observe the fellow workers and guide them as per the companies need.The
experienced supervisors are one of the key assets of this company.
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c c Clerical staff required for clerical work, clerical work need for all organization
for clerical staff required B.com/BBM
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Various departments in organization are working successfully. Coordination
of all the functional departmental area works together to achieve the stated object of
the company.
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The calls and complaints from the customers are systematically processed for
timely response and solution right from the branch, maintenance centre or the site itself. The
complaints are continuously monitored and regularly reviewed by the unit chief to ensure
speedy redressal.
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The term skill refers to those activities of organizations, with which they do best and for
which they are known.
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Top management includes board of directors, secretaries and unit chief. Top
management skills includes balancing, integrating, setting, priorities, developing standards,
conceptualizing, leading, persuasive, and planning process.
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Candidates who have passed industrial training institute are engaged scheme under trade
apprentices¶ for a year. Besides fulfilling the training requirements under the apprentices act.
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management, and decision making functions in an organization. The system utilizes computer
hardware and software; manual procedures; models for analysis; planning, control and
decision making; and a database.´ Management Information System is the application of
information technology to support business activities. MIS and the information it generates
are generally considered essential components of prudent and reasonable business decisions.
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The SWOT approach is distillation of the steps and considerations that should be taken to
formulate and effective corporate strategic plan. The term SWOT is the acronym for strength,
weakness, opportunities and threats.
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c KEC is one of the rare units in the world which produces the high voltage AC/DC
motors and generators.c
c Management is very stable, that forms strong foundation of the company.c
c The company got the ISO certificate for producing quality products.c
c Well equipped quality control department for inspecting the quality of incoming of
raw materials and final products.c
c Employees are being provided with all necessary welfare facilities.c
c There are highly skilled and committed employees.c
c There branches have been spread widely not only in India but also all round the globe.c
c Company guarantees job security to all its employees this has made them to more
commit and loyal employees.c
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c Most of the workers in the organisation are of aged persons, which might reduce the
company¶s productivity in future.
c No proper elimination of scrap materials like copper, if properly utilized will give
return of 400 per kilo gram of copper scrap.
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c The company has the opportunity to expand its production units due to more demand
for its products.c
c The company has more demand for its parabolic leaf spring from abroad.c
c The company has got better tool for better planning and decision-makimg.c
c The company can establish more branches across the globe.c
c There is growing demand for Motors and Generators in other developing countries.c
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Learning experience:
The first and foremost strength of Kirloskar Electric Company¶s is its Brand name. For any
organization, to achieve expected Mission it is necessary to have a full pledged headed by the
experienced devoted task managers and skilled supporting staffs. Kirloskar Electric
Company is well established company and its performance and the satisfaction level amongst
employee is very high and the unit is having excellent order-book position from within the
country and abroad as well.
KEC has the good market share for the AC Motors and the DC
Motors. They are the leading market share Electric products in India.The company is eco-
friendly. They recycle the waste water re use the same water for their daily use like washing
and gardening. Advertisement cost is too less because they manufacture the products based
on he order. The Kirloskar Electric Company has ISO, KEMA, CE and NVLAP certified.
The company has a good quality testing team in the shop floor. Workers would be instead to
wear compulsorily the safety gadgets.Computerization has reduced the activity of paper
works and documentation time. It is integrated system that co-ordinates and connects various
information of different departments. Hence it providesready information to the top level
management to take immediate decision.
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The term Logistics originally comes from the Greek word µlogistikos¶. In Latin it is
µlogisticus¶ meaning calculation and reasoning in the mathematical sense.
Logistic start before physical distribution and means strategically procuring right input
( raw material, component and capital equipment) converting them efficiently in to
finished product, and dispatching them to final destinations.
Logistic includes planning the infrastructure to meet demand, then implementing and
controlling the physical flows of material and final goods from point of origin to point
of use, to meet customer requirements at a profit.
Steps in logistic:
lc Deciding on the company¶s value position to its customers. ( what on ± time
delivery standard should we offer?)
lc Deciding on the best channel design and network strategy to reaching the
customers.
lc Developing operational excellence in sales forecasting, warehouse management,
transportation management and materials management.
lc Implementing the solution with the best information system, equipment,
policies and procedures.
Logistics is ³The process of planning, implementing and controlling the efficient, cost
effective flow and storage of raw materials, in-process inventory, finished goods and
related information from point of origin to point of consumption for the purpose of
meeting customer requirements´
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c The material flows from supplier to the manufacturer are referred as Inbound
Logistics
c The material flows from manufacturer to customer are referred as outbound
Logistics.
Logistics objective:
³Getting the right goods to the right place at the right time for the least cost´
Logistic decisions:
The firm must make 4 major decisions about its logistics:
1.c How should we handle orders? ( order processing )
2.c Where should we locate our stock? ( warehousing)
3.c How much stock should we hold? ( inventory )
4.c How should we ship goods? ( transportation )
c
c
ß Electric Motors
ß Generators
ß Alternators
ß Turbines
ß Capacitors
ß Energy Meters
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This study is undertaken to analyze the procedures followed by Kirloskar Electric
Company Ltd in the selection of vendors, steps followed at the time of selection of the inventory
management techniques, production methods and distribution network.
Along with this, the study will be explored with the effectiveness of logistics on working
capital, inventory management production cycle and sales. And the other aspect that will be taken
into the study is the role of Intermediaries in the channel of distribution.
c
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c Kirloskar Electric Company Ltd, Bangalorec
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1)c To study the process adopted for procurement of raw materials at Kirloskar Electric
Company ltd.
2)c To analyze the process of warehousing and inventory management at Kirloskar Electric
Company ltd.
3)c To study the process of reverse logistics adopted at Kirloskar Electric Company ltd.
4)c To analyze the impact of logistics management on sales.
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Here I have selected Logistics management as my topic, as it covers the entire core
operations of the company and with the cooperation of department heads I am conducting this
research with the help of appropriate tools and literatures. Here I am analyzing the operations of
Procurement of raw materials, Plant Layout, transportation, Warehouse, Inventory management,
working capital, and production cycle and distribution channel. Here an analysis of various
strategies of the company is carried and interpretation of the data is done with the help of analytical
tools.
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The Research is planned with the help of Questionnaire to company executives.
Depart mental reports, production summaries, financial and accounting reports of th e
company are also used for the research. !c
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Questionnaire, Books and Journals of Logistics, operational
management and reverse logistics, Company Websites, Articles related to Logistics,
Company internal sources like Depart mental reports, production summaries, market ing
su mmaries, financial and accou nting reports.
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Secondary Data studies: It will be done by using Internal and External Sources
Internal Sources: process and plant report, Departmental reports, production summaries,
financial and accounting reports, marketing and sales studies.
External Sources: books and periodicals, Computer-retrievable databases, publications, media
sources and special collections.
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Personal interview with H.R manager Mr. Subanna and Mr
Mahavir marketing head, Raj Kumar purchase department.
The project report presupposes a good knowledge of the subject and the title, which has
been chosen for a detailed analysis. Attempts have been made to acquire the detailed
information on the subject through a detailed literature survey. This requires an extensive
survey of literature available in the form of published articles in business magazines,
publication of institutions, newspapers and Journals.
After deciding about the topic of the project, it was decided to do a detailed literature
survey, to know what type of work was already done in the similar topic. The purpose of
doing a literature survey is to avoid repetition of the same study of the topic and also to
understand the scope of the subject and difficulties which arise during the course of the
study.
It helps to study the tools and technique appropriate to suit the requirement of the
company & apply them in the appropriate context and come to meaningful conclusions
and find solutions to the problems faced by the company. The literature survey helped in
deciding about the methodology which is adopted for the collection, analysis and
presentation of data.
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öc The study is conducted only for the Govenahalli (Bangalore) branch. So, the company
cannot take major decisions based on my feedbacks.
öc Interaction of the study was limited because of their busy work schedule.
öc The results of the study are based on the present conditions.
öc Limited time period for the study.
öc Most of the numerical data are of approximate value.
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Copper 11
Stamping material 10
Stator frames 12
CE & NC covers 9
IP coils 10
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The analysis shows that Kirloskar orders 11 times in a year for Copper, 10 times in a year for
Stamping material, 12 times for Stator frames, 9 times for CE & NC covers and orders 10
times in a year for IP coils.
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It can be interpreted as Kirloskar is having major purchasing transactions of stator frames with ³MPP
Technologies´ and this vendor is having more effects on the company¶s purchasing decisions. So
VDD gas to maintain a strong relationship with this vendor for cost advantages.
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Manufacturer 25%
Dealers 15%
Customers 60%
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p: from the above table and chart I can analyze the buyers of the KEC is
Manufacturers 25%, Dealers 15%, customers 60 %.
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: From the above analysis we can say that major part of KEC sales are done
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Through branches 5%
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Thestudy shows that Kirloskar uses 80% direct channel, 15% are distributed through dealers
and 5% are sold through their own branches.
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It Can be interpreted as KEC uses direct distribution channel as a major part of their
marketing.
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Particulars % of raw materials used in
production
Copper 20
Stamping materials 30
Stator frames 20
CE & NC 10
IP Coils 5
Mild steel 15
Total 100
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Thestudy shows that Kirloskar uses 20% of Copper, 30 % of Stamping Materials, 20% of
Stator Frames, 10% of CE & NC covers, 5% of IP Coils and 15% of Mild steel for production
of one DC Generator
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production and major costs of raw material is incurred for Stamping materials.
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Particulars Lead time in days
Copper 14
stamping materials 14
stator frames 30
CE & NC covers 14
IP coils 14
Rubber 15
Nuts and bolts 14
Washers 14
M/S component 14
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The graph shows that KEC gets Copper within 14 days of ordering, Stamping materials
within 14 days, Stator Frames within 30 days, CE & NC Covers within 14 days, IP Coils
within 14 days, Rubber within 15 days, Nuts and Bolts within 14 days, Washers within 14
days and M/S components within 14 days of ordering
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It can be interpreted as procuring of Stator Frames is consuming more time and the company
has to concentrate on this and should try to reduce the Lead time of procurement of Stator
Frames. If lead time is high its indirectly effects to dispatching of goods and sales.
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A.c Annual consumption of raw materials ± [ 2191.91(Rs in lakhs)]
B.c Average daily consumption of raw materials = 1/360 ± [6.0866]
C.c Average stock of raw materials = opening stock + closing stock/2 ± [566.43]
D.c Raw materials storage period = C/B
D[[>:,[;?[[c@c<:c
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p : The above calculations shows the annual consumption of raw material is
2191.91lakhs, average daily consumption 6.0866, average stock of raw material is 566.43
lakhs finally raw material storage period is 93 dayscc
c
From the analysis we can interpret that as the raw material storage period is 93 days, the
conversion time is late because of industrial goods (> 1000WT) so logistics should be
effective so that it caries Raw materials without time delay. Here we can also interpret that,
while procurement Process Company should take great care while Vendor selection process,
so that the vendor supplies raw materials at regular intervals of time with specified quality.
So, we can conclude that Transportation and Procurement of raw materials i.e. one of the
features of logistics has an impact on working capital and Inventory management.
9c c
cc
pc Annual cost of production = opening stock of WIP + consumption of raw
materials + other manufacturing cost ( salaries, wages, power & fuels) +
depreciation + closing WIP [5535.25]
1c Average daily cost of production = 1/360 ± [15.37]
c Average stock of WIP = opening stock WIP + closing stock WIP / 2 ± [1168.85]
c Average conversion period = C/B
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The result shows that Kirloskar keeps an average stock of work-in-process of rs.15.37lakhs,
its annual cost of production is rs.5535.25 lakhs and its average daily cost of production is
rs.2.13 cr. Finally, its average Conversion period is 73 days.
cc
From the analysis we can interpret that production cycle play its key role in the conversion
period. For production, one of the features of logistics i.e. proper plant layout is necessary
and proper movements of goods. Key Considerations for proper way of procurement and lead
time of raw material plays an important role in production cycle. So, we can conclude that
lead time, transportation and inventory i.e. one of the feature of logistics has its impact on
Working Capital and Production Cycle.c
c
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c c
A.c Annual cost of sales ± [5904.49(in lakhs)]
B.c Average daily cost of sales =1/360 ± [16.40]
C.c Average stock of finished goods = opening stock + closing stock/2 ± [683.34]
D.c Finished goods storage period = C/B
c
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The results shows that kirloskar¶s annual cost of sales is 5904.49 lakhs, average daily cost of
sales is 16.40 lakhs, average stock of finished goods 683.34 lakhs and finally finished goods
storage period is 41 days.
c
From the analysis we can interpret that Kirloskar finished products will be stored for 41 days
From this, we can understand the Kirloskar is doing B to .B business it takes more time for
dispatching of goods because companies customers are industries customers.. So, we can
conclude that the Distribution network, one of the features of the logistics has its impact on
Working Capital. Here also the features of logistics like Transportation and Warehouse
comes into picture and shows, these features also have their impacts on working capital.c
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Particular Total ordering cost c =ccc
c
Copperc 1800c 22
Stamping materialsc 1500c 18
Stator framesc 1500c 18
CE & NC coversc 1650c 20
IP coilsc 1800 22
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Above graph showing the ordering cost to the company to get the raw materials, organization
is spending Rs 1800 for getting the raw materials of Copper and IP coils. The organization
spending the 1650 Rs as ordering cost to get the CE & NC covers. Stator frames and
Stamping materials ordering cost is 1500. Rs
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Total cost incurred by the company to ordering the materials is 8250.Rs
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Pearl Metal Productsc Rs.2000
EBG India c Rs.1000c
MPP Technologies c Rs.3750c
Premier Industries c Rs.2350c
Copper Metal Corporation c Rs.1750c
c
pc
The analysis shows that the nonperformance cost of PMP is Rs.2000, EBG is Rs.1000, MPP
is Rs.3750, PI is Rs.2350 and CMP is Rs. 1750.
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It can be interpreted as the nonperformance cost of Premier Industries is very high compared
to other companies.
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öc In KEC for other then JIT purchase company will use the private vehicles.
öc In KEC 95% depend on road transport for receiving and sending of the goods.
öc Including transportation cost quotations are prepared by the KEC and suppliers are
responsible for transporting the raw material to the warehouse of the company.
öc From the warehouse to the layout of production to transport material Cranes are used
which are company owned.
öc Price will fix by based on distance, weight and type of vehicle or 5% margin.
öc In KEC stamping materials are importing from Russia.
Major importing costs are.
c CIF price- 82.19 ( in lakhs )
c Customs ± 3.10 ( in lakhs )
c Clearing charges-1.83 ( in lakhs )
öc The Other traveling charges 29.64 ( in lakhs )
+
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öc The KEC has made contract for transport with Babu traders and ARC( Associate
Road corporation)
öc KEC maintaining certain standard rent for sending finished goods from Govinahalli
unit to Bangalore.
c Matador -900
c Canter - 1200
c Truck (lorry) ± 1500
öc In KEC most of the time customer only takes the delivery from companies
dispatching unit.
öc The customer only bares the transportation and insurance charges.
c c
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öc For transporting of finished goods to customer the company will charge 10000 to
25000 depend on distance and Wight.
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öc The KEC has its own warehouse in his plant.
öc The dimension of warehouse is 40/100ft
öc Number of warehouse employs are as follow
Officers 3
Clerks 2
Workers 8
Total 13
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>c Major risk for Kirloskar (Govenahalli) in logistics management is Time risk like late
delivery, lead time, inventory and production
>c KEC 40% of the raw material out sourced (JIT) it reduces the ware house cost and
increase the working capital. It is positively responsible for getting good margin.
>c In warehouse maintenance machines and equipment cost is high
>c Organization is spending more money on getting the raw materials of Copper,
Stamping and Mild steel from different vendors. And it helps to maintain safety stock
in unit.
>c KEC uses Stamping Materials as a major raw material for its production and major
costs of raw material is incurred for Stamping materials.
>c As the raw material storage period is 93 days, the conversion time is late because of
industrial goods (> 1000WT) so logistics should be effective so that it caries Raw
materials without time delay.
>c Kirloskar finished products will be stored for 41 days From this, we can understand
the Kirloskar is doing B to .B business it takes more time for dispatching of goods
because companies customers are industries customers.. So, we can conclude that the
Distribution network, one of the features of the logistics has its impact on Working
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Capital. Here also the features of logistics like Transportation and Warehouse comes
into picture and shows, these features also have their impacts on working capital.c
>c Total cost incurred by the company to ordering the materials is 8250.Rs
>c Reordering point plays key role to maintain the stock in proper order to avoid the out
of stock in the company..
>c From the above analysis I can interpret that KEC is more depend on direct sales
because in govenahalli unit manufacturing industrial goods. So in KEC very less
intermediaries.
>c The inventory cost has on impact of 51.25% on sales and the magnitude of
relationship between inventory cost and sales is 43.06%
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1.c Marketing department to form a team and this team to create need base analysis with
customers based on increasing capacity of motors in watts and new designs with
additional features.
2.c There is a lack of proper process layout in DC motor section and this improper layout
is increasing cost concern to cranes and pullis and ropes and increasing the conversion
period. the company has find solution to get better benefits.
3.c Company is using JIT technique is affected factor like PEST so company has to make
situation analysis which has its own effects on inventory level and production
4.c If company pay immediate cash to Vendors Company can save the cost 18% and it
increase the working capital and it indirectly help to increase the company profit. c
5.c KEC adopted ABC technique based on values and usage and it is using to maintain
the inventory in warehouse it reduces the damages of goods in warehouse so it
increases quality of production and same time it gives information about re ordering
point order delivery period
6.c KEC¶s Major Raw material cost is for Steel and the company should handle these
costs in a better manner to gain benefits.
7.c Procuring of Stator Frames is consuming more time and the company has to
concentrate on this and should try to reduce the Lead time of procurement of Stator
Frames. If lead time is high its indirectly effects to dispatching of goods and sales.
8.c Due to increase in Inflationary prices in the year 2009, KEC has incurred more costs
on Inventory. So the company can follow some Inventory Techniques to avoid the
effects of Inflationary prices
9.c As the raw material storage period is 93 days, the conversion time is late because of
industrial goods (> 1000WT) so logistics should be effective so that it caries Raw
materials without time delay. Here we can also interpret that, while procurement
Process Company should take great care while Vendor selection process, so that the
vendor supplies raw materials at regular intervals of time with specified quality..
10.cIf the organization reduces wastage it leads to reduce the cost of getting the raw
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As company as well experience and its own brand image in the electric sector they are not
finding much difficulties in manufacturing the goods and the competitors are less in this
sector. This factor has made KEC market leader and the company deriving better benefit in
both cost performance and market performance finally conclude that KEC has good growth
in electric sector So far, companies have invested their time, resources and budgets for
gaining customer relationships through Sales Force Automation and CRM applications. But
optimizing customer relationships also demands streamlining and strengthening back-end
related processes and support of the value chain. A VRM solution provides visibility across
the entire supply base to help company to increase the value of business relationships. VRM
helps companies to analyze and anticipate purchasing patterns, compress sourcing cycles and
collaborate in real time .Long-term relationships with suppliers prove the ability of a
company to deliver a value. VRM provides an efficient, cost-effective way to automate
business processes to include all suppliers across the globe and build sustainable relationships
with the ones that do things right. Kirloskar Electric Company (KEC) has successfully taken
its initiatives in the process of Vendor Relationship management (VRM) and improved its
efficiency and internal operations.KEC have raised the need to dig deep into the next levels
of efficiency and cost savings by leveraging supplier relationships and through VRM it has
improved the relationship between Demand and Supply by providing new and better ways for
the former to relate to the latter. Finally we can conclude that
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1)c How many orders of raw materials are placed per year?
2)c Explain about quota allocation for Raw materials?
3)c What are the quality Standards fixed by the company and the performance of Vendor related
to standards?
4)c What are the details about On-time delivery Standards fixed by the company and the
performance of Vendor related to standards?
5)c To whom you are selling the final products?
a.c Manufacturer b. Dealers c. Customers
6)c What are the different modes of distribution channel?
a.c Direct channel b. Through dealers c. Through branches
7)c Details about the overall production of KEC?
Particulars % of production
Self manufacturing
Out sourcing
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13)cWhat are the percentage wise Costs incurred for raw materials?
14)c Which is the major material costs incurred in production?
a.c Steel b. Copper c. Barings
15)cWhat is thelead time of raw materials?
16)c What is the minimum and maximum level of storage of raw material?
17)cWhat are the various costs involved in ware house and inventory management?
18)cWhat are the non performance costs of different companies?
19)cWhat is the percentage of wastage of raw materials at KEC?
20)cWhat is the year wise sales of KEC/
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1)c ³Logistics and supply chain management ´
Editors- G. Raghuram and N Rangaraj
Published By- Macmillan india ltd
First Edition: 2000
ISBN:0333933427
2)c ³marketing management´
Editors team- Philip kotler, K.L KECler, Abraham koshy, M Jha
Edition ± 13
Published By- Dorling Kindersley[india] pvt ltd
ISBN: 978-81-317-1683-0
3)c ³Marketing channels´
Editors team- Pelton, Lumpkin
Edition ± 2
Published by : McGraw-Hill Higher Education
)c+c.1 )c
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c Kirloskar Electric Co Balance Sheet, Kirloskar Electric Co Financial Statement &
Accounts.htm
c http://www.processregister.com/register/seo.aspc
c http://kirloskarelectriccoltd_ww.indiabizclub.com - [Visit Website]
c http://power.indiabizclub.com/products/list
c www.kirloskar-electric.com/pdf/kecbalancesheetfinal.pdf
c www.eworldtradefair.com/kirloskarelectriccompanyltd//
c power.indiabizclub.com/.../1665500~ _
_.
~bangalore
c http://www.kirloskar-electric.com/founders.shtmlc
c GGG$
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