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CERTIFICATE
This is to certify that this Internship training report is submitted by Mr.DIVAKAR.R a bonafide student of First year, Master of Business Administration, School of Management, D.G.Vaishnav College, Chennai-600106 who had undergone training at NISSAN ASHOK LEYLAND POWERTRAIN LTD from 02nd May 2011 to 31st may 2011 in Partial fulfillment of the requirement for the degree of Master of Business Administration
College seal
ACKNOWLEDGEMENT
I extend my sincere thanks to Mr.V.GANESHAN, DEAN, School of Management. D G Vaishnav College, Arumbakkam, CHENNAI, for having given me an opportunity to undergo the Institutional training at NISSAN ASHOK LEYLAND POWERTRAIN LTD.
I express my heartfelt thanks to Dr. (Mrs.) ASHWINI RAVI, DIRECTOR School of Management. D G Vaishnav College, Arumbakkam,CHENNAI, for her kind co-operation, Invaluable guidance and More over Personal care for the completion of my report successfully. I also thanks MR.V.A.JEROLD and other Lectures of the department for their consistent Guidance.
I would be failing in my duty if I do not express my sincere thanks to my Parents, I also thanks my Mentor Mr.S.PRADEEP KUMAR, and the staff of NISSAN ASHOK LEYLAND POWERTRAIN LTD for providing all facilities to complete the training successfully.
DATE:
PLACE: Chennai
(DIVAKAR.R)
CONTENTS
CHAPTER NO PARTICULARS PAGE NO
1-16
17-24
25-31
32-65
FINANCE DEPARTMENTPROFITABILITY
66-76
INDUSTRY INTRODUCTION
The truck was first manufactured in 1896 by Daimler. This truck had a four hp two-cylinder 1.1 liter engine. In 1898 the Winton Company in USA produced a gasoline-powered delivery wagon which had a single-cylinder six-horsepower engine fitted into it. The idea of using automobiles to carry freight around had not become popular yet. Absence of good roads and inability of these automotives to run at high speeds were the reasons why trucks were not very popular. Daimler made certain changes to the design of the truck engine. He increased horse power of the engine from 4 HP to 10 HP thereby enabling the truck to carry payloads as high as 5,000 kilograms. Engine capacity too had been enhanced to 2.2 liters. The earliest Truck Engines ran on gasoline. They were not very powerful machines. Trucks faced a lot more criticism as compared to passenger cars. However, World War I changed everything. Trucks proved to be invaluable in transporting large number of troops and large quantities of supplies in a single run. After this war, trucks became an integral part of the movement of men and materials in a war.
This led to more innovation in the field of truck engines. In 1923, the first truck with diesel engine was made by different manufacturers including Benz and Daimler. In 1924, trucks fitted with diesel engines were made available for commercial use. It took diesel engines three more decades to become the primary choice for all those purchasing a truck engine. Truck diesel engines retain its popularity even today. Diesel has always been cheaper than gasoline. It has replaced paraffin and other fuels and diesel truck engines are the most popular engines in the market today.
Today, finding the best truck engines for your high power truck is not an easy task. Whether you are buying a brand new truck engine or used truck engine for sale, you have to give due regard to the history of the manufacturer and the manufacturer's reputation in the market. Different truck manufacturers focus on different types of truck engines. Make sure you are aware of these things before taking a final decision. There are many websites offer detailed information on trucks, truck engines and truck engine parts on the web. www.automotix.net is one of the best sites offering detailed information.
COMPANY INTRODUCTION
Ashok Leyland is one of the largest manufacturers of commercial vehicles and Diesel engines in India. Ashok Leyland is the leading manufacturer of trucks, buses, special application vehicles and engines in India. The products of Ashok Leyland are at par with the best in the world. Ashok Leyland is the leaders in the Indian bus market, offering unique models such as CNG, Double Decker and Vestibule bus. More than 80% of the State Transport Undertaking (STU) buses come from Ashok Leyland. The company is a pioneer in multi axle trucks and tractor-trailers. Ashok Leyland is the largest provider of logistic vehicles to the Indian army. It also manufactures diesel engines for Industrial, Genset and Marine applications, in collaboration with technology leaders.
Ashok Leyland was launched by Mr. Raghunandan Saran, an industrialist, under the persuasion of Pandit Jawaharlal Nehru. In 1948, Ashok Motors was set
up in Madras (Chennai) for the assembly of Austin Cars. Soon, British Leyland acquired an equity stake in the company and the name of the company was changed from Ashok Motors to Ashok Leyland. In 1955, Ashok Leyland commenced of commercial vehicles. Since then Ashok Leyland has maintained its technological leadership in the India's commercial vehicle industry.
Ashok Leyland was the first to introduce full air brakes, power steering and rear engine busses in India. In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH) was taken over by a joint venture between the Hinduja Group and IVECO, a fully owned subsidiary of FIAT. Since July 2006, the Hinduja Group is 100% holder of LRLIH.
Be among the top Indian Corporations acknowledged nationally and internationally for Excellence in Quality of its products Excellence in Customer focus and Service Mission: Be a Leader in the business of the commercial vehicles, excelling in technology, Quality, Value to customer, fully supported by customer service of the highest order and meeting national and international environmental and safety standards.
Values:
Customers: We value our customers and will constantly Endeavour to fulfill their needs by proactively offering them products and service appropriate to their diverse applications.
Employees: We consider our employees as our most valuable asset and are committed to provide full encouragement and support to them to enhance their potential and contribution to the companys business.
Vendors:
Our vendors are our valued partners in our business development and we will work with them in a spirit of mutual co-operation to meet our business objectives.
Distributors: Our distributors are the vital link between the company and the customers and we are committed to advise and support our distributors to continuously upgrade their infrastructure, skills and capabilities to serve our customers better.
Shareholders: We value the trust reposed in us by our shareholders and strive unstintingly to ensure a fair and reasonable return on their investment.
Society: We are committed to add to the wealth and well-being of our society by enhancing the quality of life and contributing to its economic development while maintaining the highest level of environmental and safety standards.
c. Associate Companies 1. Automotive Coaches & Components Ltd (ACCL): ACCL was promoted by Ashok Leyland and the Tamil Nadu Industrial Development Corporation (TIDCO) in the 1980s. The company has two Divisions: ACCL Division and PL Haulwel Trailers (PLHT). ACCL is the largest Tipper Body manufacturer in the organised sector in India. Apart from the tippers, it also manufactures bus bodies, front-end structures (FES), tankers, aluminum containers, OB vans, energy vans and the like. PLHT manufactures a wide variety of after-chassis products. These include Fifth Wheel Couplers and Hoists, Semi Trailers, Container trailers, Ladle Carriers, for foundries (Steel / Aluminum), Running gears for LPG tankers, Car / Truck / Tractor Carriers, Bottom dumpers, and all types of user-specific customdesigned trailers for niche applications.
2. Lanka Ashok Leyland: The Company was established in 1982. It is a joint venture between Ashok Leyland and the Government of Sri Lanka. Ashok Leyland supplies chassis in both completely built-up and knocked down conditions to Lanka Ashok Leyland, which in turn assembles the chassis and builds bodies.
3. Ennore Foundries: Ennore Foundries was established in 1959. It is India's largest automotive jobbing foundry and caters to different segment like automobiles, tractors, industrial engines and power generators.
4. IRIZAR-TVS: IRIZAR-TVS is a joint venture between Ashok Leyland, TVS & Sons Ltd and IRIZAR, the internationally reputed bus body builder from Spain. The company was started in 2001 and it manufactures luxury coaches. 5. Ashok Leyland Project Services Limited: Ashok Leyland Project Services Limited (ALPS) looks after the project development activities of the Hinduja Group in India. It assists the investment entities of the Group and provides professional services to help international companies interested in projects in India.
1. Nissan
Nissan Motor Company, Limited,, shortened to Nissan is a multinational automaker headquartered in Japan. It formerly marketed vehicles under the "Datsun" brand name and is one of the largest car manufacturers... In 1999, Nissan entered an alliance with Renault S.A. of France. Nissan is among the top three Asian (also known as the Japanese Big 3 Automakers) rivals of the "Big Three" in the U.S. Currently they are the third largest Japanese car manufacturer. It operates the Infiniti brand.
Infiniti G35 Main articles: List of Nissan vehicles andList of Nissan engines.
Nissan has produced an extensive range of mainstream cars and trucks, initially for domestic consumption but exported around the world since the 1950s.
It also produced several memorable sports cars, including the Datsun Fairlady 1500, 1600 and 2000 Roadsters, the Z-car, an affordable sports car
originally introduced in 1969; and the GT-R, a powerful all-wheel-drive sports coupe. Until 1982, Nissan automobiles in most export markets were sold under the Datsun brand. Since 1989, Nissan has sold its luxury models in North America under the Infiniti brand. Nissan also sells a small range of keicars, mainly as a joint venture with other Japanese manufacturers like Suzuki or Mitsubishi. Nissan does not develop these cars. Nissan also has shared model development of Japanese domestic cars with other manufacturers, particularly Mazda, Subaru, Suzuki and Isuzu.
Alternative propulsion
Carlos Ghosn, chief executive of Nissan Motor, which is 44% owned by Renault, plans to start selling electric cars in 2012 as the company anticipates demand from city drivers. It would be good date for both for Renault and Nissan to introduce mass-market electric cars, Ghosn told a group of journalists at the Tokyo Motor Show on Wednesday October 24, 2007.When Nissan launches its new line of electrical vehicles in America in 2010; it will initially target fleet buyers, which can provide their own charging stations. Nissan is also hedging its bets by developing both a "parallel hybrid" system (akin to that found in the Toyota Prius) and a plug-in "series hybrid" similar to the Chevy Volt. But it favours the all-electric approach, even though it will be a tough sell, says Mr. Lane. As for Mr. Ghosn, he has no doubts. "We must have zeroemission vehicles
Non-automotive products
Nissan has also had a number of ventures outside the automotive industry, most notably the Tu-Ka mobile phone service (est. 1994), which was sold to DDI and Japan Telecom (both now merged intoKDDI Corporation) in 1999. Nissan also owns Nissan Marine, a joint venture with Tohatsu Corp that produces motors for boats and other maritime equipment.
Vision
Nissan: Enriching Peoples Lives
Mission
Nissan provides unique and innovative automotive products and services that deliver superior measurable values to all stakeholders * In alliance with Renault. * Our stakeholders include customers, shareholders, employees, dealers, suppliers, as well as the communities where we work and operate. Meeting the Diverse Needs of Customers EverywhereNissan Cars Sustainable Mobility for SocietyInvesting in the Future For All StakeholdersNissan Corporate Social Responsibility
Nissan is dedicated to building appealing cars that customers can delight in driving. Attractive bodylines and refined interiorsmatched with dynamic driving characteristicsare key attributes that appeal to customers. At Nissan, we endeavor to build cars that offer better fuel consumption and environmental performance coupled with advanced safety technology, built on the philosophy of protecting people with our cars. Nissans R&D focuses on breakthrough technologies that give our products both a clear competitive edge and value-add to our customers. Exceeding customer expectations and gaining their trust and confidence are hallmarks of Nissan vehicles.
The formation of the JV is a significant initiative in achieving the vision of theHinduja Group and the Ashok Leyland Management to transform the company into a full range commercial vehicle and in that process, both organically and inorganically extend its footprints across the globe. The JV offers both low and high-end versions of LCVs (Ashok Leyland branded vehicles at the lower end, Nissan at the higher end). The JV leverages Ashok Leylands manufacturing competitiveness, market insight and a strong presence in India and other countries, core engineering capabilities and widespread marketing network, while Nissans solid engineering foundation, product development and a design capability and a global marketing network.
The JV project was coined Project Sunrise internally reflecting partnership with a company from the land of the rising sun. The project comprises of three JVs (Vehicle Manufacturing Company, Power train Manufacturing Company and Technology Development Company) covering the following business areas.
In addition this, the two partners also expect to cooperate to leverage each others dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leylands dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.
The JV is also set to benefit from leveraging the sourcing strengths of both the partners.
ORGANISATION CHART
PRODUCT PROFILE
Ashok Leyland and Nissan unveil their first LCV for India
Chennai, 29th March, 2011: The Hinduja Group flagship, Ashok Leyland and Nissan Motor Company today unveiled their first Light Commercial Vehicle (LCV) the Ashok Leyland DOST. The product will be launched to the market, as indicated earlier, in the second quarter of FY 2011-2012. The Ashok Leyland DOST will be produced in Ashok Leylands Hosur manufacturing plant. Powered by a specially-developed, 55 hp high-torque, 3-cylinder, turbocharged Common Rail Diesel engine, the vehicle has a payload capacity of 1.25 Tonnes. Reflecting the growing expectations of the Indian LCV customer, the Ashok Leyland DOST will be available in 3 versions: a base version with manual steering, a mid version with power steering and a higher version which will have dual tone interiors, power steering and AC. The vehicle will be available in both BSIII and BSIV versions. Mirroring the evolution of the entire Indian car and light truck market, the Small Commercial Vehicle segment (vehicles less than 3.5 Tonnes) has been witnessing a perceptible upward shift in terms of features, performance and payload and the Ashok Leyland DOST has been positioned as a contemporary, powerful yet highly efficient product. With the hub-and-spoke model fast gaining ground, it is well-placed to ride the robust demand for vehicles making last-mile deliveries. The Ashok Leyland DOST will be available through a newly developed LCV exclusive network to give customers a new level of experience.
The Indian market is rapidly evolving and customer expectations are growing. We believe that the LCV segment is ready for a substantial upgradation of products that yet offer low cost of ownership. The Ashok Leyland DOST, with its carefully calibrated design and features, attempts to offer a new level of experience to the Indian customer, said Dr. V. Sumantran, Executive Vice Chairman, Hinduja Automotive Ltd. and Chairman, Nissan Ashok Leyland Powertrain Ltd. Its design reflects the philosophy of both partners: blending the long traditions of quality and comfort of Nissan with the proven record of rugged reliability and fuel efficiency of Ashok Leyland, he elaborated.
Dr. Andy Palmer, Senior Vice-President, Nissan Motor Company and Chairman, Ashok Leyland Nissan Vehicles Ltd., said, The product blends the best in terms of Japanese engineering from Nissan, with local relevance that Ashok Leyland brings to the table. It represents a very attractive value proposition to the small and medium businesses that it is targeted at and we are confident that it will find wide acceptance when launched.
CAPITAL BUDGETING
Definition:
Capital Budgeting consists in planning for development of available capital for the purpose of maximizing the long term profitability (Return on investment) of the firm
-R.M.LYNCH
Meaning:
Capital budgeting means planning the capital expenditure in acquisition of fixed (capital) assets such as land, building, plant or new projects as a whole. It includes replacing and modernizing a process, introducing a new product and expansion of the business. It involves the preparation of Detailed Project Report (DPR) and cost and revenue statements indicating the profitability. The project which gives the highest return on investment is to be selected and then investment is to be made in such a project as to maximize the profitability of the firm.
ii)
iii)
I.
On the basis of Decision situation: i.Mutual exclusive Decisions ii.Accept-Reject Decisions iii.Contingent Decisions
I.
As the name itself suggests, these methods do not discount cash flows to find out their present worth. There are two such methods available i.e., PAY BACK PERIOD METHOD, and THE ACCOUNTING OR AVERAGE RATE OF RETURN METHOD. These are essentially rules of thumb that intuitively grapple with the trade-off between net investment and operating cash inflows. Both these traditional evaluation criteria are discussed below:
This method, sometimes called the payout or pay off or replacement period method, determines the length of time required to recover the initial outlay of a project. In other words, it is the period within which the total cash inflows from the project equals the cost of investment in the project. The lower the pay back period, the better it is since initial investment is recouped faster.
Example : Suppose a project with an initial investment of Rs.5,00,000, yields profit of Rs. 1,00,000, after writing off depreciation of Rs. 25,000 per annum. In this case, the pay back period is computed as given below:
Solution: CFATp.a = Profit after tax + Depreciation = 1,00,000 + 25,000 = Rs. 1,25,000
PAYBACK PERIOD=500000125000
= 4 years
CFAT p.a
iv)
OBJECTIVE
To study the profitability for the current selling price for all the Engine models. To Determine the Pay Back Period of the Investment.
Capital Investment
FY'09-10 50 11 1 62
FY'10-11 FY'11-12 Total 107 83 2 192 159 33 126 190 220 3 413
Royalty
FACTORY COST GROSS PROFIT Net Profit Gross Profit Less- Fixed Cost Operating Expenses Total Expenses NET PROFIT
(F)
Tax Rate 30 %
ADMINISTRATION Overhead - Revision - 2 Tentative Budget for Particulars FY' FY' FY' FY' FY' FY' FY' FY'
08-09
09-10
10-11
11-12
12-13
13-14
14-15
15-16
MnINR
Salary Expatriates Accomodation for Expatriates Salary Stuff Recruit expence Staff Welfare Contingency HR Cost
28.73
31.23
31.23
31.23
31.23
R&D & Testing Cost Research & Development Cost Technical Consultancy Consumable Tools & Stores 0.50 37.31 4.68 50.00 1.00 50.00 1.40 1.00 50.00 1.40 1.00 50.00 1.40 1.00 50.00 1.40 1.00 50.00 1.40
Administration Expense Consultancy Charges Travel - Domestic Travel - International Rental Charges for Office 19.15 14.86 17.84 8.30 9.58 5.00 5.00 8.30 2.30 3.00 3.00 4.05 1.00 1.00 3.00 4.05 1.00 1.00 4.05 1.00 1.00 4.05 1.00 1.00 4.05
9.60 12.05
9.60 12.05
18.00 5.00
3.00 5.00
3.00 3.00
3.00 3.00
3.00 3.00
TOTAL Accum
39
165 165
140 305
116 421
101 522
96 618
96 713
96 809
Cal Data for CPU -Adm OH yellow Cal Data for CPU -PIC / Common Green
40
95.68 69
95.68 44
95.68 21
95.68 5
95.68 0
95.68 0
95.68 0
Model
Selling price
Material Cost
Inhouse Rejection Cost (3% of Material Cost) 2005 2040 2078 2334 2368 2407
Conversion cost
Royalty
Factory Cost
Marginal Profit (W/o JV Expense) 1179 1280 1441 2328 2431 2495
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Fy'11-12
Depreciation Interest on Capital Investment (10%) Maintenace Cost (2%)
7yrs 10% on Dep. Value 2% on Dep. Value
Fy'12-13 67 34
Fy'13-14 67 27
Fy'14-15 67 20
Fy'15-16 67 13
67 40
TOTAL
115
107
99
91
82
Fy'11-12
Fy'12-13
Fy'13-14
Fy'14-15
Fy'15-16
Administration expense (Mn.INR) Engine Transportation Cost / unit Warranty Cost / unit
96 15 1600
96 17 1600
96 19 1600
96 19 1600
96 19 1600
Volume for
Fy'11-12 Model C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 27,500 4,260 9,100 910 3,970 8,590 670
Volume for
Case-2
Fy'11-12 Model C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 27,500 4,260 9,100 910 3,970 8,590 670
PIC Technical Consultancy R&D Cost Consultancy Charges Contract Casual Total
Total
Total
14
16
HR Cost Expat Salary Expat Rent Staff Salary Recruitment Expense Staff Welfare Total
Total 31 15 58 1 2 106
Total 15
Total 14
Others 7 Total
Total
Sub Total
68
117
262
447
Factory Cost
Per unit
Marginal profit -1
Per unit
FY ' 11 12
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY ' 12 13
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 31 4
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 41 5
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Y' 1 51 6
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Marginal profit -1
Per unit
Fixed Cost
Per unit
Operating Expenses
Per unit
Net Profit
Per unit
FY' 11-12
FY' 12-13
FY' 13-14
FY' 1415
FY' 1516
CASE 1 (Present Selling Price, Present Volume) Calculation Of Marginal Profit Particulars Sales Revenue Less Material Cost conversion cost Royalty (Gross Profit) Marginal Profit - 1 Calculation Of Net Profit Marginal Profit - 1 (Gross Profit) Less Fixed Cost Operating Expenses (Net Profit) Marginal Profit - 2 In Rs. Mn Fy'13-14 4631 4135 303 86 4524 108 Fy'13-14 In Rs. Mn 54 115 140 -201 76 107 159 -189 108 99 185 -176 108 91 185 -168 108 82 185 -160
REVENUE FORECASTING PARTICULARS No.Of.Units 27,500 C22 Truck BS3 FY C22 Truck LX BS3 ' 11 C22 Truck VX BS3 12 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 4,260 9,100 910 3,970 8,590 670 49,000 C22 Truck BS3 FY C22 Truck LX BS3 ' 12 C22 Truck VX BS3 13 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 7,591 16,215 1,621 7,074 15,306 1,194 77,100 78,400 79,900 89,800 91,100 92,500 75,921 77,120 78,459 87,472 88,669 90,005 1,179 1,280 1,441 2,328 2,431 2,495 Selling price
Per unit
Factory Cost
Per unit
Marginal profit -1
Per unit
100,000 C22 Truck BS3 F Y' 1 31 4 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 15,491 33,091 3,309 14,436 31,236 2,436 77,100 78,400 79,900 89,800 91,100 92,500 75,921 77,120 78,459 87,472 88,669 90,005 1,179 1,280 1,441 2,328 2,431 2,495
100,000 C22 Truck BS3 F Y' 1 41 5 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 15,491 33,091 3,309 14,436 31,236 2,436 77,100 78,400 79,900 89,800 91,100 92,500 75,921 77,120 78,459 87,472 88,669 90,005 1,179 1,280 1,441 2,328 2,431 2,495
F Y' 1 51 6
100,000 C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 15,491 33,091 3,309 77,100 78,400 79,900 75,921 77,120 78,459 1,179 1,280 1,441
C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 Marginal profit -1
Operating Expenses
Per unit
Per unit
Per unit
Per unit
1, 179 FY 280 ' 11 441 12 328 431 2, 495 4175 5094 5) 1, 4175 1, 4175 2, 4175 2, 4175 5094 8) 5094 1) 5094 8) 5094 9) 4175 5094 0)
1, 179 FY 280 ' 12 441 13 328 431 2, 495 F Y' 1 31 2178 3570 3) 1, 2178 1, 2178 2, 2178 2, 2178 3570 7) 3570 9) 3570 6) 3570 7) 2178 3570 9)
1, 441 2, 328 4 2, 431 2, 495 986 2576 7) 986 2576 1) 986 2576 4) 986 2576 0)
1, 179 1, F Y' 1 41 5 280 1, 441 2, 328 2, 431 2, 495 905 2576 6) 905 2576 0) 905 2576 3) 905 2576 9) 905 2576 1) 905 2576 2)
F Y' 1 51 6
1, 179 1, 280 1, 441 2, 328 2, 431 824 824 2576 2) 2576 9) 824 2576 9) 824 2576 0) 824 2576 1)
(90
CASE 2 (Present Selling Price, Increased Volume) Calculation Of Marginal Profit In Rs. Mn Particulars Fy'11-12 Fy'12-13 Fy'13-14 Sales Revenue 2316 4126 8420 Less Material Cost 2067 3684 7518 conversion cost 151 270 550 Royalty 43 77 157 2262 4030 8225 (Gross Profit) Marginal Profit - 1 54 96 195 Fy'11-12 Fy'12-13 Fy'13-14 Calculation Of Net Profit In Rs. Mn Marginal Profit - 1 (Gross Profit) 54 96 195 Less Fixed Cost 115 107 99 Operating Expenses 140 175 258 (Net Profit) Marginal Profit - 2 -201 -186 -161
REVENUE FORECASTING PARTICULARS No.Of.Units 27,500 4,260 9,100 910 3,970 8,590 670 39,100 6,057 12,939 1,294 5,645 12,213 953 55,000 8,520 18,200 1,820 7,940 17,180 1,340 Selling price
Per unit
Factory Cost
Per unit
Marginal profit -1
Per unit
FY ' 11 12
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY ' 12 13
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 31 4
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 41 5
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 51 6
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Marginal profit -1
Per unit
Fixed Cost
Per unit
Operating Expenses
Per unit
Net Profit
Per unit
1, 179 1, 280 FY' 11-12 1, 441 2, 328 2, 431 2, 495 4175 5094 5) 4175 5094 8) 4175 5094 1) 4175 5094 8) 4175 5094 9) 4175 5094 0)
1, 179 1, 280 FY' 12-13 1, 441 2, 328 2, 431 2, 495 FY'1 2729 4064 9) 2729 4064 3) 2729 4064 5) 2729 4064 2) 2729 4064 3) 2729 4064 4)
1, 179 1, 280 1, 441 3-14 2, 328 2, 431 2, 495 1793 3359 7) 1793 3359 1) 1793 3359 3) 1793 3359 0) 1793 3359 1) 1793 3359 3)
1, 179 1, 280 1, FY'1 4-15 441 2, 328 2, 431 2, 495 1646 3359 0) 1646 3359 4) 1646 3359 6) 1646 3359 3) 1646 3359 4) 1646 3359 6)
1, 1499 1, 280 1, 441 2, 328 2, 431 2, 495 1499 1499 1499 3359 9) 1499 3359 6) 1499 3359 7) 3359 8)
CASE 3 (For Present Selling Price & Reduced Costs) Calculation Of Marginal Profit In Rs. Mn Particulars Fy'11-12 Fy'12-13 Fy'13-14 Sales Revenue 2316 3292 4631 Less Material Cost 2026 2881 4052 conversion cost 94 133 187 Royalty 43 61 86 2163 3075 4326 (Gross Profit) Marginal Profit - 1 153 217 306 Fy'11-12 Fy'12-13 Fy'13-14 Calculation Of Net Profit In Rs. Mn Marginal Profit - 1 (Gross Profit) 153 217 306 Less Fixed Cost 115 107 99 Operating Expenses 140 159 185 (Net Profit) Marginal Profit - 2 -102 -48 22
306 91 185 30
306 82 185 39
PARTICULARS
No.Of.Units
Factory Cost
Fixed Cost
Operating Expenses
FY ' 11 12
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Per unit
Per unit
Per unit
FY ' 12 13
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
39,100 6,057 12,939 1,294 5,645 12,213 953 55,000 8,520 18,200 1,820 7,940 17,180 1,340 55,000 8,520 18,200 1,820 7,940 17,180 1,340 55,000 8,520 18,200 1,820 7,940 17,180 1,340
F Y' 1 31 4
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 41 5
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 51 6
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY ' 1112
FY ' 1213
FY '1 314
FY '1 415
FY '1 516
CASE 4 (Estimated Selling Price for Reduced Cost) Calculation Of Marginal Profit In Rs. Mn Particulars Fy'11-12 Fy'12-13 Fy'13-14 Sales Revenue 2691 3718 5130 Less Material Cost 2026 2881 4052 conversion cost 94 133 187 Royalty 43 61 86 2163 3075 4326 (Gross Profit) Marginal Profit - 1 528 643 804 Fy'11-12 Fy'12-13 Fy'13-14 Calculation Of Net Profit In Rs. Mn Marginal Profit - 1 (Gross Profit) 528 643 804 Less Fixed Cost 115 107 99 Operating Expenses 140 159 185 (Net Profit) Marginal Profit - 2 273 377 521
REVENUE FORECASTING
PARTICULARS
No.Of.Units
Factory Cost
Fixed Cost
Operating Expenses
FY ' 1112
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
27,500 4,260 9,100 910 3,970 8,590 670 39,100 6,057 12,939 1,294 5,645 12,213 953 55,000 8,520 18,200 1,820 7,940 17,180 1,340
Per unit
Per unit
Per unit
FY ' 1213
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY '1 314
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY '1 415
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY '1 516
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
Marginal Profit 2 (Net Profit) 6056 6143 6240 6895 6982 7080
FY ' 1112
FY ' 1213
FY '1 314
91405
6774
98,179
11,926
FY '1 415
FY '1 516
CASE 4A (Estimated Selling Price for Reduced Cost) Calculation Of Marginal Profit Particulars Fy'11-12 Fy'12-13 Sales Revenue 2601 3594 Less Material Cost 2026 2881 conversion cost 94 133 Royalty 43 61 2163 3075 (Gross Profit) Marginal Profit - 1 438 519 Fy'11-12 Fy'12-13 Calculation Of Net Profit Marginal Profit - 1 (Gross Profit) 438 519 Less Fixed Cost 115 107 Operating Expenses 140 159 (Net Profit) Marginal Profit - 2 183 254
In Rs. Mn Fy'13-14 4959 4052 187 86 4326 633 Fy'13-14 In Rs. Mn 633 99 185 350
REVENUE FORECASTING PARTICULARS No.Of.Units 27,500 C22 Truck BS3 FY C22 Truck LX BS3 ' 11 C22 Truck VX BS3 12 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 4,260 21 77,1 9,100 20 78,4 910 59 87,4 3,970 72 88,6 8,590 69 90,0 670 05 39,100 75,9 C22 Truck BS3 FY C22 Truck LX BS3 ' 12 C22 Truck VX BS3 13 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 F 6,057 21 77,1 12,939 20 78,4 1,294 59 87,4 5,645 72 88,6 12,213 69 90,0 953 05 55,000 2729 4064 2729 4064 2729 4064 2729 4064 2729 4064 2729 4064 4175 5094 4175 5094 4175 5094 4175 5094 4175 5094 Factory Cost
Per unit
Fixed Cost
Per unit
Operating Expenses
Per unit
75,9 C22 Truck BS3 C22 Truck LX BS3 Y' 1 31 4 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 8,520 21 77,1 18,200 20 78,4 1,820 59 87,4 7,940 72 88,6 17,180 69 90,0 1,340 05 55,000 75,9 C22 Truck BS3 F Y' 1 41 5 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 8,520 21 77,1 18,200 20 78,4 1,820 59 87,4 7,940 72 88,6 17,180 69 90,0 1,340 05 1646 3359 1646 3359 1646 3359 1646 3359 1646 3359 1646 3359 1793 3359 1793 3359 1793 3359 1793 3359 1793 3359 1793 3359
55,000 75,9 C22 Truck BS3 F Y' 1 51 6 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4 8,520 21 77,1 18,200 20 78,4 1,820 59 87,4 7,940 72 88,6 17,180 69 90,0 1,340 05 1499 3359 1499 3359 1499 3359 1499 3359 1499 3359 1499 3359
94, 85190 FY ' 11 12 86389 87728 96741 97938 99275 9466 656 95, 9599 987 97, 9748 475 107, 10749 490 108, 10882 820 110, 11031 305 300 151 018 017 868 735
91, 82714 FY ' 12 13 83913 85252 94265 95463 96799 9190 905 93, 9324 237 94, 9472 724 104, 10474 739 106, 10607 069 107, 10755 554 549 400 267 266 117 984
F Y' 1 31 4
90, 81073 82271 83610 92623 93821 9008 081 91, 9141 413 92, 9290 900 102, 10291 915 10425 245 443 104, 576 442 293 160
15,
89, 80926 F Y' 1 41 5 82124 83463 92476 93674 95010 8992 917 91, 9125 249 92, 9274 737 102, 10275 751 104, 10408 082 105, 10557 566 561 413 279 278 129 996
89, 80778 F Y' 1 51 6 81977 83316 92329 93526 94863 8975 754 91, 9109 085 92, 9257 573 102, 10259 588 103, 10392 918 105, 10540 403 397 249 116 114 966 833
CASE 5 (Estimated Selling Price ,No Cost Reduction) Calculation Of Marginal Profit Particulars Fy'11-12 Fy'12-13 Sales Revenue 2801 3875 Less Material Cost 2067 2940 conversion cost 151 215 Royalty 43 61 2262 3216 (Gross Profit) Marginal Profit - 1 539 659 Fy'11-12 Fy'12-13 Calculation Of Net Profit Marginal Profit - 1 (Gross Profit) 539 659 Less Fixed Cost 115 107 Operating Expenses 140 159 (Net Profit) Marginal Profit - 2 284 393
In Rs. Mn Fy'13-14 5350 4135 303 86 4524 826 Fy'13-14 In Rs. Mn 826 99 185 543
REVENUE FORECASTING PARTICULARS No.Of.Units 27,500 4,260 9,100 910 3,970 8,590 670 39,100 6,057 12,939 1,294 5,645 12,213 953 55,000 8,520 Factory Cost Fixed Cost Operating Expenses
Per unit
Per unit
Per unit
FY ' 11 12
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY ' 12 13
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y'
75,921
1793
3359
1 31
C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
18,200 1,820 7,940 17,180 1,340 55,000 8,520 18,200 1,820 7,940 17,180 1,340
F Y' 1 41 5
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
F Y' 1 51 6
C22 Truck BS3 C22 Truck LX BS3 C22 Truck VX BS3 C22 Truck BS4 C22 Truck LX BS4 C22 Truck VX BS4
FY ' 11 12
FY
' 12 13
F Y' 1 31 4
F Y' 1 41 5
F Y' 1 51 6
CASE 5A (Estimated Selling Price ,No Cost Reduction) Calculation Of Marginal Profit In Rs. Mn Particulars Fy'11-12 Fy'12-13 Fy'13-14 Sales Revenue 2710 3750 5177 Less Material Cost 2067 2940 4135 conversion cost 151 215 303 Royalty 43 61 86 2262 3216 4524 (Gross Profit) Marginal Profit - 1 449 534 654 Fy'11-12 Fy'12-13 Fy'13-14 Calculation Of Net Profit In Rs. Mn Marginal Profit - 1 (Gross Profit) 449 534 654 Less Fixed Cost 115 107 99 Operating Expenses 140 159 185 (Net Profit) Marginal Profit - 2 194 268 370
Table No:1
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 Fy'12-13 (Net Profit) Marginal Profit - 2 -201 -189 less Tax@30% 0 0
Fy'13-14 -176 0
Fy'14-15 -168 0
Fy'15-16 -160 0
Add
67 -134 -134
67 -122 -255
67 -108 -364
67 -100 -464
67 -92 -556
FINDINGS:
For the current Selling price, only loss will be incurred through out the project life.
Table No:2
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 Fy'12-13 (Net Profit) Marginal Profit - 2 -201 -186 less Tax@30% 0 0 Add Depreciation 67 67 CFAT -134 -118 Cumulative CFAT -134 -252 Fy'13-14 -161 0 67 -93 -345 Fy'14-15 -153 0 67 -85 -430 Fy'15-16 -145 0 67 -77 -507
FINDINGS:
For the current Selling price, only loss will be incurred through out the project life.
Table No:3
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 Fy'12-13 (Net Profit) Marginal -102 -48
Fy'13-14 22
Fy'14-15 30
Fy'15-16 39
0 67 -35 -35
0 67 19 -15
0 67 90 74
0 67 98 172
0 67 106 278
FINDINGS:
With the Current selling price the project may achieve it Pay Back Period in more than 11 years.
Table No:4
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 Fy'12-13 (Net Profit) Marginal Profit - 2 273 377 less Tax@30% 82 113 Add Depreciation 67 67 CFAT 259 332 Cumulative CFAT 259 590 Fy'13-14 521 156 67 432 1022 Fy'14-15 520 156 67 432 1454 Fy'15-16 519 156 67 431 1885
FINDINGS:
The project with the estimated current selling price may get the pay back in 3 years and 1 month, which is beneficiary since the company may go for a new project after 3 years.
Table No:5
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 (Net Profit) Marginal Profit - 2 183 less Tax@30% 55 Add Depreciation 67 CFAT 196 Cumulative CFAT 196
FINDINGS:
The project with the current estimated selling price may get the pay back for the initial investments in 4 years and 2 months, which is also beneficiary.
CASE NO: 5 (Estimated Selling Price ,No Cost Reduction) Table No:6
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 (Net Profit) Marginal Profit - 2 284 less Tax@30% 85 Add Depreciation 67 CFAT 266 Cumulative CFAT 266 Fy'12-13 393 118 67 343 609 Fy'13-14 543 163 67 448 1057 Fy'14-15 542 163 67 447 1503 Fy'15-16 541 162 67 446 1950
FINDINGS:
The project with the current estimated selling price may get the pay back for the initial investments in 3 years, but may increase the selling price at a higher level.
CASE NO: 5A (Estimated Selling Price ,No Cost Reduction) Table No:7
Calculation of CFAT(Profit After Tax Before Depreciation Fy'11-12 Fy'12-13 (Net Profit) Marginal Profit - 2 194 268 less Tax@30% 58 80 Add Depreciation 67 67 CFAT 203 255 Cumulative CFAT 203 458 Fy'13-14 370 111 67 327 785 Fy'14-15 370 111 67 326 1111 Fy'15-16 369 111 67 326 1437
FINDINGS:
The project with the current estimated selling price may get the pay back for the initial investments in 4 years , but may increase the selling price at a higher level, and even reduces the net profit rate.
CONCLUSION
1. Case-1 & Case-2 will incur losses in subsequent years. Hence are not desirable. 2. Case-3 will Payback period is over 11 years. Hence not desirable.
3. Case-4 is estimated with 15% to 18% increase in present selling price so as to Net profit of 10% .Payback period will be 3year 1months. Hence Desirable. 4. Case-4A is estimated with 11% to 14% increase in present selling price so as to Net profit of 7% .Payback period will be 4year 2months. Hence Desirable. 5. Case-5 is estimated with 19% to 23% increase in present selling price so as to Net profit of 10% .Payback period will be 3years. 6. Case-5A is estimated with 15% to 19% increase in present selling price so as to Net profit of 7% .Payback period will be 4years.
Descript CaseCase-1 Case-2 Case-3 Case-4 ion 4A Estimat Present Present Present ed Selling Selling Selling Selling Price Price Price Price 15% to Price 18% in Increas ------------first e year Selling Price Peak 55k Volume 100k 55k 55k Estimat ed Selling Price 11% to 14% in first year 55k
Case5A Estimat ed Selling Price 15% to 19% in First year 55k Present Material Cost
Present Present Material Reduce Reduce Material Materia Cost d by 2% d by 2% Cost l Cost Reduce Reduce d from d from Convers Rs. Rs. Rs. Rs. ion Cost 5,500 5,500 5,500 to 5,500 to Rs. Rs. 3,400 3,400 Royalty Rs. Cost 1,600 Gross Profit Net Profit Pay Back Period 2% in all years -9% to -3% in 5years Rs. 1,600 2% in all years -9% to -2% in 5years Rs. 1,600 7% in all years -4% to 1% in 5years Rs. 1,600
Present Reduce Material d by 2% Cost Reduce d from Rs. Rs. 5,500 to 5,500 Rs. 3,400 Rs. 1,600 Rs. 1,600
Rs. 5,500
Rs. 1,600
20% to 17% to 20% to 17% to 15% in 12% in 15% in 12% in 5years 5years 5years 5years 10% in 7% in all 10% in 7% in all all years years all years years 4years
3 years 4 years Cannot Cannot Over 11 1 2 3years be met be met years months months
OVER ALL COMPARISON AND CONCLUSION OF EACH PROJECT WITH THE CHANGE IN EXPENDITURE, SELLING PRICE AND PROFITS.
ANNEXURE
MODEL OF P15