NISSAN ASHOK LEYLAND POWERTRAIN LTD.
For the partial fulfillment of the requirement of
MASTER OF BUSINESS ADMINISTRATION DEGREE
Submitted by Mr.DIVAKAR.R Register No.10230112
SCHOOL OF MANAGEMENT D.G.VAISHNAV COLLEGE CHENNAI-600106 2010-2012
A REPORT ON INTERNSHIP TRAINING
Undergone at
NISSAN ASHOK LEYLAND POWERTRAIN LTD.
For the partial fulfillment of the requirement of
MASTER OF BUSINESS ADMINISTRATION DEGREE
Submitted by Mr.DIVAKAR.R Register No.10230112
SCHOOL OF MANAGEMENT D.G.VAISHNAV COLLEGE CHENNAI-600106 2010-2012
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
(Mr.V.GANESHAN) Faculty in Charge
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
INDUSTRY INTRODUCTION & COMPANY INTODUCTION
1-16
2
ORGANISATION CHART & PRODUCT PROFILE
17-24
3
FINANCIAL PERFORMANCE ANANLYSIS
25-31
4
PRODUCT PRICING SKILL & PROFITABILTY ESTIMATION
32-65
5
FINANCE DEPARTMENTPROFITABILITY
66-76
6
CONCLUSION INDUSTRY INTRODUCTION 77-81 & COMPANY INTODUCTION ANNEXURES 82-85
Chapter No: 1 Industry Introduction & Company Introduction
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.
Mission, Vision and Values:
Vision:
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 company’s 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.
A. Ashok Leyland’s Units or Factories i.Ennore ii.Hosur iii.Bhandara iv.Alwar
Ashok Leyland Plants
b. Products & Solutions
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.
Products Automotive products
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 People’s 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 Everywhere—Nissan Cars Sustainable Mobility for Society—Investing in the Future For All Stakeholders—Nissan Corporate Social Responsibility
Nissan is dedicated to building appealing cars that customers can delight in driving. Attractive bodylines and refined interiors—matched with dynamic driving characteristics—are 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.” Nissan’s 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.
Ashok Leyland and Nissan Joint Venture – Sunrise:
On October 29, 2007, Ashok Leyland and Nissan Motor Company Ltd. signed a binding Master co-operation Agreement (MCA) for the formation of the three joint venture companies supporting the Light commercial vehicle (LCV) business.
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 Leyland’s manufacturing competitiveness, market insight and a strong presence in India and other countries, core engineering capabilities and widespread marketing network, while Nissan’s 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.
Vehicle Manufacturing Company – a company with exclusive rights to
manufacture LCV products in India for both the partners. Manufacturing facility is located in India and the company is owned 51% by Ashok Leyland and 49% by Nissan. Production is expected to start in 2010 and will include the new generation Nissan Atlas F24 light-duty truck, in addition to a range of products covering applications from 2.5 to 8 ton gross vehicle weight (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to grow beyond 1,00,000 units annually.
Power train Manufacturing Company – responsible for the
manufacture and assembly of engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing is located in India and the company is owned 51% Nissan and 49% by Ashok Leyland.
Technology Development Company – responsible for the development
of LCV products and related powertrains, destined for the Indian and select global markets. This JV is owned 50:50 by the two partners and located in Chennai. The products developed will be sold under both the Ashok Leyland and Nissan brands.
In addition this, the two partners also expect to cooperate to leverage each other’s dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leyland’s 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.
Ashok Leyland and Nissan unveil their first LCV for India
The Ashok Leyland DOST to be market-launched by second quarter of FY 2011-12
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 Leyland’s 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.”
FINANCIAL PERFORMANCE ANALYSIS
Chapter No: 3 Financial Performance analysis
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.
CAPITAL BUDGETING PROCESS
OBJECTIVES OF CAPITAL BUDGETING
The objectives of capital budgeting are summarized as given below: i) It aims at deciding the most profitable among the numerous investment proposals available. It decides the most suitable among different sources of finance on the basis of capital market constraints. The growth and expansion of the firm and modernization can be taken care of.
ii)
iii)
TYPES OF CAPITAL BUDGETING DECISIONS
I.
On the basis of firm’s existence:
Replacement and Modernisation Decisions ii.Expansion Decisions iii.Diversification Decisions
i. II.
On the basis of Decision situation: i.Mutual exclusive Decisions ii.Accept-Reject Decisions iii.Contingent Decisions
I.
Traditional (or) Non-discounting methods
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:
1. Pay Back Period Method:
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:
CALCULATION OF PAY BACK PERIOD =
INITIAL INVESTMENT CASH ACCRUAL AFTER TAX BEFORE DEPRECIATION
In the case of uniform CFATp.a. =
INITIAL INVESTMENT
CFAT p.a
In the case of differential CFAT for various years,
i) ii) iii) Compute cumulative CFAT at the end of each year. Find out the year in which cumulative CFAT exeeds initial investment. Payback period = Time at which cumulative CFAT= Initial investment (calculation on time proportion basis) Accept if the payback period is less than maximum or bench mark period, else reject the project.
iv)
PRODUCT PRICING SKILL & PROFITABILTY ESTIMATION
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
Description Specific Equipment Vendor Tooling Others Sub Total
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.
CASE NO: 4A(Estimated Selling Price for Reduced Cost)
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
Fy'12-13 254 76 67 245 441
Fy'13-14 350 105 67 313 754
Fy'14-15 350 105 67 312 1066
Fy'15-16 349 105 67 312 1377
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.
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.
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
Chapter No: 6 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.
Comparision Of Net Profit
Each case shows the level of net profit from the business over 5 years.
Comparision Of Gross Profit
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
Case-5 Estimat ed Selling Price 19% to 23% 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.