Escolar Documentos
Profissional Documentos
Cultura Documentos
ON
SUBMITTED BY:
NIDHI SRIVASTAVA
ROLL NO: 921DMFS0047
(MBA-FSM)
CHITKARA BUSINESS SCHOOL
CHANDIGARH
PUNJAB TECHNICAL UNIVERSITY
PREFACE
Practical training is an important part of the theoretical studies. It is of an
immense importance in the field of management. It offers the student to
explore the valuable treasure of experience and an exposure to real work
culture followed by the industries and there by helping the students to bridge
gap between the theories explained in the books and their practical
implementations.
Training plays an important role in future building of an
individual so that he/she can better understand the real world in which he has
to work in future. The theory greatly enhances our knowledge and provides
opportunities to blend theoretical with the practical knowledge where trainees
get familiar with certain aspects of industries. I feel proud to get myself
trained at SWARAJ MAZDA that is one of the top most light commercial
vehicle industries in India.
I have taken up training in finance department and have studied
and explained the need for working capital as well as its management and
financing. I am sure I could encash this opportunity to the best of my
encompetence, zeal , perfection and academic knowledge & I am keen to
make it on going journey throughout my life as I strongly believe that
learning is a journey not a destination.
ACKNOWLEDGEMENT
The project management of working capital contained the culmination of
six weeks of my own search, study and practice in the office of swaraj mazda
limited. I present this project to all those who instructed me to write the
project report during summer vacation training programmed at swaraj mazda
limited(an indo-japanese joint venture LCVs)
I am thankful to Mr. Ashok Verma(chief manager-finance) who was not only
my trainer but my mentor and my guide. He has given me chance to have
training in this esteemed organization & for their full cooperation at every
sphere to successfully accomplish my task. He not only imparted me summer
training but he also cultivated seeds of discipline. He made me realized the
importance of time. He not only tried in making me a good manager but also
a good human being.
I thank Mr. Gopal Bansal( vice-president-finance & company secretary) and
his team who has given me this great opportunity to work in SML.
I also thank Mr Arun and all the members of the finance department for cooperating with me in completion of this project.
Last but not the least I am thankful to all my friends and family members,
particularly Mr. Sanjeev, my ideal,
appreciation all over the world for quality products that are rolling out of its
plants.
The factory Swaraj Mazda Limited is located at Village Asron district
Nawanshahar (Punjab) near the city of Ropar and at a distance of 45 km from
the capital city of Chandigarh. The plant has captivating site. It spreads over a
quaint, sprawling 100 acres of land ringed by Shivalik Hills on three of its
sides and river Satluj on the other. The desolate slit hill has been leveled for
construction. Work at the plant began at a great tempo and the first vehicle
rolled out of the production line in a record time of one year of laying the
foundation stone.
The LCV are manufactured in five attractive colours- Santos Red, Nile blue,
Light Beige, White and Golden Yellow. In addition to these, any other colors
can be made on demand. Swaraj Mazda vehicles are not only strong but also
fuel-efficient.
Prominent among the load carriers Swaraj Mazda is also manufacturing:1. 4 wheel drives;
2. Extended wheel- base long- chassis Mini Buses which carry up to 44
passengers.
3. Deluxe Buses carrying to 40 passengers;
4. Ambulances
5. Mobile Reverse- Osmosis and Electro dialysis Units for the Central Salt
and Mineral Chemical Research Institute.
6. CNG Buses with Safety & Eco grades.
7. Integrated Garbage collection and disposal system for urban centers;
8. Hydraulically operated dumpers;
9. Mobile fair priced vans;
10. Sky Lift Vehicles
Swaraj Mazda gives due attention to the marketing part and the employees
are highly qualified and trained to fit the job. Swaraj Mazda has a vast
network of 150 dealers spread throughout the country including A&N
Islands. Zonal offices have been opened in Chandigarh, Lucknow,
Ahmedabad, Mumbai, and Chennai. This helps substantially in sales
promotion, Export promotion, especially for Hi-tech products, is also being
emphasized.
Discipline and its rigid enforcement without discrimination is an important
Hallmark of Swaraj Mazda. It is of great significance in evolving work
culture. All the employees, irrespective of their position and status have to
punch their cards when they report for duty. As a result, strict punctuality has
become a way of life and work with them.
To ensure Industrial peace, i.e. absence of strikes and lockouts, Swaraj
Mazda believes in making a contended labour force with a very low rate of
absenteeism and turnover. Reasonably fair wages and various perks like
subsides uniform and transport, mess facilities go a long way in creating
identification with the job. Earnestness, Sincerity and Spirit of corporation
pervades the entire atmosphere of the company. The happy absence of
Industrial dispute in the enterprise speaks volume for the success of the firm
and cultivation of work culture.
The project in its concept, aims at breaking new ground not only in terms of
product and production technology, but also in building a new culture and
value system in the organisation, which enables it to move forward with
confidence into the era of competitive markets. This guiding philosophy is
dictating every facet of project implementation both in physical facilities and
the human side.
CORPORATE PROFILE
The best way to predict the future is to invest it.
Alan Key
10
CORPORATE PROFILE
SWARAJ GROUP CONSTITUENTS
COMPANY
PUNJAB TRACTORS LTD. -----------------
DIVISION
SWARAJ TRACTORS DIVISION
SWARAJ COMBINE DIVISION
SWARAJ FOUNDRY DIVISION
SWARAJ R&D DIVISION
11
MILESTONES
1983 Swaraj Vehicles Ltd. (SVL) incorporated (in July)
1984 Joint Venture and Technical Assistance Agreement between
Punjab Tractors Ltd., Mazda Motor Corporation &
Sumitomo Corporation concluded.
SVL renamed Swaraj Mazda Ltd. (SML)
1985 LCV Project capacity - 5,000 vehicles on single shift basis
Capital Outlay
- Rs. 220 Million
Equity Capital
- Rs. 105 Million
1985
Commencement of Trial production and test marketing of
(August) Swaraj Mazda Trucks and Bus.
1986
1987
1990
1993
12
1996
1999
2001
2004
2006
June
July
August
December
13
2007
2006-07
175700
Growth
(+) 139400
73000
(+) 36100
269000
517700
(+) 183600
(+) 358200
14
OBJECTIVES
The main objectives of my research on management of working capital of
swaraj mazda limited are:1) To study & evaluate the working capital management system of swaraj
mazda limited.
2) To determine the adequate or optimum quantum of investment in
working capitalof swaraj mazda limited.
3) To determine the composition or structure of current assets.
4) To maintain a proper balance between liquidity & profitability.
5) To maintain a proper the policy or means of finance for current assets.
15
SYNOPSIS
INTRODUCTION TO WORKING CAPITAL
Cash is the lifeline of a company. If this lifeline deteriorates, so does the
company's ability to fund operations, reinvest and meet capital requirements
and payments. Understanding a company's cash flow health is essential to
making investment decisions. A good way to judge a company's cash flow
prospects is to look at its working capital management (WCM).
16
17
18
19
20
(v)
Conversion of debtors into cash by realizing cash from them.
Thus,the operating cycle starts from cash and then again restarts from cash.
Need for working capital depends upon period of operating cycle. Greater the
period, more will be the need of working capital. Period of operating cycle in
a manufacturing concern is greater than a period of operating cycle in a
trading concern because in trading units cash is directly converted into
finished goods.
CASH
DEBTORS & BILLS
RECEIVABLES
RAW MATERIAL
FINISHED GOODS
WORK-INPROGRESS
23
(a)
(b)
24
minimal because they get immediate payment for their services and do
not have to maintain big inventories. On the other extreme are the
trading and financial enterprises which have to invest less amount in
fixed assets and a large amount in working capital. This is so because
the nature of the business is such that they have to maintain a sufficient
amount of cash, inventories and debtors. Working capital needs of most
of the manufacturing enterprise fall between these two extremes, that is
between public utilities and trading concerns.
2) SIZE OF THE BUSINESS: larger the size of business enterprise,
greater would be the need for working capital. The size of a business
may be measured in terms of scale of its business operation.
27
11) LEVEL OF TAXES: full amount of cash profit is not available for
working capital purposes. Taxes have to be paid out of profits. Higher
the amount of taxes less will be the profits available for working capital.
12) DIVIDEND POLICY: dividend policy is a significant element in
determining the level of working capital in an enterprise. The payment
of dividend reduces the cash and thereby, affects the working capital to
that extent. On the contrary, if the company does not pay dividend but
retains the profit, more would be the contribution of profits towards the
working capital pool.
29
(ii) Period during which raw material remains in store before it is issued
for production purpose.
(iii) Period of operating cycle
(iv) Period during which finished goods is stored before sale.
(v) Period of credit allowed to debtors and period of credit allowed by
suppliers.
(vi) Time lag in payment of wages and overheads.
(vii) minimum cash balance required to be maintained.
Of raw material
(weeks/months)
52 weeks/12 months
+ yearly wages x 50
x
(weeks/months)
100
52 weeks/12 months
+ yearly manufacturing and administrative overheads(ex. Dep)
average time span of W-I-P
x 50
x
(weeks/months)
100
52 weeks/12 months
+ manufacturing, admn.
& selling overhead)
52 weeks/12months
(ii)wages:
Yearly wages
52 weeks/12months
If wages are paid at the end of each month, the average time lag in
the payment of wages will approximate to half a month. This is so
because 1st days wages are paid on the 30th day of each month,
extending credit for 29 days, the 2nd days wages are, again paid on
the 30th, extending credit for 28 days, and so on. Thus, average time
lag will approximate to half a month.
(iii)overheads:
Yearly overheads average time lag in payment of overheads
(other than dep.)
x
(weeks/months)
52 weeks/12months
33
34
CASH MANAGEMENT
Cash management is one of the key areas of working capital management.
There are 4 motives of holding cash
(i)
transaction motive
(ii)
precautionary motive
(iii)
speculative motive
(iv)
compensating motive
36
MANAGEMENT OF RECEIVABLES
It deals with those transactions which deals with the billing of customers who
owe money to a person, company or organization for goods & services that
37
when they become due. The two relevant aspects are the degree of efforts to
collect the over dues and the type of collection effort.
The framework of analysis of all the three decision areas in receivable
management is to secure a trade-off between the costs & benefits of the
measurable effects on the sales volume, capital cost due to change in accounts
receivable, collection costs, and bad debts and so on. The alterantive will be
selected when the benefits exceed the costs.
INVENTORY MANAGEMENT
The term inventory refers to assets which will be sold in future in the normal
course of business operations. The assets which the firm stores as inventory
in anticipation of need are raw materials, work-in-progress, semi-finished
goods, and finished goods.
The objective of inventory management consist of two counter balancing
parts, namely, to minimize investments in inventory and to meet the demand
for products by efficient production and sales operations. In operational
terms, the goal of inventory management is to have a trade-off between costs
and benefits at different levels of inventory.
39
The costs of holding inventory are ordering cost and carrying costs. The
major benefits of holding inventory are in the areas of purchasing, production
and sales.
The non-mathematical inventory management techniques illustrated here are
(i) ABC system
(ii) EOQ
(iii) re-order point
(iv) safety stock
40
On the basis of the cost involved, the various inventory items are, according
to this system, categorized into three items (1) A (2) B (3) C. the items
included in group A involved the largest investment. Therefore, inventory
control should be most rigourous and intensive and the most sophisticated
inventory control techniques should be applied to these items. C group
consists of items of inventory, which involve relatively small investments
alyhough the number of items is fairly large. These items deserve minimum
attention. B group stands mid way. It deserves less attention than A but more
than C. employing less sophisticated techniques can control it.
The task of inventory management is to properly classify all the inventory
items into one of these three groups. The typical breakdown of inventory
items is shown in following table:
Group
(%)
A
B
C
No. of Items
15
30
55
----
Inventory Value
70
20
10
----
100
41
Some points stand out from above table. While group A is the least important
than in terms of the no. of items, it is by far the most important in terms of
investments involved. With only 15% of the number, it accounts for as much
as 70% of the total value of inventory. The firm should direct most of its
inventory control efforts to the items included in this group. The items
comprising B group accounts for 20% of the investment in inventory. They
deserve less attention than A, but, more than C, which involves only 10% of
the total value although number wise its share is as high as 55%.
RE-ORDER POINT
The EOQ technique determines the size of an order to acquire inventory so as
to minimize the carrying as well as the ordering costs. In other words, the
EOQ provides an answer to the question: how much inventory should be
ordered in one lot? Another important question pertaunung to efficient
inventory management is : when should the order to procure inventory be
placed? This aspect of inventory management is covered under the order
point problem.
The reorder point is stated in terms of the level of inventory at which an
order should be placed for replenishing the current stock of inventory. In
other words, reorder point may be defined as that level of inventory when
43
fresh order should be placed with the suppliers for procuring additional
inventory equal to the economic order quantity. Although some sophisticated
re-order point formulae are available, it is based on following assumptions:
Constant daily usage of inventory & fixed lead time.
In other words, the formulae assume condition of certainty. The re-order point
= lead time in days x average daily usage of inventory.
The term lead-time refers to the time normally taken in receiving the delivery
of inventory after placing orders with the suppliers. It covers the time span
from the point when a decision to place an order for the procurement of
inventory is made to the actual receipt of the inventory by the firm. Another
way of saying it is that the lead time consists of the number of days required
by the suppliers to receive and process the orders as well as the number of
days during which the goods will be in transit from the supplier. The lead
time may also be called as the procurement time of inventory.
The average usage means the quantity of inventory-consumed daily. We can,
therefore, define re-order point as that inventory level, which should be equal
to the consumption during the lead-time.
OUTSOURCING
A few years ago there was a tendency on the parts of many companies to
manufacture all components in hours. Now more and more companies are
adopting the practice of out-sourcing. Out-sourcing is a system of buying
parts and components from outside rather than manufacturing them internally.
Many companies have developed a single source of supply, and many others
help developing small and middle sized suppliers of components that they
require. Tata motors has, for example, developed a number of ancilliary units
around its manufacturing sites that supplies parts and components to its
manufacturing plant. With the help of tata motors, ancillaries are able to
45
46
1996-97
4006
3726
1997-98
2931
3303
1998-99
2877
2975
1999-00
4010
3983
2000-01
5211
5069
2001-02
6360
6222
2002-03
8201
8101
2003-04
10225
10279
years
production
sales
2004-05
12385
12353
2005-06
11946
11887
2006-07
10915
10841
47
%age share
Truck
62%
Bus
34%
AMB
3%
Special Applications
1%
48
Truck
Bus
Spp. Appl.
ABM
SML is 3rd player in LCV segment with 15% market share. Out of this 15% large
market share is covered by SML trucks with 6762 units (62%) in LCV segment.
Sales of bus vehicles are 3706 units with 34% market share. Ambulance vehicles
have 3% market share by a sale of 297 units. Swaraj Mazda special Application has
just 1% market share in LCV segment.
49
Vehicles
2005-06
2006-07
Truck
8401
6702
Bus
3275
3706
Spp. Appl.
117
136
ABM
94
297
TOTAL
11887
10841
50
51
YRS.
2002-03
2003-04
2004-05
2005-06
2006-07
TELCO
EICHER
SWARAJ
MAHINDRA
FORCE
A.LEYLAND
17007
11466
8101
7095
4076
1515
22680
14208
10279
7205
5164
1788
25928
15164
12353
7955
4155
4477
30936
16048
11887
7078
5286
4002
29331
16821
10841
8694
4592
2526
Total
49260
61324
70032
75237
72823
CO.
52
53
COMPANIES
TELCO
EICHER
SWARAJ
MAHINDRA
FORCE MOTOR
A.LEYLAND
MARKET SHARE
(%AGE)
40%
23%
15%
12%
6%
4%
54
The above Table and Graph shows the %age of market share of different
companies in LCVs segment. All these companies are competitors in 5-10
Ton GVW in LCV sector. Telco is a market leader having 40% market share.
Telco has local technology. Eicher stands at 2nd place with 23% market share.
Swaraj Mazda is the 3rd player with 15% market share in LCV segment.
Mahindra & Mahindra holds 12% market share it stands at 4 th place. Force
motors have 6% & Ashok Leyland has just 4% market share in LCV segment.
55
Sumitomo corporation
Punjab tractors limited(ptl)
Mutual funds/nationalized banks
FIIs
Public
41.03%
14.04%
7.83%
9.31%
27.79%
56
YEARS
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
EXPENDITURE
52
66.6
73.5
71.4
64
65.6
57
58
YEARS
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
EPS
6.4
13.9
20
23
16
15.3
59
60
YEARS
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
DIVIDEND(%)
25%
45%
70%
75%
55%
55%
61
62
2001-02
2002-03
2003-04
(Rs. Crore)
2004-05
2005-06
2006-07
ACTUALS
Sales (Nos.)
Passengers Applications
2104
2512
3715
4516
5475
5714
Goods Applications
4118
5589
6564
7837
6412
5127
6222
8101
10279
12353
11887
10841
297.8
372.3
477.7
589.9
613.1
605.5
Material Cost
228.0
278.0
368.1
474.2
513.8
504.5
%age
76.6%
74.7%
77.1%
80.4%
83.8%
83.3%
(112183)
(116405)
(106625)
(93661)
(83537)
(93165)
14.4
18.3
19.2
20.4
22.3
26.7
Total
Expenditure
Employees Cost
63
(23144)
(22590)
(18679)
(16514)
(18760)
(24629)
4.8%
4.9%
4.0%
3.5%
3.6%
4.4%
10.4
11.4
12.7
13.6
15.3
16.9
(16715)
(14072)
(12355)
(11009)
(12871)
(15589)
3.5%
3.1%
2.7%
2.3%
2.5%
2.8%
%age
24.9
33.7
37.2
34.6
26.4
22.0
(40019)
(41600)
(36190)
(28009)
(22209)
(20293)
8.4%
9.1%
7.8%
5.9%
4.3%
3.6%
%age
Royalty
2.3
3.2
4.4
2.8
Total Expenses
52.0
66.6
73.5
71.4
64.0
65.6
(83574)
(82212)
(71505)
(57800)
(53840)
(60511)
%age
17.5%
17.9%
15.4%
12.1%
10.4%
10.8%
Operating Profit
17.8
27.7
36.1
44.3
35.3
35.4
Margin
6.0%
7.4%
7.6%
7.5%
5.8%
5.8%
Interest
5.8
3.1
1.6
4.0
7.3
9.3
Cash Profit
12.0
24.6
34.5
40.3
28.0
26.1
Depreciation
1.6
2.1
2.1
2.5
2.7
2.9
10.4
22.5
32.4
37.8
25.3
23.2
Margin
3.5%
6.0%
6.8%
6.4%
4.1%
3.8%
Corporate Tax
3.7
7.9
11.4
13.6
8.5
7.1
6.7
14.6
21.0
24.2
16.8
16.1
10.5
10.5
10.5
10.5
10.5
10.5
EPS (Rs)
6.4
13.9
20.0
23.0
16.0
15.3
64
Book Value
17.9
26.8
38.9
53.4
63.2
72.1
Dividend (%age)
25%
45%
70%
75%
55%
55%
2007-08
PLAN
Q1
Passengers Applications
7400
1429
Goods Applications
5800
1253
13200
2682
780.0
153.0
Material Cost
651.5
124.7
%age
83.5%
81.5%
(97348)
Sales (Nos.)
Total
(105518)
Expenditure
Employees Cost
32.0
(24242)
6.7
(24981)
65
%age
4.1%
4.4%
20.0
(15152)
(15287)
2.6%
2.7%
%age
4.1
28.0
(21212)
(18270)
3.6%
3.2%
%age
Royalty
4.9
Total Expenses
80.0
15.7
(60606)
(58538)
%age
10.3%
10.3%
Operating Profit
48.5
12.6
Margin
6.2%
8.2%
Interest
12.0
3.0
Cash Profit
36.5
9.6
Depreciation
3.5
0.8
33.0
8.8
Margin
4.2%
5.8%
Corporate Tax
10.0
2.8
23.0
6.0
10.5
10.5
EPS (Rs)
21.9
5.7
Book Value
66
Dividend (%age)
30th
June
AS AT 31st MARCH
PARTICULARS
2003
2004
2005
2006
2007
2007
FACTORY
647
1146
1361
3496
7350
4895
PORT
1000
1000
1040
6000
2260
1340
8700
10480
19480
12060
7540
1620
10347
12626
21881
21556
17150
7855
CONS-PRODUCTION
8201
10225
12385
11946
10915
2653
CLOSING STOCK
2146
2401
9496
9610
6235
5202
OPENING STOCK
SHIPMENT
67
FACTORY
1146
1361
3496
7350
4895
4782
PORT
1000
1040
6000
2260
1340
420
2146
2401
9496
9610
6235
5202
AS AT 31st MARCH
PARTICULARS
2003
2004
2005
2006
2007
2007
OPENING STOCK
506
605
548
578
636
708
PRODUCTION
8201
10225
12385
11946
10915
2653
8707
10830
12933
12524
11551
3361
5589
6564
7837
6412
5127
1253
SALES INCLUDES :
GOODS APPLICATIONS
68
PASSANGER
APPLICATIONS
2512
3715
4516
5475
5714
1429
8101
10279
12353
11887
10841
2682
-BONDED / SAC
77
52
118
30
88
123
-BODY BUILDER
105
107
89
57
30
113
-MKTG.
423
389
371
549
590
441
-TOTAL
605
548
578
636
708
677
-PRODUCTION
683
852
1032
996
910
884
-SALE
675
857
1029
991
903
894
69
particulars
cash flow from
operating
activities (A)
200405
523
200506
6599.0
6
Net cash
from
70
investing
activities
Cash flow from
Financing
Activities
Net cash
used in
financing
activities
199697
199798
199899
199900
200001
200102
200203
200304
Sales (Nos.)
4231
3726
3303
2975
3983
5069
6222
8101
Net Revenue
1654
1622
1510
1372
1855
2360
2978
3723
4777
5899
6126
Operating Profit
97
125
125
91
90
137
178
277
361
443
353
7.7%
8.3%
6.6%
4.9%
5.8%
6.0%
7.4%
5.8%
7.5%
5.8%
Margin 5.9%
200405
200506
Interest
40
65
45
47
39
57
58
31
16
40
73
Cash Profit
57
60
80
44
51
80
120
246
280
403
280
3.7%
5.3%
3.2%
2.7%
3.4%
4.0%
6.6%
4.6%
6.8%
4.6%
Margin 3.4%
Depreciation
11
11
11
13
14
15
16
21
21
25
27
46
49
69
31
37
65
104
225
253
378
253
3.0%
4.6%
2.3%
2.0%
2.8%
3.5%
6.0%
4.1%
6.4%
4.1%
Margin 2.8%
Extra Ordinary
Item
29
--
--
--
--
--
--
--
--
--
Income Tax
--
--
25
36
79
114
136
85
75
49
67
26
28
40
68
146
168
242
168
71
(PAT)
Dividend
- Rate
--
--
--
--
10%
15%
25%
45%
70%
75%
55%
- Outflow
--
--
--
--
13
17
26
53
83
90
66
- Payout Ratio
--
--
--
--
46%
43%
38%
36%
40%
37%
39%
Equity Share
Capital
105
105
105
105
105
105
105
105
105
105
105
Net Worth
(5)
44
111
136
152
174
188
281
408
561
663
Earnings Per
Share (Rs.)
7.2
4.7
6.4
2.4
2.7
3.8
6.5
13.9
20.0
23.1
16.0
--
4.2
10.6
13.0
14.5
16.6
17.9
26.8
38.9
53.5
63.2
Return on Avg.
Net Worth
--
--
--
72
Right to manufacture and sell T-3500 diesel series models WT-48, WT-49
& WT-50.
Right to use the well knows mazda trademark and patents.
To provide complete drawings, technical information and know-how for
manufacture, sale & service
Modifications in product and components to suit Indian operating conditions.
Provide guidance on selection of plant and equipment.
Provide guidelines on plant layout, services and facilities.
Provide support on development of vendors.
Provide continued information on development and improvements.
Train adequate number of SML personnel at their facilities.
Depute adequate number of swaraj mazda corporations experts to SML for
training of counter-part personnel, establish manufacturing processes, vendor
development etc.
ROYALTY AGREEMENT
Royalty agreement made on 5th day of October, 1984 between mazda motor
corporation ( formerly called Tokyo kogyo company limited), accompany
organized and existing under the laws of japan (called licensor) and swaraj
vehicles limited, a company organized and existing under the laws of republic
of India and having its registered office at phase iv, S.A.S nagar, district
ropar, Punjab, the republic of India (called licensee). Licensee shall pay
licensor the royalty listed in addendum (B), which shall be in the net amount
of the deduction of all the taxes and duties, if levied in territory, for each unit
of CKD vehicles assembled and/or manufactured and shipped out of
licencee,s plant for sale or its own use , provided that the royalty including
Indian taxes per/each unit of CKD vehicle shall not exceed 1.5% of the net
74
ex-factory selling price of the vehicle minus landed cost of imported CKD
part used therein and the cost of standard bought out components namely
tyres, tubes, wheel rims, batteries and shock absorbers.
Initially royalty provided for here in above was payable for a maximum
period of 10 years which was ended in September 1994. later the agreement
had again been extended two times for 5 years on the same terms and
condition.
- 29%
Sumitomo corporation
15.6%
10.4%
------------55%
75
Remaining 45% was raised by SML from public and Indian financial
institutions in the usual manner.
MC and SC agreed to nominate their directors on the board of SML. The joint
venture agreement provided for the right of upto 3 directors. MC and SC
agreed to subscribe to their entire equity at the earliest stage of the project
even before the public issue signifying their commitment to the project.
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77
CKD AGREEMENT
In case of CKD agreement, MC will send the CKD agreement through SC
against the letter of credit in five products WT_48,
WT-49, and WT-50, WV-26,ZT-54.
78
PRODUCT MIX
The product selected by the Swaraj Mazda for introduction in India
in 1985 was the latest, state of art technology of Japan, which had been
introduced there in March 1984. The company started with a 30% of
local content. Starting with one standard product i.e. truck, Swaraj
Mazda has over the years, on the strength of their own R&D, have
developed various variants of the same.
The company is manufacturing Light Commercial Vehicles in fourwheel base i.e. 2515MM, 2815MM, 3335MM. All the version and the
models are being fabricated on these wheelbases. Swaraj Mazda T3500
vehicles have been tested by Vehicles Research and Development
Establishment (VERD), a designated authority by Government of India
under Ministery of Defense. VERD tests the companys vehicles at
frequent intervals and issue certificates confirming it the Indian road
standards laid down by Government of India from time to time. Vehicles
are fuel efficient and meet emission norms.
The range of products now includes Buses, Ambulances, Police Vans,
Dumpers, Sky Lifts, Dumper placer, Delivery vans, Bottle Carriers,
Mobile Ration Shops, Fire Tenders, CNG Buses & Trucks etc. as a
result of such wide range of products the companys products are very
popular with both private and government customers.
In addition to the above SML is adding up 4 wheel drive & CNG
vehicles as with the changes which take places in the market CNG has
more powerful engine more torque at low rpm thus higher pick up,
Grade ability & fuel efficient.
79
PRODUCTS FEATURES:(a) Quality Control: There exits a detailed & elaborate system of Quality Assurance on
every product, covering the manufacturing activity in plant & at the vendors
end. The Quality Control development manned by highly qualified & trained
manpower is fully involved in development of local components in addition
to the routine activity of incoming material inspection, in house inspection &
pre delivery inspection.
(b) Localisation:At the time of inception, production stated with 30% local content
keeping in view the govt. of India guidelines, Swaraj has now achieved a
local content 75% & such critical parts as starter motor, crankshafts,
connecting rods, transmission gears are all in the local list now.
(c) Manufacturing Methods:All vehicles of Swaraj Mazda are based on the modern chassis
manufacturing method using a welded box construction. The chassis is much
stronger despite of its being
.
80
81
82