I.

CHAPTER

INTRODUCTION

INTRODUCTION

Mahindra & Mahindra Limited (M&M) is an Indian multinational automobile manufacturing corporation headquartered in Mumbai, Maharashtra, India. It is one of the largest vehicle manufacturers by production in the Republic of India. It is a part of Mahindra Group, an Indian conglomerate. The company was founded in 1945 in Ludhiana as Mahindra & Mohammed by brothers K.C. Mahindra and J.C. Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was formed, Mohammed emigrated to Pakistan. The company changed its name to Mahindra & Mahindra in 1948. It is ranked #21 in the list of top companies of India in Fortune India 500 in 2011.

Major competitors in the Indian market include Maruti Motors (a 60% owned subsidiary of Suzuki Motors from Japan),

Tata Motors (fully owned by Tata Sons; Owner of British Jaguar Land Rover), Toyota, Hyundai, Mercedes-Benz (Merc) (Based in Poona, Maharastra in India; A subsidiary of Daimler AG from Germany) and others

COMPONY PROFILE

Mahindra & Mahindra Limited (M&M) is the flagship company of around US $ 2.5 billion Mahindra Group,

which has a significant presence in key sectors of the Indian economy. A consistently high performer, M&M is one of the most respected companies in the country.
Set up in 1945 to make general-purpose utility vehicles for the Indian market, M&M soon branched out into manufacturing agricultural tractors and light commercial vehicles (LCVs). The company later expanded its operations from automobiles and tractors to secure a significant presence in many more important sectors. The Company has, over the years, transformed itself into a Group that caters to the Indian and overseas markets with a presence in vehicles, farm equipment, information technology, trade and finance related services, and infrastructure development. M&M has two main operating divisions: 1. 2. The Automotive Division manufactures utility vehicles, light commercial vehicles and three wheelers. The Tractor (Farm Equipment) Division makes agricultural tractors and implements that are used in conjunction with tractors, and has also ventured into manufacturing of industrial engines. The Tractor Division has won the coveted Deming Application Prize 2003 , making it the only tractor manufacturing company in the world to secure this prize. The resurgence of the automotive industry and M&M's success in exploiting it, has created an opportunity to strengthen the company through an entry into the Auto Components business, the growth of which is being fueled by both, domestic and export demand. M&M employ around 11,500 people and have six state-of-the-art-manufacturing facilities spread over 500,000 square meters. M&M have also set up two satellite plants for tractor assembly.

M&M have 49 sales offices that are supported by a network of over 780 dealers across the country. This network is connected to the Company's sales departments by an extensive IT infrastructure. M&M's outstanding manufacturing and engineering skills allow it to constantly innovate and launch new products for the Indian market. The Company's significant recent product launch, the "Scorpio", resulted in the Company winning the National Award for outstanding in-house research and development from the Department of Science and Industry of the Government in 2003. The Company has launched India's first tractor with turbo technology - the Mahindra Sarpanch 595 DI Super Turbo. The Company's commitment to technology-driven innovation is reflected in Company's plans of setting up of the Mahindra Research Valley, a facility that will house the Company's engineering research and product development wings, under one roof.

The M&M philosophy of growth is centered on its belief in people. As a result, the company has put in place initiatives that seek to reward and retain the best talent in the industry. M&M is also known for its progressive labor management practices. In the community development sphere, the company has implemented several programs that have benefited the people and institutions in its areas of operations.

History

Mahindra & Mahindra was set up as a steel trading company in 1945. It eventually saw business opportunity in expanding into manufacturing and selling larger MUVs, starting with assembly under licence of the Willys Jeep in India. Soon established as the Jeep manufacturers of India, the company later commenced upon the task of expanding itself, choosing to utillize the manufacturing industry of light commercial vehicles (LCVs) and agricultural tractors. Today, Mahindra & Mahindra is a key game player in the utility vehicle manufacturing and branding sectors in the Indian automobile industry with its flagship UV Scorpio and swiftly exploits India's growing global market presence in both the automotive and farming industries to push its products in other countries.

Over the past few years, the company has taken interest in new industries and in foreign markets. They entered the twowheeler industry by taking over Kinetic Motors in India. M&M also has controlling stake in REVA Electric Car Company and acquired South Korea's SsangYong Motor Company in 2011.

The US based Reputation Institute once ranked Mahindra amongst the top Ten Indian companies in its 'Global 200: The World's Best Corporate Reputations' list

OBJECTIVE The main objective of Mahindra is that they want to maintain none to second position and be the Best top company by maintaining talented people

1.

Customer Focus: People Culture: By Encouraging team work By providing a healthy and good work environment By Sake practices By appraisal and Reward System.

Community Culture: By setting high ethical standards. By responsible to environmental needs. By to community welfare.

Time Discipline: By Meeting set targets By delivering on time By ensuring service on time By quick response to needs

Quality Discipline: By positive reputation for quality By following international quality assurance, systems and procedures. By delivering right time and every time.

Cost Discipline: By elimination of non-value added work. Through continues improvement.

By productive use of assets

1. 2. 3. 4. 5.

To take an overview of the clients in short and long term goals. To have the clients current financial strengths and weaknesses and implications of financial plan. To study the clients financial objectives anchored to current resources. To give a detailed summation of all recommendations. To suggest appropriate financial plan for mutually selected recommendationsTo also give comprehensive economic overview of the clients financial plan, supported by financial statements.

1.

To follow step-by-step implementation and monitoring plan. To ensure regular and uninterrupted supply of materials i.e., to make materials available as and when they are needed.

2. 3. 4. 5.

To keep investment in stock at a reasonable levels, so that there is no loss of interest on capital. To purchase the materials at a reasonable price without sacrificing the quality of such materials. To avoid abnormal wastage by exercising direct control. To avoid the risk of spoilage and obsolescence of the materials by fixing the maximum stock level.

BUSINESS:

The main business of MAHINDRA & MAHINDRA limited is to manufacture the utility vehicles and light commercial vehicles and tractor to market these vehicles for customers. The mahindra group is divided into 6 sectors and these are the strategic core business units.

The Planning Process:-

The main business Farm equipment Automotive component sector Trade and finance sector Infra structure development sector Telecom software exports sector.

The preparation of the financial plan is a multi-dimensional process. It requires the planner to collect as much information as possible about the current resources, assets and liabilities of the client. The planner needs to analyze the collected information from a number of different aspects to develop an optimal financial plan. To prepare and implement a comprehensive and effective financial plan, the Financial Planning Standards Board recommends the following 6-step process:-Let us look at the above steps in more detail. A financial planner has to prepare a plan that helps his clients:1. 2. 3. 4. 5. 6. 7. 8. Organize their finances Improve their cash flows Lower their personal income taxes Plan for their retirement Improve their investment performance Lower their investment risk Insure themselves appropriately and reduce insurance costs Minimize their estate settlement costs

To achieve this, the planner needs to answer the following questions: 1. 2. 3. 4. 5. 6. 7. 8. 9. What is the most immediate concern of the client? What is the clients current financial situation? What are the clients immediate and long-term needs? What is the gap between the clients needs and the current financial situation? What services can you apply to the clients needs? How would the client benefit from your service portfolio? What is the estimated time frame to complete the plan and accomplish goals? Is your role likely to be of an adviser, motivator, teacher, or director? Client agreements and confidentiality clauses

When a client utilizes the services of a financial planner, he/she shares financial and other personal information with the planner that is normally not shared with anyone else. The client-planner relationship presupposes a very high level of trust between the two parties. Consequently, the planner is under obligation to maintain utmost confidentiality of this information. To prevent unnecessary litigation and disputes in the future, it is recommended that the financial planner should enter into a client agreement which formalizes the relationship with the client and establishes the basis on which the service would be provided. Such an agreement is also referred to as the 'Letter of Engagement.' 2. Gather clients data and determine goals and expectations The next step involves researching and collecting information that will help the financial planner design and implement a successful financial plan. There are two aspects to this exercise:(a) Understanding the client's current financial position. (b) Getting to know the client's financial goals, objectives and requirements. The first helps the financial planner understand where the client is at the moment and the second helps,the financial planner understands where the client wishes to go.

Product Life-cycle Management Practice Service Overview Practice Highlights Mahindra Satyam provides a range of high quality services in the Product LifeCycle Management (PLM) space, including consulting, product implementation, support and maintenance of PLM products. Mahindra Satyam provides PLM implementations to many large global organizations. It provides solutions to facilitate requirements planning, product design, engineering change management, manufacturing systems, vendor management and customer support for multiple domains. Diversified experience with 100+ PLM implementations Over 600 PLM professionals with 6000+ person years of delivery excellence Global implementation experience on multiple PLM/PDM products Rich experience in CAD/PDM tool customization and engineering application development Alliances with major PLM vendors - System Integrator partnership with Product Life-cycle Management Practice

MAJOR JOINT VENTURE

Aerostaff Australia

Aftermarket

Mahindra First Choice

Agribusiness

Mahindra Shubhlabh

Automotive

Mahindra & Mahindra (Automobile Manufacturer) Mahindra Navistar Mahindra Reva SsangYong Motors
Mahindra Two Wheelers

Components

Engines Engineering Mahindra Castings Mahindra Composites Mahindra Engineering Mahindra Gears and Transmissions Mahindra Forgings Mahindra Hinoday Ltd Mahindra Intertrade Mahindra Sona Ltd. Mahindra Steel Service Centre Mahindra Systech Mahindra Ugine Steel Metalcastello S.p.A

Consulting

Mahindra Consulting Engineers Mahindra Logisoft

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Mahindra Special Services Group

Defence

Mahindra & Mahindra - Millatary Defence Division Defence Land Systems

Education

Mahindra United World College of India

Energy

Mahindra & Mahindra - Energy Division Mahindra Solar One

Mahindra EPC Services Pvt. Ltd. [13]

Hospitality

Club Mahindra Mahindra Holidays and Resorts

Industrial Equipment

Mahindra Conveyor Systems

Information Technology

Tech Mahindra Mahindra Satyam

Mahindra Comviva Bristlecone

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CanvasM

Farm Equipment

Mahindra & Mahindra - Farm Equipment Division Mahindra (China) Tractor Co Mahindra USA Inc Mahindra Yueda (Yancheng) Tractor Co

Mahindra Tractors Mahindra Gujarat Jiangling Tractors

Financial Services

Mahindra & Mahindra Financial Services Limited Mahindra Insurance Brokers Mahindra Rural Housing Finance

Logistics

Mahindra Logistics

Luxury Boats

Mahindra Ocean Blue

Real Estate

Mahindra Lifespaces

Mahindra World City

Retail

Mahindra Retail

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Sports

Mahindra Racing Mahindra-NBA Partnership Mahindra-Celtic Football Club Partnership

Defunct

Mahindra Renault Mahindra United FC

13

RESEARCH METHODOLOGY Any of the above systematic and scientific research lies in its methodology giving a clear idea of the forms of study and procedure adopted in conducting it and stating the purpose become essential parts of every study. So, in this study the information furnished from secondary source for three years i.e2004-2005, 2005-2006, 2006-2007.

It is a way to systematically solve the research problem. It may be understood as science of studying how research is done scientifically. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with the logic behind them. In general methodology is an optional framework within which the facts are placed so that the meaning may be seen more clearly. The sources of data shown that designing of a research plan calls for decision on the data sources are research approaches (primary and secondary data) research instruments (observation survey experiment) sampling plan and contact methods (personal interviews).

RESEARCH DESIGN

A research design is the determination and statement of the general research approach or strategy adopted for the particular project. It is the heart of the planning. If the design adheres to the research objectives, it will ensure that the client need will be served.Research design is a plan structured and strategies of investigation. It is the arrangement of condition and analysis of data in a manner to combine relevance to the research purpose with economy in procedure.

1.

In order to achieve the objective it was necessary to talk to the customers and public to draws the conclusions regarding the objective.

2.

For visiting the customers and publics to collect the relevant information; a questionnaire has to be designed. The questionnaire was designed in such a manner to achieve the objective of the research.

3.

The sample size taken is 100 customers and publics.

TYPE OF RESEARCH

In this project Descriptive Research has been used.

Descriptive Research: This is kind of research structure which is concerned with describing the characteristics of the problem.

Research Objective:The Financial Planning is vast in nature. It is intended to provide a bird s-eye view of the client s assets. The Financial planner has to have bottomless knowledge of markets, funds etc. Considering this fact, the scope of the study is defined to satisfy following objectives:

1. 2.

Understand the necessity of financial planning, Study and apply the financial planning process,

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3. 4.

Identify various investment alternatives that can fit in clients profile, and Provide the client in an appropriate asset allocation mix based on certain factors like time horizon risk tolerance

15

16

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DATA ANALYSIS

DATA ANALYSIS

Business Overview

Mahindra & Mahindra Limited (MNM) manufactures a range of automotive vehicles, agricultural tractors, implements, and industrial engines. The company offers multi utility vehicles, light commercial vehicles, three-wheelers, and tractors. It also provides services related to financing, leasing, and hire purchase of automobiles and tractors. In addition, the company operates in the real estate, special economic zones, the hospitality industry, infrastructure development, and project engineering consultancy and design industries. It provides telecommunication products and services and information security services. The company has made forays to enter foreign markets.From FY2005 to FY2008, the company introduced its vehicles into new countries including Europe, Middle East, South America and South-East Asia by adapting unique business models for each country. The company also entered in a joint venture with Navistar International's operating company, International Truck and Engine Corp, to produce and market light, medium, and heavy commercial vehicles for India and export markets. It has four main manufacturing plants. hree in Maharastra and one in Andhra Pradesh. The units in Mumbai, Nasik and Igatpuri in Maharastra, deal with multi-utility vehicles and engines. The plant in Andhra Pradesh deals with the manufacture of light commercial vehicles and three wheelers. In addition to these the company has plants planned in Chakan, Maharashtra and Orgadam, outside Chennai in Tamil Nadu; both of which are to become operational in 2010 Financial Metrics

18

Mahindra & Mahindra Ltd revenues and net profit

Mahindra & Mahindra Ltd Operating margin and net profit margin from Dec 2007 to Dec 2008

From FY2004 to FY 2008, sales revenues have grown from Rs 5,914.54 crore to Rs 11,503.48 crore, at average annual rate of over 23.62%. In the same period, net profit grew from Rs 348.54 crore to Rs 1,103.37 crore by over 54.14% average annual growth rate.In FY2008, due to general economic slowdown, the sales of MNM in the quarter ending December fell by 24.36% as compared to the same quarter in FY2007.

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With the fall in sales, the operating margin fell from 9.95% to 1.53% and the net profit margin fell from 12.02% to 0.05%.. Repot By Unmesh Lulu , Sr. Engineer BID department. The long term debt to equity ratio has gone up from 0.4 to 0.62 due to investments in capacity expansion. On 16 March 2009, the company announced the reduction in capacity expansion plans by around Rs 500 crore. The company had originally planned to invest around Rs 4000 crore in its Chakan plant in Maharashtra.

Share holding pattern: The promoters namely, Mahindra family owns 21.73% of MNM. FII's own 24.18% while banks financial institutions and Insurance companies own another 23.2%. SBI Magnum Contra Fund , SBI Magnum Tax Gain Scheme, SBI Blue Chip Fund and Franklin India Flexi Cap Fund are some of the mutual funds invested in the firm, with 0.33%, 0.19%,0.18% and 0.10% ownership respectively. The government retains a minor share of 0.09% in the company.

Mahindra & Mahindra Ltd share holding pattern Entity FII's Banks Fin. Inst. and Insurance Mahindra Family General Public FII's Others Private Corporate Bodies Foreign Promoters Government NRI's/OCB's/Foreign Others Percentage 24.18% 23.20% 21.73% 9.65% 8.82 % 7.1% 5.03% 4.75% 0.09% 0.76%

unmesh lulu is new appoint for the six sigma ans ISO verification officer in B.I. D. department in our nagpur plant.

Key Trends and Forces

Economic slowdown resulting in adverse impact on the sales

Automobile industry is a cyclical industry. It is substantially affected by general economic conditions. The demand is
influenced by factors including the growth rate of the economy, easy availability of credit, increase in disposable income,

interest rates and oil prices. Lack of vehicle finance availability, lower growth on GDP and/or increases in fuel prices lead
to a decline in the demand for automobiles. The Indian economy has shown a sharp decline in GDP from 7.1% in the 2nd quarter of FY2008-09 to 5.3% in 3rd quarter of FY2008-09. The performance of the rural economy has a direct relation with the sales of MNM as about 60% of the utility vehicles sales happen in rural India also tractor sales are dependent on the rural economy. Decrease in agricultural commodity prices and poor rainfall can affect the agriculture dependent rural economy and reduce MNM sales. In 2008, India recorded normal rainfall of around 98% of the long period average. Despite the 62% decline in the international gasoline prices, the gasoline prices have dropped by only 10% in India.

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Raw material price fluctuations directly affect the operating margin and net profit margin

World steel prices in USD/tonne

MODEL WISE PROCUREMENT OF INVENTORY IN A NO. OF DAYS

MODELS ASSEMBLING IN

TIME

21

MAHINDRA & MAHINDRA

INTERVAL

CHAMPION

8 DAYS

25 SEATER

10 DAYS

LOAD KING

24 DAYS

MAX AND MARSHAL

8 DAYS

TOURISTER(50 SEATER)

3 DAYS

Raw material costs comprises of about 70.41% of the price of the finished products. Any price increase of the raw
materials have a direct bearing on the overall operating margin. As can be seen from the Amex steel index and the world steel price index, there is high degree of volatility in the steel prices. This volatility not only affects the operating margin but also the inventory management of the steel required for production. In August 2008 steel prices peaked to over 1100$/tonne 40% higher then the steel price in January 2008. Whereas on the other hand in March 2009, the steel prices have fallen to 4 year low of $473/tons Tyres are also an important part of the raw material required for manufacturing. Tyre prices are correlated to the rubber prices. The chart above shows the volatility present in the rubber market. The rubber volatility also affects the operating margin and consequently the net profit margin.

Currency and exchange rate fluctuations and its adverse effects on the earnings

The value of the Indian Rupee(INR) compared to the U.S. dollar impacts the profit margin of exports. A strengthening

INR adversely impacts the export earnings of MNM.The Companys exports constitute 25% of the revenues .[30]Moreover
MNM has operations in China and USA through MCTCL. All the dividend earnings from this subsidiary are exposed to the

currency risk. MNM undertakes steps to hedge the currency risk for its operational requirements, but a weakening of the
rupee against the dollar or other major foreign currencies can lead to significant losses in cases where the hedging has not been done. In Jan 2009, MNM reported Rs 93 crore forex loss in its 3rd quarter result which resulted in to 93% dip in net

profit.

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Competition

Utility Vehicles:

Tata Motors -Based in Mumbai, India, Tata Motors Limited is a part of Tata Group. It manufactures commercial
and passenger vehicles primarily in India. It offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy commercial vehicles, such as rigid trucks, tractor trailers, and tippers; intermediate, light, and small commercial trucks; buses; and defense related vehicles. The company, through its subsidiaries, also provide engineering and automotive products; manufacture of construction equipment; automotive vehicle components manufacturing and supply chain activities; and provision of machine tools and factory automation products, as well as offers high-precision tooling, and plastic and electronic components for automotive and computer applications. In addition, it provides automotive retailing and services, as well as financing for the vehicles sold by the company. The company markets its products in Europe, Africa, the Middle East, south Asia, south east Asia, and Australia.

Toyota - Headquartered in Toyota City, Japan, Toyota Motor Corporation operates in the automotive industry
worldwide. It designs, manufactures, assembles, and distributes passenger cars, recreational and sport-utility vehicles, minivans and trucks, and related parts and accessories. It also offeres hybrid vehicles. Its products also comprise conventional engine vehicles, including subcompact and compact cars, mini-vehicles, passenger vehicles, commercial vehicles,auto parts, mid-size models and luxury models.In addition, Toyota offers sports and specialty vehicles, recreational and sport-utility vehicles, pickup trucks, minivans and cab wagons, trucks and buses. Further, the company provides finance to dealers and their customers for the purchase or lease of Toyota vehicles. Additionally, it is also involved in the design and manufacture of prefabricated housing and information technology-related businesses, including intelligent transport systems and an e-commerce marketplace, called Gazoo.com.

Force Motors (FORCEMOT-BY) -The Group's principal activity is to manufacture and market utility and
light commercial vehicles, agricultural tractors and diesel engines. Its plant are located at Bombay Pune road, Akurdi, Pune and Pithampur, District Dhar, Madhya Pradesh.

With technical collaboration of MAN AG, Germany, Force Motors has a range of heavy commercial vehicles with a payload capacity ranging from 16 to 50 tonnes.

Light Commercial Vehicles:

Tata Motors -Same as above

Eicher Motors (EICHERMOT.EQ-IN) -Headquartered in New Delhi, Eicher Motors Limited manufactures
and markets trucks, buses, motorcycles, automotive gears, and components in India. It operates in four segments: Commercial Vehicles, Two Wheelers, Components, and Others. The Commercial Vehicles segment offers CNG

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trucks, cruiser buses, buses on HCB platform, and tippers. The Two Wheelers segment provides motorcycles and bikes. The Components segment offers gears, gear boxes, construction and earthmoving equipment, and forklifts. The Others segment provides engineering products to automotive, aerospace, heavy engineering, consumer durables, power generation, and other segments. Eicher Motors has a joint venture agreement with Volvo AB.

Force Motors (FORCEMOT-BY) -Same as above

Swaraj Mazda - Headquartered in Nawanshahar district, Punjab, the Company's principal activity is to
manufacture and sale of commercial vehicles and spares for both goods and passenger applications The company has inked a technical assistance agreement with Isuzu Motors, Japan on Jun. 30, 2006. The agreement is for the expansion of vehicle production capacity, new assembly line for Isuzu vehicles and also setting up of in-house facilities for the manufacture of luxury buses based on existing Mazda and Isuzu chassis

Financial Comparison of the competitors:

Financial metrics FY2007 Name Revenue in Rs Crore Net Profit Margin Operating Margin 6.96% 5.80% -8.02% 10.44% 8.64% -5.04%

Tata Motors 28,738 Toyota Force 930 Motors Eicher 2,218 Motors Swaraj 671 Mazda 14,31,096

2.81%

5.85%

3.75%

7.80%

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Market share

Market share of Utility vehicles in India

Market share of Light commercial vehicles in India

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INDUSTRY PROFILE

UNIT SCENARIO: The MAHINDRA & MAHINDRA plant is located at 108 kilometers from the state capital of AP at Zaheerabad.It has an area of 350 hectors land including all facilities. In July 1983 Hyderabad Allwyn limited (HAL) a state public sector agreement with Nissan Motor Company (NMC) limited of Japan for manufacturing new generation of light commercial vehicles (LCVs) in India. The scope of transfer stocks of imported kits procured at favorable rates during the year 1962 vehicles was sold. Although company achieved 60% localization in its products, yet the raising value of yen continued to adversely affect its financial crisis and both. The financial corporation and industrial development corporation were facing massive cuts in government findings. Therefore, in order to cover the closing down of units, the state government indifference to the state industrial policy decided to sell Allywn Nissan Ltd (ANL) to capable of business houses, in the case preferably and established automobile company. After that an intensive negotiation MAHINDRA & MAHINDRA LTD; the countrys leading manufacturing of jeeps and tractors entered into the memorandum of understanding with HAL on 10 th June 1988 and agreed to acquire 26% of share capital in ANL and there after took control of the companys management with the transferor of shares and management. The joint venture agreement was entered into 7 th November 1988 by M & M with NMC. The name of the company was changed to MAHINDRA ALLWYN NISSAN LTD.M & M finally took entire control of the operation of the plant on 1992. PICK UP RANGE: Mahindra utility Mahindra pick up Mahindra NC 640 DP Mahindra pick up CBC

MAXX RANGE: Mahindra Maxx Mahindra Maxx LX

CL RANGE: Mahindra MM 540/550 DP Mahindra MM 540/550 XDB Mahindra MM 540 DP Mahindra MM ISZ-petrol soft-top

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COMMANDER RANGE: Mahindra commander 650 DI Mahindra commander 750 ST.

HARD TOP RANGE: Mahindra economy Mahindra Marshal Mahindra MM775 XDB Mahindra three and five door hard top Mahindra Marshal 2000 Deluxe Mahindra marshal DX Royal

ALTERNATIVE FUEL RANGE: Mahindra CNG- three door Mahindra Bijlee Mahindra FJ CNG mini bus.

Mahindra & Mahindras Logo symbolizes:

The road ahead that links the companys past with its future.

The road through which the companys thoughts, ideas, designs, and products will travel.

A forward looking organization moving towards new horizons.

Innovation and dynamism.

This Logo is created by Mr.Shyam Kumar from the Automotive Sector Nasik.

Core purpose and values

Core Purpose

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Indians are second to none in the world. The Founders of our Nation and of our organization passionately believed this. We will prove them right by believing in ourselves and by making Mahindra & Mahindra Limited known worldwide for the quality, durability and reliability of its products and services.

Core Values

I.

Good Corporate Citizenship As in the past, we will continue to seek long term success, which is in alignment with our countrys needs. We will do this without compromising on ethical business standards.

ii.

Professionalism We have always sought the best people for the job and given them the freedom and opportunity to grow. We will continue to do so. We will support innovation and well reasoned risk taking, but will demand performance.

iii.

Customer First We exist and prosper only because of the customer. We will respond to the changing needs and expectations of our customers, speedily, courteously and effectively.

iv.

Quality Focus Quality is the key to delivering value for money to our customers. We will make quality a driving value in our work, in our products and in our interactions with others. We will do it first time right.

v.

Dignity of the Individual We will value the individual dignity, uphold the right to express disagreement and respect the time and efforts of others. Through our actions we will nurture fairness, trust and transparency.

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CLASSIFICATION OF M&M BUSSINESS SECTORS

BUSINESS SECTORS

Automotive

Farm

Trade & financial services

Information

Infrastructure 29

Automotive

Automotive sector

M&M's automotive division was created in 1994 following an organizational restructuring, but its origins go back to 1954. That was when the company entered into collaboration with Willys Overland Corporation (now part of the Daimler Chrysler group) to import and assembles the Willys Jeep for the Indian market. M&M began producing light commercial vehicles (LCVs) in 1965. The Group Companies are:

1.

Automotive Division M&M's automotive division is in the business of manufacturing and marketing utility vehicles and LCVs. It is the leader in this segment, with a market share in excess of 50 per cent. The M&M brand symbolizes ruggedness, durability, reliability, easy maintainability and operational economy. The customer profile here includes individuals, traders, entrepreneurs, contractors, tour operators, taxi owners, car hire companies, government departments and institutions, and the Indian army.

2.

Automartindia Ltd. Automartindia is a business-to-consumer portal that offers a comprehensive picture of the Indian automobile market. Launched in collaboration with a group of partner organizations, it offers a wide range of new vehicles and a virtual marketplace to buy or sell used automobiles. The site also features car reviews, price information, technical comparisons of different models, and ratings to help the consumer make an informed decision.

Farm Equipment sector

The origins of M&M's Farm Equipment Sector lie in the formation of a joint venture in 1963 between the Company, International Harvester Inc., and Voltas Limited, christened the International Tractor Company of India (ITCI). This enterprise was a shot in the arm for the green revolution then beginning to sweep the country. The launch of highperformance tractors played a vital role in the mechanization of Indian agriculture.

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In 1977, ITCI merged with M&M and became its Tractor Division. After M&M's organizational restructuring in 1994, this division was called the Farm Equipment Sector. M&M's Farm Equipment Sector is the largest manufacturer of tractors in India with sustained market leadership of over 19 years. The Farm Equipment Sector is the first Tractor Company in the world to win the Deming Application Prize. Also, it is the fourth company in India and the 10th in the world, outside Japan, to win this prize. It designs, develops, manufactures and markets tractors as well as implements which are used in conjunction with tractors. The tractor industry in India is segmented by horsepower into the lower segment of 25 HP, mid-segment of 35 HP and higher segment of 45 HP and above. The Company's Farm Equipment Sector has a presence in all these segments across all states.

The Farm Equipment Sector has also ventured into manufacturing of Industrial Engines. M&M Industrial engines are used for various applications like Genset, Industrial, Construction, Marine Compressors etc. These engines are manufactured at the Company's state of art Engine Assembly plants at Kandivli and Nagpur. M&M have two main tractor manufacturing plants located at Mumbai and Nagpur in Maharashtra. Both these plants have been certified for ISO 9001, QS-9000 and ISO 14001.

Apart from these two main manufacturing units, the Farm Equipment Sector has satellite plants located at Rudrapur in Uttarachal and Jaipur in Rajasthan. The Farm Equipment Sector of the Company has a strong and extensive dealer network of over 450 dealers for sales and service of tractors and spare parts. 28 area offices, situated in all the major cities and covering all the principal states manage this dealer network.

M&M tractors have earned goodwill and trust of more than 8, 00, 000 customers and the 'Mahindra' tractor has come to be recognized as a powerful symbol of productivity and performance.

In addition to capturing the domestic market, M&M's Farm Equipment Sector has also found significant success in the international market. Whilst around 90% of our tractor exports are to the USA, M&M also exports tractors to neighboring countries like Nepal, Bangladesh and Sri Lanka and African countries like Uganda, Nigeria, and Zambia etc.

Mahindra USA, a wholly owned subsidiary based in the USA, has established a network of 140 dealers. Several other international markets are being developed to expand M&M's global reach in the Farm Equipment Sector. The Group Companies are:

1.

Mahindra USA Inc.

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Mahindra USA, a wholly owned subsidiary of M&M, began selling tractors in America in 1994 from its headquarters in Tomball, Texas. It has since firmly established the Mahindra brand and captured a significant share of the American small-tractor market. The company has two-wheel- and four-wheel-drive utility tractor lines for part-time farming enthusiasts, turf managers, nursery operators, and small and medium-sized contractors. Its products have gained considerable brand recall among users of small tractors in the US.

2.

Mahindra Gujarat Tractor Ltd. This company was formed in 1978 after the Indian government nationalized the ailing Hindustan Tractors. It is one of the oldest tractors manufacturing units in India and produces rugged, low-cost tractors. The company has its own foundry and facilities for making auto components.

3.

Mahindra Shubhlabh Services Ltd. MSSL is a virtual marketplace where farmers and traders of agricultural commodities can sell their produce, obtain finance, buy seeds and fertilizers, rent farm equipment, and check the latest weather information. The site provides constantly updated market information to enable procurement of quality inputs at competitive prices.

Trade & Financial Services sector Credit is the lifeblood of commerce, which in turn is the engine that drives industry. The Mahindra Group helps keep the wheels of industry moving with its presence in the trade and financial services sector through the following companies.

1.

Mahindra Intertrade Ltd. Mahindra Intertrade is a wholly owned subsidiary of the Mahindra & Mahindra group, one of the 10 largest industrial houses in India. MIL undertakes imports, exports, third country business, domestic trading & marketing & distribution activities. Seeking to deliver a distinct value proposition through leveraging its skills & competencies, Mahindra Intertrade handles a wide variety of products & services. Starting with steel, Intertrade today handles Metals, Ferro Alloys, Application Engineering products, Consumer Goods and Engineering goods. The first to set up a Steel Service Centre in the organized sector to bring a value beyond traditional intermediation - they now cover significant relationships in Auto, Auto ancillaries, Home Appliances and Transformer manufacturers. Machine Tools trading, now known as the Technical Business Group provides a clearly differentiated value chain with installation, erection & servicing of state of the art equipment. A key player in the Rubber & Tyre, the group has also diversified into Non destructive testing equipment.

2.

Mahindra Steel Service Centre Ltd.

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MSSCL was incorporated in 1993 as a joint venture between M&M, Mitsubishi and Nisho Iwai. A pioneer in the steel service centre business, it supplies cut-to-length steel blanks and silt coils to the automobile and homeappliances industries. The main plant has well-designed processing lines, such as a feeder line, a slitting line, a shearing line and an electrical sheet slitting line.

3.

Mahindra & Mahindra Financial Services Ltd.

Incorporated in January 1991 by M&M with Kotak Mahindra Finance as a promoter, MMFSL is in the business of finance, leasing and hire purchase. The company lends monetary muscle to M&M's dealers and customers and to other small businesses by extending short-term, lease and hire purchase finance.

Information Technology sector Information Technology constitutes one of the thrust areas of the Mahindra Group. The group's foray into Information Technology goes back to 1986 when the Flagship Company of the Sector, Mahindra British Telecom, was formed in association with British Telecom. The group established other IT companies in the 90s and today they cater to entire IT services space from software engineering to product based solutions. They aspire to become a leading provider of IT services globally.

1.

Mahindra British Telecom Ltd. A joint venture between Mahindra & Mahindra and British Telecom, are a leading software services company focused on the global Telecom industry. MBT offers solutions and Systems integration services to Telecom operators, Telecom equipment manufacturers and Telecom technology suppliers. MBT utilizes its experience developed across various hardware and software platforms to offer comprehensive software services.

2.

Bristlecone The Mahindra Group recently acquired a majority stake in US based IT services and solutions company, Bristlecone Inc. and merged it with its subsidiary Mahindra Consulting. Bristlecone, a leading provider of extended supply chain solutions, and a business and development partner of SAP, empowers Global 2000 companies and SMBs alike to build scalable IT infrastructure and solutions that support their value chain processes. Bristlecone uses its deep knowledge of technology, industry domain and business processes to facilitate and manage organizational change and deliver lasting value.

3.

Mahindra Logisoft Business Solutions Pvt. Ltd. The company is a joint venture with TVS family that brings domain expertise in automotive industry. With the acquisition of Information Services Division of Mahindra Holidays & Resorts the company now also possesses domain knowledge of hospitality industry. The company is focused on product based solutions in automotive and

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hospitality verticals. Current product range includes Autopower - a solution for automotive dealerships, HumanEdge (HRMS) for human resource management, and ConnectEDGE - an interactive GUI software tool, designed to address specific needs of achieving customer care and relationship.

4.

Mahindra Engineering Services Mahindra Engineering Services, a division of Mahindra & Mahindra Ltd., is set up to provide engineering services to global OEMs and automotive supplier around the world. Our approach is to partner with our customers in the area of product development by providing engineering services from a mix of on-site, off-site, and off-shore services in the following areas- (a) Advanced surfacing and reverse engineering (b) CAD (c) CAE (d) Rapid prototyping & Tooling and parts, and (e) Validation. We are one of the few Asian full service providers, with strong offshore engineering capabilities.

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TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT:-

Effective inventory management requires an effective control system for inventories. A proper inventory control not only helps in solving the acute problem of liquidity but also increases profits and causes substantial reduction in the working capital of the concern. The following are the tools and techniques of inventory management and control; Determination of stock levels. Determination of safety stock levels. Selecting a proper system of ordering for inventory. Determination of economic order quantity (EOQ). A.B.C analysis. Classification and codification of inventories.

DETERMINATION OF STOCK LEVELS:-

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Carrying of to much and too little of inventories is determinate to the firm. If the inventory level is too little, the firm will face frequent stock-outs involving heavy ordering cost and if the inventory level is too high it will be unnecessary tie-up of capital. Therefore, an optimum level of inventory where costs are the minimum and at the same time there Id. No. stock-out, which may result in loss of sale or stoppage of production. Various stock levels are discussed as such

A) MINIMUM LEVEL:-

This represents the quantity which must be maintained in hands at all times. If stock is less than the minimum level then the work will stop due to shortages of materials. Following factors are taken into consideration while fixing minimum stock level;

LEAD-TIME:

A purchasing firm requires some time to process the order and time is also required by the supplying firm to execute the order. The time taken in processing the order and then executing it is known as lead-time. It is essential to maintain some inventory during this period.

RATE OF CONSUMPTION:-

It is the average consumption of materials in the factory. The rate of consumption will be decided on the basis of past experience and production plans.

NATURE OF MATERIAL: -

The nature of materials also affects the minimum level. If a material is required only against special orders of the consumers then minimum stock will not be required for such materials minimum stock level can be calculated using the formula:

Minimum stock level=re-order level-(normal consumption x normal re-order period).

B) RE-ORDER LEVEL:When the quantity of materials reaches at a certain figures then fresh order is sent to get materials again. The order is sent before the materials reach minimum stock level. Re-ordering level or ordering level is fixed between minimum stock level and maximum stock level. The rate of consumption, number of days required replenishing the stock, and maximum

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quantity of materials required on any day is taken into account while fixing re-ordering level. Re-ordering level is fixed with the following formula.

Re-order level= maximum consumption x maximum re-order period.

C) MAXIMUM LEVEL:-

It is the quantity of materials beyond which a firm should not exceed its stock. If the quantity exceeds maximum level limit then it will be over-stocking. A firm should avoid over-stocking because it will result in high material costs. Overstocking will more blocking of more working capital, more space for storing the materials, more wastage of materials and more chances of losses from obsolescence. Maximum stock level will depend upon following factors:

The maximum requirements of materials at any point of time. The availability of space for storing the materials. The rate of consumption of materials during lead-time. The cost of maintaining the stores. The possibility of fluctuations in prices. Availability of materials. If the materials are available only during seasons then they will have to be stored foe the rest of the period.

The possibility of change in fashions and production process will also affect the maximum stock level.

The following formula may be used for calculating maximum stock level;

Maximum stock level= re-order level + re-ordering quantity (minimum consumption X minimum re-ordering period).

D) DANGER LEVEL:-

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It is the level beyond which materials should not fall in any case. If level arises then immediately steps should be taken to replenish the stocks even if more cost is incurred in arranging the materials. If materials are not arranged immediately then there is a possibility of stoppage of work. Danger level is determined with the formula:

Danger level= consumption X maximum re-order period for emergency purchases.

E) AVERAGE STOCK LEVEL:-

The average stock level is calculated as such:

Average stock = minimum stock level +1/2 of re-order quantity.

DETERMINATION OF SAFETY STOCK:-

The safety stock is a buffer to meet unanticipated increase in usage. The usage of inventory cannot be perfectly forecasted. It fluctuates over a period of time. The demand for materials may fluctuate and delivery of inventory may also be delayed and in such a situation the firm can face a problem of stock-out. The stock-out can prove costly by affecting the smooth working of the concern. In order to protect against out of usage fluctuations, firms usually some margin of safety stocks. The basic problem is to determine the level of quantity of safety stocks. Two costs are involved in determination of this stock. I.e., opportunity cost of stock outs and the carrying costs. Thee stock-outs of raw materials cause production as the firm cannot provide proper customer service. If a firm maintains low level safety stocks them frequent stock-outs will occur resulting into the large opportunity costs. On the other hand, the larger quantity of safety stocks involves higher carrying costs. There are three prevalent systems of ordering and a concern may use any one of these, Fixed order quantity system generally known as economic as economic order quantity (EOQ) system. Fixed period order system of periodic re-ordering system or periodic review system; Single order and schedule part delivery system.

DETERMINATION OF ECONOMIC ORDER QUANTITY (EOQ):-

A decision about how much to order has great significance in inventory management. The quantity to be purchased neither should be neither small nor big because costs of buying and carrying materials are very high. Economic order quantity is the size of the lot to be purchase which is economically viable. This is the quantity of materials, which can be purchased at minimum costs. Generally, economic order quantity is the point at which inventory carrying costs are order costs. In determining economic order quantity it is assume that cost of managing inventory is made up solely of two parts I, e. ordering cists and carrying costs

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C = consumption of the material concern in units during a year or a particular period. O = cost of placing one order including the cost of receiving the goods I.e. cost of getting An item into the firm stores. I = interest payment including variable cost of storing per unit per year or particular period.

A) ORDERING COSTS:-

These are the costs, which are associated with the purchasing or ordering of materials. These costs include;

Costs of staff posted for ordering of goods. A purchase order is processed and they placed with suppliers. The labor spent on this process is including in ordering cost.

Expenses include on transportation of goods purchased. Inspection costs of incoming materials.

B) CARRYING COST: -

These are the costs for holding the inventories. These costs will not be incurred if inventoried are not carried. These costs include;

The cost of capital invested in inventories. An interest will be paid on the amount of capital of capital locked-up in inventories.

Cost of storage, which could have been used of 4 other purchases. The loss of materials due to determination and obsolescence. The materials may deteriorate with passage of time. The loss of obsolescence arises when the materials in stock are not usable because of change in process or product.

Insurance cost. Cost of spoilage in handling of materials.

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CODIFICATION OF MATERIALS:-

The inventories of manufacturing concern may consist of raw materials; work in process, finished goods. Spares, consumable stocks etc. all these categories may have their sub-divisions, for proper recording and control of inventory, a proper classification of various types of items is essential. The inventories should first be classified and then code numbers should be assigned for their identification. The identification of short names is useful for inventory management not only large concerns but also for small concerns. Lack of proper classification may also lead to reduce in production.

Guideline

Part I Guidelines for deciding Schedule Based strategy of procurement for schedule based the following conditions should get satisfied all together. Vendor Response Time + Transit Time + Internal Lead Time is less than one day Part falls in AX, AZ & BZ category. Part is quality certified.

Part II After having decided it follow Consumption Driven strategy for procurement, decide whether Fixed Time Variable Quantity (FTFQ) or Fixed Quantity Variable Time (FQVT) or Fixed Quantity Fixed Time (FQFT) be made applicable. FQFT is useful in the case of parts where one vendor is supposed to get Fixed Qty share by agreement irrespective of production volume. Suppose for a part X there are two vendors A and B we have an official arrangement with vendor A whereby what ever be total consumption level we are bound to pick up Fixed Quantity from him then the Quantity from him then the Quantity and Time of the trigger with his vendor could be standardized to have Fixed Quantity schedules at Fixed Time Intervals. The increase and decrease in total consumption of the month is taken by the other vendor with whom the scheduling arrangement has to be of Fixed Quantity and Variable Time type.

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Part III:For schedule driven Work out stock quantity to cover for production requirement for one day Vendor supplies days requirement in the morning by 10am. At 10am communicate next two days production schedule.

Part IV:Fixed Time Variable quantity (FTVQ) Fix up replenishment interval Calculate Control Level by formula

CL= ADD (RI+VRTLT+ILT)*FACTORY OF SAFETY

To begin with take factor of safety as one Decided upon the control level at which you are comfortable to work with the closing stock level as in the simulation Substitute acceptable control level in the formula to recalculate factor of safety

Part V: Fixed Quantity Variable time (FQVT) Decide upon the Fixed Quantity shipping lot based on considerations like most preferred load, most economically transportable lot etc, Calculate RI as Fixed Qty/ADD Calculate Control Level

CL=ADD (RE+VRT+TLT+ILT)* Factor of Safety

To being with take factor of safety as one. Simulate for above CL. Fix the CL through simulation. Substitute in the formula to arrive at proper factor of safety. One Bin, Two Bin System of replenishment are offshoots of FQVT system in which case the Fixed Qty decided is isolated in a bin to trolley or pallet or specified area from which it is issued to production and empty bin is taken as a trigger for schedule purpose. Here total quantity in one bin in the case of one bin system or total quantity in both the bins in the two bin system is taken as the control level.

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Estimation of different costs: -

In the calculation of the ordering cost and also for other calculation purpose or analyzing purpose, I have considered ALL CLASSES ITEMS AND TO ALL MODELS, To calculate the various costs which are involved in the analysis of inventory management as explained earlier.

TRANSPORTATION COST:-

These are the cost, which are incurred when the spare parts/materials are procured from different places in M&M ltd, the spare parts are procured from the places like Delhi, noida, Mumbai, pune, nashik and bang lore etc. and the cost is incurred by procuring the spare parts form vendors place to the company I, e. manufacturing unit.

There are different slab for the transportation cost procured from different places.

Two main important factors are considered in calculating transportation cost. Distance between the company and vendors place. Depending upon the weight of the spare part to be transported.

Transportation cost is taken as maximum 2.5%. The basic price of the spare parts on an average. It is calculated as the overall fright incurred during previous year divided by purchases made. Here in M&M the transportation cost will be 6 crores pa (app). For Zaheerabad

CARRYING COST: -

These are the costs for holding the inventories. These costs will be depending up on their classes. These costs will not be incurred if inventories are not carried. Usually 4 days inventory are kept in stock for any A category items. Hence the carrying cost includes various costs and those are capital locked in the inventories, storage cost, maintenance cost etc.

ESTIMATION OF STOCK LEVELS FOR CHAMPION:

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NOTE:- HERE IAM CONSIDERING ONLY CHAMPION MODELS.

There are different models used in the calculations of the stock levels. As mentioned earlier the formula for the calculations of the stock levels, economic order quantity, number of purchase orders placed in the month for different spare parts.

Reordering quantity - 2000units. Reordering period Weekly usage: Maximum Normal 600 units. 480 units. 390 units. 2 to 3 weeks.

Minimum

RE-ORDERING QUANTITY:

The quantity to order is called re-order quantity. There are many factors to be considered to place an order for certain level at certain time. It depends upon the present demand, future, and the coordination between the buyer and vendor etc. The re-ordering quantity, which is generally followed, is that of ordering the bin quantity. In M&M ltd. A system is followed in ordering and that is like 2-bin system. After the consumption of 1-bin order is placed with the vendor for the procurement of spares. Hence reordering quantity is taken as the 1-bin quantity. This process of ordering is not exact as per the schedule of the production is concerned because it keeps on changing Reordering quantity is 2000 units Reordering period is 2-3weeks. Reordering level = maximum consumption X maximum re-order period 600 x 3 = 1800 units.

MINIMUM STOCK LEVEL: -

NOTE: - For the calculated of the champion vehicles as 480. Hence the weekly consumption of the parts id constants Ex: - consider CHAMPION ENGINE for calculation purpose. Normal daily consumption = 480units.

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Normal reorder period = Reorder level =

2.5weeks. 1800 units.

Minimum stock level reorders level- (normal consumption x normal reorder period) 1800-(480 x 2.5) = 600 units.

The engine stocks should not go below 600 units. Otherwise there will be storage in stocks of engine and the company can come across losses due to the storage.

MAXIMUM STOCK LEVEL:-

It is the level at which it is risk of storing the inventory and thus it is loss to the company. If it exceeds this level. It is calculated as: Re-order level=1800 units. Re-order quantity =2000 units. Minimum consumption=390 units. Minimum re-order period = 2 weeks.

Maximum stock level = re-order level + re-order quantity (minimum consumption X minimum re-order period). =1800 + 2000 (390 x 2) =3020 units.

From this it is clear that the stock level of the engine should not exceed above 3020 units. It will be economical to maintain stock below 3020 units. Above this level the company incurs relating sort the maintenance of stock, loss due to storage, storage cost, insurance cost, etc.

AVERAGE STOCK LEVEL: -

It is the company should maintain in order to reduce the various cost of inventory management. At this level it is very economical for the company to maintain the stocks at this level It is calculated as: Minimum stock level = 600units Re-ordering quantity = 2000 units. Average stock level = minimum stock level + of re-ordering quantity. =600 + (1/2 x 2000) =1600 units.

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SUPPLY CHAIN MANAGEMENT:-

A supply chain management is a network of facilities and distribution option that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both services and manufacturing organizations, although the complexity if the chain vary greatly from industry and firm to firm.

Below is an example of very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers.

THE TYPICAL BENEFITS OF EXCELLENT SUPPLY:-

Reduction in total logistics costs as a percentage of revenue (material acquisition, order management, inventory costs and finance/IT support). Reduction in order-fulfillment leads time. Reduction in inventory. Improvement in meeting commitment dates. Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organization along the supply chain operated independently.

These organizations have their own objectives and these are often conflicting. Marketings objective of high customer service and maximum sales collars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single integrated plan for the organization-there was as many plans as businesses. Clearly, there is a need for a mechanism together supply chain management is a strategy through which such integration can be achieved. Supply chain management is typically viewed to lie between fully vertical integrated firms, where the entire material flow is owned by a singe firm and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Supply chain management can be compared to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.

Supply chain decisions

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We classify the decisions for supply chain management into two broad categories strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometime {\it are} the corporate strategy), and guide supply chain policies from a decisions are short term and focus on activities over a day-to-day. The efforts in these types of decisions Is to effectively and efficiently manage the products flow in the strategically planned supply chain.

There are four major decision areas in supply chain management. location Production. Inventory and. Transportation.

And there are both strategic and operational elements in each of these decision areas.

1. LOCATION DECISIONS:-

The geographic placement of production facilities, stocking points and sourcing points is the is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distributions costs, production limitations, etc. although location decisions are primarily strategic, they also have implications on an operational level.

2. PRODUCTION DECISIONS:-

The strategic decisions include what products to produce, and which plants to produce them in, allocation of plants, plants to DCs, and DCs to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities gut determine the exact path(S) through which a product flows to and from these facilities.

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Another critical issue is the capacity of the manufacturing facilities and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling .these decisions includes the construction of the master production schedules. Scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

3. INVENTORY DECISIONS:-

These refer to means by which inventories are managed .inventories exist at every stage of the supply chain as either raw materials. Semi finished or finished goods. They can also be in process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain .since holding of inventories can cost anywhere between 20 to 40 percent of their value. The efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. How ever, most researches have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies the determination of the optimum levels of order points, and setting safety stock levels, at each stocking location. These are critical since they are primary determinants of customer service levels.

4. TRANSPORTATION DECISIONS:-

Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30% of the logistics costs. Operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus lot-for-lot). Routing and scheduling of equipment are key in effective management of the firms transport strategy.

FINDINGS

For all the models assembled in Mahindra & Mahindra the reordering quantity is followed by two bin system i.e. after the consumption of one bin only the second bin order is placed.

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The minimum stock level that Mahindra & Mahindra will store for champion model is 600 units by calculation.

There is a risk and loss to the company if it exceeds a maximum stock more than 3020units for champion model.

From the study we found that for champion auto the average stock level is 1600 units on the basis of minimum stock and reordering quantity.

From the past two years there is a tremendous increase of production and dispatches which in turn gave rise to growth of all models of Mahindra&Mahindra.

Management concentrates much while taking decisions in supply chain as there is a problem in transportation due to location disadvantage.

JIT system is being implemented in Mahindra&Mahindra as consumption of materials for all models are procured for a definite period of time.

While purchasing materials a definite codification is given to each and every spare parts of vehicle for all models and it is maintained with that particular code only.

SUGGESTIONS The process two bin system of reordering quantity must be taken exactly as per the schedule of production as there may be changes due to increase in demand and unforeseen conditions.

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The minimum and maximum stock level should be accordingly to the calculated units, otherwise there will be a risk of storing inventory and thus it is a loss to the company.

The company should maintain the average stock level accordingly in order to reduce the various costs of inventory management.

Investment of finance will be less if the stock is brought day-to-day. So the full inventory has to be made direct online system on basis of milk run concept.

To keep materials cost under control so that they contribute in reducing cost of production and over all costs.

Proper codification leads to maximum cost control.

Finally I suggest that Mahindra & Mahindra should continue in using the high Japanese technology .

LIMITATIONS:

The time confined for the study is very limited which is not sufficient to make a comprehensive study.

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The complete data cant be obtained as it was confidential and was not revealed to outsiders.

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