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EXECUTIVE SUMMARY

The study is undertaken in Telcon Ltd. Dharwad It is a summer training wherein an


attempt has been made to understand the management of the company and how the
work has been undertaken so as to get an insight into the management.
The internship was from 23th March 2015 to 23th May 2015, during the project I had
the privilege of being guided by Mr.Anil (Finance officer at Telcon Ltd)
This research is based on .. in Telcon Ltd. Dharwad. This was
one of the primary objectives of the study apart from the other objectives while
analyzing company collection efforts and liquidity. The study was conducted through
the annual reports of the company and personal interview with the personnel of the
company. The findings were analyzed and interpreted based on the study some
suggestions are given.

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INDUSTRY
PROFILE

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ABOUT CONSTRUCTION EQUIPMENT INDUSTRY


Construction equipment industry is going to grow significantly; 20% to 30%, i.e., the
kind of industry estimate of growth over the next five years. Most of the international
Construction equipment companies already exist in India, for example Caterpillar,
Volvo, JCB and others. These companies have invested heavily in the form of
establishment to cater the needs of the Indian market.
Komatsu, which is also one of the top five players in the world, is having 50-50 joint
venture with L&T. There are some rumors that L&T may surrender, or sell its 50%
equity stake to Komatsu to make it as a 100% Komatsu unit. Therefore, knowing the
completion and the significance of this market, Hitachi was very keen to be a partner
with TELCON and take a slightly higher equity stake.
Telcon & HITACHI agreed upon in terms of sourcing the components and machines
from Telcon by Hitachi for its global distribution network. They would be also
bringing some technology by setting up the product development laboratory and
enhancing capability in India jointly with Telcon. They were quite impressed by Tata
Motors ERC facility in Pune as well as in Jamshedpur, and they would like to set up
similar kind of a facility for construction equipment in India which will be not only
meant for the Indian market but also to a large extent meant for their global
operations, especially in the areas of design and development where they would like
to cooperate and work with Tata Technology.

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INDUSTRY OVERVIEW
Construction Equipment industry recorded about 45% growths in the year 2008-2010,
continuing its similar growth rate during the previous year. During the year, the
countrys economic condition indicated high GDP growth, strong rupee; controlled
inflation and soft interest rates, followed by increased demand for industrial and
consumer product.
After a few ears of sustained growths, the world economy was hit by the subprime
crisis and slowdown dramatically in the year 2008-2009. The Indian economy which
was growing rate of over 8% for over period of five year felt the tremors of the
slowdown quite rapidly in the latter half of the year following the bankruptcy of
Lehman brother in September 2008 causing a drop of almost 3% in the growth rate
the bellwether index of industrial production (IIP) should a marred decline in outputs
also the global financial meltdown had a teaching effect on the financial sector in the
country and the flow of credit to the customers of the construction equipment (CE)
industry showed great sluggishment with the impact to the end customers in the form
of:

Interest rates hikes.

Increased margin money requirements.

Stringent credit checks.

A total lack of risk appetite.

The imports of global developments on India contributed to a market contribution of


24% for Excavators, and pronounced fall of over 45% in the Backhoe loaders. In
addition, the whole of the CE industry slowed down dramatically with investments
dropping off postponement or shelving of number of infrastructure projects due to
heightened uncertainty. In addition, many ongoing projects witnessed low level of
activities on questions of financial viability though the stimulus packages announced
by the government gave some respite.

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Situation affected mining sector too, after fall in global demand for iron ore and the
consequent decline in exports. There was however, a sustained activity in the power
and coal sectors where there was only a managerial fall.

COMPANY
PROFILE

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COMPANY PROFILE
Tata Hitachi construction machinery company ltd, the leader in construction
equipment in India enhances the operational performance of its customers, leading to
improving their profitability and competitiveness by offering constructive solutions.
Tata Hitachi is a subsidiary company of Hitachi Construction Machinery Co. Ltd.,
which holds 60% share, and Tata Motors Ltd holding the balance 40%. The company
commenced manufacturing of construction equipment in 1961, as a division of
TELCO. In 1984, it entered into a technical collaboration with HCM, Japan for
manufacturing state of the art hydraulic excavators. Tata Hitachi is focused on
capitalizing the opportunity in the domestic arena for which the key market segments
are Excavators, Wheeled Products, Cranes and Others. Tata Hitachi's consistent
growth and success have been built on the foundation of our ability to understand
customers' needs, provide Equipment, and Support solutions that increase profitability
and competitiveness for them. What we call Reliable Solutions. Our capabilities to
deliver Reliable Solutions starts with our comprehensive range of Equipment that
ensures that the customer has exactly the right kind of equipment for all Mining,
Infrastructure, Construction and Agricultural needs.
The construction industry involves heavy use of excavators, wheel loaders, and
backhoe loaders. Tata Hitachi's ranges of excavators starting at 2 tonnes with a
maximum size of 120 tonnes are made in the country.
Tata Hitachi is one of the largest manufacturers of construction equipment in the
country and has three manufacturing plants - at Jamshedpur in Jharkhand, at Dharwad
in Karnataka and at Kharagpur in West Bengal. It also has a full fledged Design and
Development set-up for developing indigenous and collaborated equipments. Hitachi
is actively participating in creating the new R&D facilities at Kharagpur with the aim
to make the new centre a global R&D hub. Our endeavor to provide Reliable
solutions is enabled by our widespread network. Tata Hitachi Dealers provide support
to the customers through parts and expert service. Tata Hitachi takes pride in its
marketing and service network of 230+ touch points that enables it to have one of the

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largest distribution networks in the country. Our focus is also on value added Service
offerings such as Full Maintenance Contracts, which complete our package to our
customers and enable him free up precious resources for his core activities.
Specialized reconditioning and refurbishing services are offered to ensure that the
utility of the equipment is extended and life cycle costs brought down.

Industry Name

TELCON Construction Equipment Co., Ltd.,

Year of Incorporation

1999

Registered Office

KIADB Plot # 2, Belur Industrial Estate,


Garag Road, Mummigatti, Dharwad 580007.

Business Type

Manufacturing

Telephone No

91-0836-6452880

Fax No

91-0836-2486907

Joint Venture

Hitachi, Japan

Bankers

State Bank of India HDFC Bank Ltd.,


Corporation Bank, Standard Chartered Bank.

Auditors

S.B Billimoria & Co.,

Company Secretary

A Azhagesan

Total revenue

1300 crore

Works

Jamshedpur, Dharwad

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BACKGROUND AND INCEPTION


Telcon has been at the forefront of providing Constructive solution to the Indian
Construction, Earthmoving and Mining Industry. Started in 1961 as a division of
Telco (now Tata Motors), Telcon is an independent subsidiary of Tata Motors and a
Joint Venture between Tata Motors & Hitachi Construction Machinery Co. Ltd. Of
Japan world leaders in Hydraulic Excavators Technology. Telcon has the widest
range of construction equipment catering to the needs of various end use sectors and
holds a dominating presence in the construction equipment market in India the
portfolio equipment range includes Hydraulic Excavators, Mining Shovels Backhoe
Loaders, Wheel Loaders, Vibratory Compactors, Motors Graders, Crawler Cranes,
Asphalt Plants, etc. Apart from manufacturing world-class machines with cutting
edge technology at Jamshedpur & Dharwad, Telcon has a well designed backup
system to cater to the Support Needs of the customers. With a wide network of over
50 front offices in the form of Dealer and Telcon offices, the resultant reach ensures
prompt service to customers both on account of Spare Parts & Breakdown Repairs. In
addition, Telcon offers various value added services like On Site Maintenance
Contracts, Unit Exchange Programs, and Aggregate Repairs at Telcons endeavor and
objective to provide pro-active & constructive solutions with a view to continuously
improve competitiveness & profitability of its valued customers. This spirit, hence,
forms the Telcon Brand-Construction Solutions.

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TELCON-DHARWAD
Initially the manufacturing unit of Telcon was setup only in Jamshedpur but later an
additional plant of Telcon was setup in Dharwad because the availability of land at
lower cost and also transportation cost of the finished goods was reasonable and there
is good market of their product in southern India.
Telco Construction Equipment Company Ltd. Is situated in Belur Industrial Estate in
Dharwad. Telcon was incorporated on 30th March 1999 and commenced its
commercial by the company is 118.75 acres. It is joint venture of Tata group and
Hitachi construction company Ltd.
Joint venture with Hitachi-a world leader in hydraulic excavator technology, Telcon
has access to the very latest and is able to bring excellent products to the discerning
Indian customers. The manufacturing facilities are in accordance with Hitachi
standards and stipulations and the Tata policy of quality ensures that only the best
machines roll out. Telcons facilities located in Dharwad in Karnataka and
Jamshedpur in Jharkhand are strategic locations with proximity to the markets of the
respective products manufactured in each region.
It is the younger of the two facilities having been set-up in 1999 this modern and
highly mechanized facility spread over 118 acres rolls out more than a thousand
machines with less than 50 workers in each shop.
It has fully automated conveyor system, which is designed to cater to high volumes
and is undaunted by the flexibility and fluctuations in the model mix. This gives it the
capability to respond nimbly to customer needs. Systematic workflow and a quality
conscious team ensure that high quality products roll out. The harsh conditions that
prevail on a field site, makes the equipment susceptive to damage and corrosion. So
the machine that rolls out of Dharwad receive an Autophorective Pretreatment, oven
banking, allowed by PU-based painting, a process unique to the Indian Construction
and Earthmoving Equipment industry. This makes the machines corrosion resistant
and gives them a superior finish.
All equipment and key components undergo a rigorous testing routine that ensures
that the equipment is fit for use immediately after commissioning and secures a long
and trouble free life for them.

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NATURE OF THE BUSINESS CARRIED


Earthmoving is the planned, progressive modification of the natural earth surface to
give it a profile matched to a proposed engineering structure or use the material for
processing. While this is the more macro view of earthmoving and its importance to
humankind more specifically, the term Earthmoving is related to construction (dams,
roads, etc.) land clearance; making of canals; mining and quarrying, etc.
Infrastructure development is the key to spurring business growth, generating
employment and giving an overall thrust to the economy of nation. Quality
construction equipment can power the development process by helping to cut costs
and by ensuring timely completion of projects.
Telcon is in the field of designing, manufacturing, assembling, selling, distribution
and dealing in all service related to earth moving machinery and construction
equipment with manufacturing facilities at Jamshedpur and Dharwad and a marketing
and service network covering 65 towns in the country. Its product includes hydraulic
excavators, crawler, cranes, wheel loaders, backhoe loaders, dumpers and motor
graders.

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VISION, MISSION AND QUALITY POLICY


VISION:

Reliable Solutions for Building a Greater Tomorrow

MISSION:

Be the preferred partner for providing reliable solutions for mining and
infrastructure sectors.

While dominating the domestic market, we will become a global manufacturing


and development hub.

Our hallmark shall be our motivated people, customer-centric culture, superior


technologies, and strong partnerships, all working safely in unison with
environment and society.

QUALITY POLICY:
Tata Hitachi Construction Machinery Co. Ltd is committed maximizing customers
satisfaction and delight. It will strive to achieve this goal by continues improvement
of its design and development; manufacture; sales and services of its products. It will
also ensure that its product is reliable, safe, environment friendly and cost effective
and its services are of the highest order. Tata Hitachi Construction Machinery Co. Ltd
also has a commitment to words improving the quality life of its employees, both
within and outside its plants and offices, it will strive to achieve this through the
continues improvement of its work practices and community initiative.

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CORPORATE SOCIAL RESPONSIBILITY


Tata Hitachi (THCM) has identified Corporate Social Responsibility (CSR) as on one
of the Key Business Process. Tata Hitachi is committed to improving the quality of
life of its identified communities located in and around the units of its operations. It
shall strive to achieve this through periodical assessment of the needs of its
communities and the continuous enrichment of the initiatives, designed to facilitate a
process through which Tata Hitachi and its communities shall work as equal partners
of social development. Tata Hitachi shall also strive to provide opportunity to its
employees to volunteer their managerial, technical and specialized skills and services
in order to enrich their lives, as well as to enable the company achieve its stated social
responsibility of building strong communities, in creating a sustainable environment
in and around its facilities.

TATA HITACHI PHILOSOPY and VALUES


1. Ethical behavior

Integrity

Credibility

Transparency

2. Customer orientation
3. Ability speed and competitive urgency
4. High performance culture
5. Innovation
6. Meritocracy
7. Team work as well as respect for individual

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8. Fact based
9. Socially responsible

PRODUCTS AND SERVICE PROFILE


The portfolio of equipment range includes

Hydraulic Excavators,

Mining Shovels,

Backhoe Loaders,

Wheel Loaders,

Vibratory Compactors,

Motor Graders,

Crawler Cranes,

Asphalt Plants, etc.

Telcon has the blend of manufacturing world-class machines with cutting edge
technology as well as designed back up system to cater to the support needs of the
customers. Telcon has a wide network of over 50 front offices in the form of Dealer
and Telcon offices across India.

This has brought Telcon more closely to its

customers as they can avail Spare Parts Support & Breakdown Repairs easily.
In addition, they offer various value added services at Telcons own workshops and
Comprehensive Refurbishing of machines like.

On Site Maintenance Contracts

Unit Exchange Programs

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Aggregate Repairs

It is Telcons endeavour and objective to provide pro-active & constructive solutions


with a view to continuously improve competitiveness & profitability of its valued
customers.

This spirit, hence, forms the core of the Telcon Brand-Constructive

Solutions.

PRODUCT PROFILE
TELCON Construction Equipment Co., Ltd. engages in the design, manufacture, and
supply of construction equipment. Its products include hydraulic excavators, crawler
cranes, wheel loaders, backhoe loaders, off-highway dumpers, wheeled equipments,
road making equipments, motor graders, skid steer loaders, cane loaders, and truck
loader cranes.

The companys products are used for agriculture, construction,

infrastructure, and mining applications.


headquartered in Bangalore, India.

It supplies its equipment in India, as

TELCON Construction Equipment Co., Ltd.

Operates as a subsidiary of TATA Motors, Ltd.

AREA OF OPERATION
The company has used state-of-art technology to manufacture excavators and backhoe
loaders. It enjoys a 90% share of the crawler crane market in India. The only Indian
manufacturer produces 100 tone cranes. These are the largest machines made locally.
The company was the first to introduce mini excavators in India, and its brand EX 60
is the most successful machine to be made in India so far with more than 1300
machines being sold in the last three years. It is the largest manufacturer of hydraulic
excavators in India with over 6000 machines in the market. It offers the widest
available range of hydraulic excavators, eight models ranging from two tonnes to
sixty tonnes in size.

OWNERSHIP PATTERN
Telcon Construction Equipment Company Limited (TELCON) is a 60:40 joint
venture company between Tata Motors (earlier known as TELCO) and Hitachi
Construction Machinery Company Limited (HCM).

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HCM has increased its stake in TELCON from 20% to 40% on 9 th Dec 2008 by an
agreement.

This agreement was made with a view to expand the scope of co-

operation and partnership between Tata Motors and HCM.


HCM is a leading Construction Equipment Manufacturer with a turnover of around
US $ 5 billion. Widely accepted as the foremost in excavator technology, HCM has
its own manufacturing operations in Japan, China, Indonesia, and Netherlands, France
and USA and worldwide distribution network.

Their participation reflects their

confidence in the fast growing Indian market and their desire to be a part of the
infrastructure building in the county as also to strengthen the relationship with the
Tata Motors.

CUSTOMERS OF TELCON
Major constructors
Builders
Contractors
Land scrapper

COMPETITORS OF TELCON

CATERPILLAR

BEML

ESCORTS

HINDUSTAN MOTORS

L&T (Larson & Turbo)

VOLVO

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INFRASTRUCTRAL FACILITIES
TELCON is constantly raising and introducing new facilities to meet overall needs of
the company. Both the plants at Dharwad and Jamshedpur are equipped with modern
infrastructure facilities.
To give an insight into the infrastructure facilities, following are some of the
important features:

Video conferencing facility was extended to Dharwad plant in order to have better
communication between two plants and the corporate office at Bangalore.

An in-plant facility was introduced in the companys Dharwad plant to give a


strategic partnership with vendors.

The transmission subassembly operations for the above product were successfully
shifted from Jamshedpur to Dharwad plant.

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ACHIVEMENTS AND AWARDS:


1961: Started as the Excavator Division of Tata Motors at Jamshedpur
1976: Marketing of these equipments was taken over from M/s Voltas.
1984: Collaboration agreement with Hitachi Construction Machinery Co. Ltd.
1990: Tata-Hitachi EX series of excavators was launched.
1991: The excavator division came to be known as the Construction Equipment
Division (CED). The sale of excavators crossed 3000 units in the same year.
1994: Creation of Construction Equipment Business Unit.
1996: Indias first mini excavator the Tata-Hitachi EX60 was launched, which led to
great success and reached record-breaking sales of more than 500 units.
1997: Telcon CEBU signed a technical collaboration with John Deere Industrial
Equipment Company, USA for the manufacture of Backhoe loaders.
1998: State-of-the art manufacturing facility at Dharwad.
1999: Construction Equipment Business Unit becomes a separate company-telcon.
2000: Tata Motors (then Tata Engineering) and Hitachi sign Joint Venture for 80:20
stakes respectively.
2003: Recently Telcon launched Indias largest excavator the Tata Hitachi EX-1200
was launched
2004: Roll out of 10,000th EX series excavator
2006: 10T Wheel Leader- First Assembled and Inaugurated

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New Central Warehouse Inaugurated at Nagpur

Telcon won the Best Innovation Award for the Innovation Day organized by
TBEM Eastern Region (For 10T Wheel Loader)

10000th Machine Rolled Out from Dharwad Plant in August

Became a Zero Debt Company in December

2006: ISO 9001 Certification


2007: ISO 14001 Certification
2008: JRDQV Award
2009: Kharagpur plant under construction

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Mini excavator

Mid excavator

Large dump trucker

Large excavator loader

Large transit mixer

Large VM

Large excavator

Large TG

Large wheel loader

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Sub large cranes

Sub large Tata Hitachi

DEPARTMENTA
L STUDY

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DEPARTMENTAL STUDY:
1. Planning Department
2. Design Department
3. Supply Chain Department
4. Assembling Department
5. Quality Assurance Department
6. Maintenance Department
7. Finance Department
8. Human Resource Department

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1. PLANNING DEPARTMENT

Planning Department in every organization is an important department so at Tata


Hitachi Construction Machinery Co. Ltd also it is an important department, which
plans each activity of the organization. This department also decides on goals and
objectives, formulates policies to achieve these goals and policies. It also involves
forecasting and research. Tata Hitachi Construction Machinery Co. Ltd believes
Planning today avoids crisis of tomorrow. Planning is a very important concept to be
considered before executing any action. Planning is the concept of executive
managerial skill that embodies skill of anticipating, influencing and controlling the
nature and direction of changes. Therefore, we can say that any organization needs
planning to carry out its work and achieve its objective. It is an integral part of the
management system. It involves selecting the best course of action.
Need for planning:
Planning minimizes risk and uncertainties.

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Leads to success.
Focuses attention on the organizational goals.
Helps manage by objectives.
Facilitates control.

2. DESIGNING DEPARTMENT
Design is the base for any product. Designing is not one time job. It is a continuous
process. As the needs and requirement change, the design must be changed too to
satisfy the new needs of customers. In other words, it is like serving delicacy to the
customers in terms of products. Therefore, design department is the brain of the
organization that gives new ideas and innovations.
Need for design and development department
To face the tough effectively competition.
To provide products to the customers.
With the intension to the improvement and upgrading of the existing range and
customizing it to suit for the Indian environment.
To cope up with the customer needs, as their wants are dynamical.
To increase the quality and efficiency of the machines produced and have a
intension to reduce the cost of production.
To develop new models and proprietary items.

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3. SUPPLY CHAIN MANAGEMENT DEPARTMENT


Supply chain management department is an important department at Telcon. SCM is
the new name for the material and purchase department. The main function of the
SCM department is to procure materials for the production department. Utmost care is
taken at Telcon to select the good quality material in order to procure standard and
quality goods keeping the satisfaction level of the customer in view. The materials
that are to be purchased are classified into two types-Direct material and indirect
material. The direct materials are used in assembly the machines and indirect
materials are the source or aid to build the machines for example- tools, hand gloves,
helmets etc. Here the design department will design the product and prepare a bill of
materials which is called as BOM. This BOM is further given to planning
department where the necessary changes are made in the bill of materials and then it
is sent to SCM department. The BOM is the list of all direct materials to be procured.

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4. ASSEMBLING DEPARTMENT

This department is the backbone of the company. Only assembling of parts takes place
in this department. There are three assembly lines for assembling different types of
excavators. They are

Mini assembly line

Midi assembly line

Wheel shop

All the 3 shops are divided into three parts:

Sub assembly area(Left)

Main line(Middle)

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Sub assembly area(Right)

The contract workers maintain the stores department and bin cards are used for the
stores in all the shops. Tata Hitachi Construction Machinery Co. Ltd also has a Paint
shop, which is the best in Asia in its modernization and automation. The components
are painted before issuing for production. There is also a small paint shop, gear shop
and dispatch area. The machines are given final mal touch at small paint shop and in
dispatch area loading and delivery takes place. Before dispatching, testing is done to
locate defects if any, and to correct the same.

SHOPS AND THEIR CAPACITATES


MIDI SHOP

Built up area -42000 Sq.m

The products assembled here are

Excavators EX 110

Excavators EX 200

The main engine used in

EX 110 is Tata Engine.

EX 200 is Cummins.

Features:

Chain Wheels

Ex 110 capacity of 110 tones

Ex 200 capacity of 200 tones

18 attachments

Application:

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Digging purpose

Pipe lifting

Stone breaking

Mountain leveling

MINI SHOP

Built up Area -3200 Sq.m

It is the second shop where mini excavators are assembled.

Products

Excavators EX 70

Excavators EX 40

Excavators EX 20

Application

Digging purpose

Pipe lifting

Stone breaking

Mountain Leveling

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WHEEL SHOP
Built up Area-4000Sq.mts

Third shop is named as wheel shop because wheels are used in the products
instead of chains.

Product

Backhoe-TATA JD-315

Features

Rubber wheels

Backhoe attachment at the back

Loader attachment in the front

Application

Digging

Loading

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PAINT SHOP

Built up area-7600Sq.m

Goliath Cranes and under slung cranes are used for loading and unloading.

Process:

First base coat is applied to the component.

Next Epoxy coat is applied to the component. This epoxy coat is usually in
Grey color.

Next P.U.coat is applied to the component. This is usually in orange color.

Lastly, component subjected to heat treatment and next it is carried to the


assembly unit.

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5. QUALITY ASSURANCE DEPARTMENT:


Tata Hitachi Construction Machinery Co. Ltd is committed maximizing customers
satisfaction and delight. It will strive to achieve this goal by continues improvement
of its design and development; manufacture; sales and services of its products. It will
also ensure that its product is reliable, safe, environment friendly and cost effective
and its services are of the highest order. Tata Hitachi Construction Machinery Co. Ltd
also has a commitment to words improving the quality life of its employees, both
within and outside its plants and offices, it will strive to achieve this through the
continues improvement of its work practices and community initiative.

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6. MAINTENANCE DEPARTMENT
The main objective of this department is to reduce breakdown hours / time and also
provide all resources for maintaining machines.
Functions

This department attend breakdown of machines and equipment in less time.

This department maintains critical parts so that the breakdowns can be


reduced.

These departments carry out preventive maintenance of machine and


equipments as per the preventive schedule plan. This can be done weekly,
monthly and quarterly also.

In order to avoid any mishaps and accidents safety equipments are to be


maintained

Products
Spare parts like --bearings, valves, gears, electrical items, springs etc.

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7. FINANCE DEPARTMENT
Tata Hitachi Construction Machinery Co. Ltd also has a separate finance department
that controls the financial sources of the company. Tata Hitachi Construction
Machinery Co. Ltd has made a very huge investment to build the product. Finance
department plays a very significant role in any organization. Tata Hitachi Construction
Machinery Co. Ltd has made a very huge investment to build the business in the
global market and to sustain any competition by introducing a variety of features in
the product. Tata Hitachi Construction Machinery Co. Ltd believes that if one tries to
eliminate the financial functions, he may have to put an end to the business activities.
The financial department is to attain the desired goals in the stipulated time. Finance
department encourages the effective use of the funds so as to improve the productivity
in the business operation. The main objective of this is to maximize the value of the
firm. Finance function is not merely procurement of funds but something more than
that. Tata Hitachi Construction Machinery Co. Ltd maintains a clear and perfect
accounting system. Finance department records the total activities of the company in
financial terms. The activities of the accounts and finance department can be
segregated below.
Functions

Every day transactions are recorded.

Planning and controlling expenses and funds for production.

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The respective parties and vendors are paid accordingly

Keeping a record of the payments received

Preparation of P&L account on monthly basis and balance sheet on yearly


basis.

Preparation of fund flow and cash flow statements for every month.

Preparing the new cost reduction and cost control methods and implementing
them

Planning and sketching the profit

The Accounting is done on TALLY System. The activities of the Department are
classified as:
1. Books of Accounts.
2. Bills Payable.
3. Commercial.
4. Costing and Budgeting.
Books of Accounts: This group looks the fund monitoring; trial balance preparation,
bank reconciliation statement, cash management, books of accounts and also reporting
to head office.
Bills Payable: This group takes care of supplier payment, which includes the
activities like bills checking, bills passing, etc. After comparing the Goods Inward
Notes (GIN) and the suppliers invoice and comparing it with the purchase order the
bill is passed. The data is fed to the computer and continuous updating is made in the
system. There are two sub groups of the bills group viz. Revenue Bills and Capital, to
take care of the respective activities.

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Commercial: This group is divided into following functional activities, which are
Excise, Sales Tax, Sales accounting etc. Salary Section, which looks after the salaries
of the employees, is also a part of this.
Costing and Budgeting: This group concerned with activities like capital assets
costing, fixed assets accounting, material accounting, budgeting and MIS, Auto and
Non-auto costing.

Accounts Maintained Are

Bank Account Profit and Loss Account

Debtor Account Trial Balance

Creditor Account

Fixed Assets

Cash Account

Tally Software is used and the accounts are maintained through SAI system. The
company deals with the State Bank Of India, HDFC Bank Ltd, Corporation Bank. The
company prepares the annual report. The auditors concerned with the company are
S.B. Billimoria and Co. for determining the financial results, net sales and other
income, profit before tax, profit after tax and profit for appropriation. The company
for reviewing financial performance and comparison uses current asset ratio,
Inventory turnover ratio, Net profit ratio, Fixed Asset ratio etc.

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8. HUMAN RESOURCE DEPARTMENT


Human resource management is the field of management, which has to do with
human relation its maintenance and its related issues, in order to attain the individual
goals as well as company goals.
Recruitment: In Tata Hitachi Construction Machinery Co. Ltd recruitment is called
as hire to retire. Tata Hitachi Construction Machinery Co. Ltd is hiring its employees
believing that they will serve the company until their retirement age. Tata Hitachi
Construction Machinery Co. Ltd is recruiting its work force by the source of:

Campus Selection: Selecting from different Engineering Colleges and IT


institutes as its technical personnel.

Private Employment Agencies: NTTF is serving as such agency by charging


fees. Other than these, it is also recruiting by ways of internal recruitment,
transfers, making use of data banks etc.

Selection: In Tata Hitachi Construction Machinery Co. Ltd selection of


managerial personnel is made on managerial selection scheme i.e. supervisors are
promoted to managers grade as in Tata where in Tata employees are promoted.

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OBJECTIVES
PRIMARY OBJECTIVE:
To analysis of the Cost Volume Profit and its impacts at TELCON LTD.

SECONDARY OBJECTIVE:

To identify the effect of breakeven point for multiple products and ascertain which

product is as advantages.
To study the level of sales need to achieve a desired target profit and identify

Margin of safety and its significance.


To measure the degree of leverages.
To analyze the trend with regards to income, expenditure and profits.

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SCOPE OF THE STUDY


This study is performed by using the cost sheet and balance sheet of TELCON LTD.
The analysis done in the cost sheet are Breakeven analysis, profit volume, etc., these
calculation cover the major areas like contribution margin, profit. This would be
useful for company to make new strategy to compete in the market by adopting
various controlling techniques in the process of manufacturing.

This study was conducted only on overall cost volume profit analysis and not on each
variables. This study to help to forecast profit fairly and accurately as it is essential to
know the relationship between profits and costs.

This study assists in evaluation of performance for the purpose of control and also
assists in formulating policies by showing the effect of different price structure on
costs and profits.
This study predetermined overheads rates are related to a selected volume of
production.

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REVIEW OF LITERATURE
Cost volume profit analysis is one of the most hallowed, and yet one of the simplest,
analytical tool in management accounting. In a general sense, it provides a sweeping
financial overview of the planning process (Horngren et. Al., 1994). That overview
allows managers to examine the possible impacts of a wide range of strategic
decisions. These decisions can include such crucial areas as pricing policies, product
mixes, market expansion or contractions, outsourcing contracts, idle plant usage,
discretionary expenses planning and a variety of other important considerations in the
planning process. Given the board range of context in which cost volume profit can
be used.
The basic simplicity of cost volume profit is quite remarkable. Armed with just three
inputs of data Sales price, variable cost per unit, and fixed cost a managerial
analyst can evaluate the effect of decision that potentially alter the basic nature of a
firm.

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RESEARCH METHODOLOGY
Research Methodology is a way to systematically analysis the research subject and it
may be understood as a science of study how research at done scientifically. Research
is common parlance refer to a research for knowledge. According to Redman and
Mary, research is defined as a systematized effort to gain new knowledge. Research
Methodology is a way to systematically solve the problem. It may be understood as a
science of studying how research is done scientifically. The advanced learners
dictionary lay down the meaning of research as a careful investigation or inquiry
especially through search for new facts in any branch of knowledge.
The secondary data is collected from the annual report of TELCON LTD and the
various records maintained in the Finance Department.
In addition, the data collected by interviewing the Finance Department employees is
used in this study to understand the thing clearly. It is necessary for the research
method, techniques but also the methodology.

RESEARCH DESIGN:
Research Design is the conceptual structure within which the research is conducted.
A research is the arrangement of conditions for the collection and analysis of data in a

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manner that aims to combine the relevance to the research purpose with economy in
procedures. Research constitutes the blue print for the collection.

CONCEPTUAL FRAMEWORK
MEANING OF FINANCE
In the modern money using economy, finance is considered to be the life blood of
business. It is the foundation of every economic activity and is the pivot around
which every business activity rotates. Money or finance has acquired so much of
important that the modern economy is described as money economy. At present, we
cannot think of an economy without money because an economy without money
cannot function as effectively, efficiently and smoothly as a money economy. It has
made possible tremendous saving of time and trouble in the marshalling of try of to
final consumer it has brought about rapid economic progress by facilitating
specialization and division of labor, technological progress large-scale production and
expansion of various forms of business and financial organizations.

DEFINITION OF FINANCE
In business, finance is defined as provision of money at the time when it is wanted.
Finance is the art of rising and spending of money. Every business concern requires
money or finance to commerce its operations and to continue its operations and for
expansion or growth. There must be continuous flow of finance in or out of the
organization.

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COST-BENEFIT ANALYSIS:
Costbenefit analysis (CBA), sometimes-called benefitcost analysis (BCA), is a
systematic process for calculating and comparing benefits and costs of a project.

CBA has two purposes:


1. To determine if it is a sound investment/decision (justification/feasibility).
2. To provide a basis for comparing projects. It involves comparing the total
expected cost of each option against the total expected benefits, to see whether the
benefits outweigh the costs, and by how much.

THEORY:
Governments and others, e.g. businesses, to evaluate the desirability of a given policy,
often use costbenefit analysis. It is an analysis of the expected balance of benefits
and costs, including an account of foregone alternatives and the status quo, helping
predict whether the benefits of a policy outweigh its costs, and by how much (i.e. one
can rank alternate policies in terms of the ratio of costs and benefit). Altering the
status quo by choosing the lowest cost-benefit ratio can improve Pareto efficiency,
[citation needed] in which no alternative policy can improve one group's situation
without damaging another. Generally, accurate cost-benefit analysis identifies choices
that increase welfare from a utilitarian perspective. Otherwise, cost-benefit analysis
offers no guarantees of increased economic efficiency or increases of social welfare;

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generally, positive microeconomic theory is moot when it comes to evaluating the
impact on social welfare of a policy.

Benefits of cost benefit analysis:


It is one of the tools of analyzing and interpreting financial statements. It helps in
understanding the financial health and trends of the firm. The following are different
benefits.

1. Benefit to management:
The management use cost benefit analysis in formulating policies, making
decision, evaluating performance, knowing the trend of business, planning and
forecasting.
2. Benefit to share holders:
Cost benefit analysis helps investor to select best company for making investment.
The existing shareholders will be able to understand the performance of their
company and about future prospects.

3. Benefit to creditors:
Creditors and suppliers of goods on credit basis are interested in company, who
has solvency and good liquidity position.

4. Benefit to employees:
Employees are interested in the performance of the company as their benefits are
related with profit earned by the company.

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Disadvantages of Cost-Benefit analysis:


1. Historical values are considered in working out the calculations. However, the
effects of changes in price level of various items are ignored and that extent
comparison and evaluation of proposal becomes unrealistic.

2. Usefulness of the ratios depends upon the ability and intention of the person who
handle them.

3. If there is a window dressing of financial statements ratios derived from them will
not serve the purpose.

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COST ANALYSIS:
The accumulation, examination, and manipulation of cost data for comparisons and
projections is called as cost analysis. In cost analysis I am taking 8 important costs to
analyze that will give us the clear picture of the cost analysis in the company we are
comparing these costs with respect to the net sales of the company so that we can get
the ratio or the percentage of these costs to net sales of the company. The most
important of them are:
1.
2.
3.
4.
5.
6.
7.
8.

Factory expenses
Administration expenses
Operating expenses
Direct expenses
Indirect expenses
Operating ratio
Financial expenses
Debt Equity proportion

Now we will analyze each item with respect to sales so that we can get a clear picture
of cost analysis of the company.

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THEOROTICAL
BACKGROUND

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