GOVERNMENT ENGINEERING COLLEGE,AJMER

(An Autonomous Institute of Govt. of Rajasthan)

Preface

As one cannot achieve anything worth wide in any field of knowledge solely on the basis of
theoretical knowledge from books to develop healthy managerial and administrative skills in
potential manager, it has became a necessity that the theoretical knowledge should be
necessity supplemented with the real business environment actually it is the implementation
of theory in practical which is the life force of management.

My training at HMT had been a leering and wonderful experience. Constantly adding to my
knowledge. I had the opportunity of getting practical insight into the business world, which
enable me to sufficient the principle of management with critical. Working of the well
established, esteemed and leading organization I have also learned how to ameliorate my
theoretical knowledge into practical aspects.
I have tried to put in my utmost and best effort to make this project a
learing and really useful to the company. Now I have it upon their satisfaction that decides
my success.
 Acknowledgement

Sometimes words fall short to show gratitude, the same happened with me during this
project. The immense help and support received from HMT Machine Tools Limited
overwhelmed me during the project.

It was a great opportunity for me to work with Mr. R.C Maheshwari (AGM of finance
department of HMT Machine Tools LTD.) I am extremely grateful to the entire team of
finance department have shared their expertise and knowledge with me and without whom
the completion of this project would have been virtually impossible.

My sincere gratitude to Mr. Bharath Bhoosan ( JGM of training & development of

HMT Machine Tools LTD.) for providing me with an opportunity to work with Mr. R.C
Maheshwari as a project guide who has provided me with the necessary information and
his valuable suggestion and comments on bringing out this report in the best possible way.

I am highly indebted to Mr.B.C JAIN who has provided me the necessary

information’s and his valuable suggestion and a good support in understanding the basics of
the TAXATION.
I’m also very thankful to my friends who helped me in completion of the project
report. I am thankful to the power that always inspires me to take the right step in the
journey of success

(Amandeep kaur)

Executive Summary
The objectivity is to do the comparative study of value added tax of the company with regard
to sales tax system. The time period which has been taken for analysis is from 18 jun 2009
to 28 jully 2009.The data used in it are mainly from personnel talks to the financial officers
Mr. B.C. Jain and Mr. R. C. Maheshwari of the company who provide yearly data of VAT
paid by the company and provided necessary information’s and his valuable suggestion
and a good support in understanding the basics of the TAXATION.
Besides this, Annual Reports, invoice and Websites are also helpful in analyzing the data.

CONTENT
1) PREFACE…………………………………………………

2) ACKNOWLEDGEMENT…………………………………

3) EXECUTIVE SUMMARY…………………………………

4) HMT- A PROFILE…………………………………………
4.1) Introduction
4.2) Milestones
4.3) Corporate profile
• Mission
• Business group
• Corporate objective

5) PROFILE OF HMT, AJMER……………………………

5.1) Introduction
5.2) Product basket
5.3) Background
5.4) Organizational structure
5.5) Accounts Department
5.6) Technical Base
5.7) Basic information on the co.

6) RESEARCH DESIGN…………………………………
6.1) Techniques used

6.2) Source of information

7) SWOT ANALYSIS…………………………………………
7.1) Strengths

7.2) Weaknesses

7.3) Opportunities

7.4) Threats
 VALUE ADDED TAX

8) INTRODUCTION OF VAT ……………………………….

8.1) What is VAT
8.2) Meaning of VAT
8.3) VAT system in india
8.4) Concept of VAT in rajasthan
8.5) History of VAT
8.6) Broad consensus

9) BASIC ELEMENT OF VAT……………………………

9.1) Output Tax

9.2) Input tax

9.3) credit c/f,credit b/f
9.4) ITC
a) ITC on capital goods
b) ITC on opening stock
9.5) Treatment of export
9.6) Goods procured from other state
9.7) Tax invoice
9.8) Registeration
9.9) Small dealer and composition scheme
9.10) Return
9.11) Declaration form
9.12) Self assissment
9.13) Audit
9.14) Incentive
9.15) Rates
10) VAT PROVISION & PROCEDURES………………
10.1) Introductory
10.2) background
10.3) hurdles
10.4) prov of vat 2003 nd 2004

11) OTHER IMPORTANT PROVISION…………………

12) CONCLUDING REMARK……………………………
13) ANALYSIS OF VAT………………………………
14) BIBLIOGRAPHY…………………………………
PROFILE

OF HMT MACHINE TOOS LTD. GROUP

 INTRODUCTION

When India has achieved independence in 1947, there was hardly any industry base in
country. Right from that period, HMT has layed an important role in providing the much
needed industrial base as well as a launching pad for the growth and development of the
country.

When HMT was founded in 1953, it dedicated itself to a clear

objective: empowering the emergence of Indian Industry. With the virtue of being founded
on a strong technical base, HMT donned the role of a one-of-its kind precision engineering
company. HMT leveraged its technical know-how, acquired from world leaders in machine
tools, to arm a wide spectrum of industries with vital manufacturing machinery and
solutions. Strongly supported by excellent R&D prowess, a highly-skilled workforce and as
many as nine exclusive machine tool units across the country, HMT contributed enormously
to the precision engineering arena.
Introduction:
HMT Machine Tools’ expertise in machine tools has been honed to a point that it can
design and develop any kind of machine. From simple lathes to multi-station transfer lines,
from stand-along CNC machines to flexible manufacturing systems, leading to factory
automation, HMT Machine Tools’ Products cover general purpose machines, special
purpose machines and CNC machines to meet the application needs of every engineering
industry. To date, over 80,000 machine tools on par with international standards in quality
and performance, manufacture by HMT, are in use all over India. The Company also
manufactures sheet fed offset printing machines in single, two, four, and five colours,
programmable paper guillotines, ball screws, and CNC Control Systems.
HMT’s pioneering spirit and cutting-edge marketing abilities enable it to showcase its
products and services to a worldwide clientele. The establishment of HMT (International)
Limited leveraged the Company’s international trading experience. HMT (I) markets the
products through a global network that extends over 40 countries to service its customers
worldwide. HMT (I) has a diverse clientele with more than 14,000 machines in over 70
countries including the developed ones.

HMT Machine Tools, jointly with HMT(I) has been instrumental in executing various
international turnkey projects in Algeria, Tanzania, Nigeria, Malaysia, Iraq, Mauritius,
Indonesia, Kenya, Ethiopia, Iran, Maldives, Senegal, Turkmenistan, Nepal, Zambia - to
name just a few.

MILESTONES

1960-61 : HMT’s performance was adjudged as best out of all public sectors
And it was given highest Presidential award.

1961 : HMT’s second factory was set up at Bangalore financed entirely

By internal resources. The project was completed in a record time
Of fourteen month of MAY, 1961, month ahead of schedule.

1962 : HMT diversified into wrist watch manufacturing by setting up a

Plant at Bangalore in technical collaboration with M/s citizen watch
Corporation limited, Japan.

1963 : HMT’s third machine tool factory was set up at pinjore using
Entirely internal resources.

1964 : MR.S.M Patil took over from Mr. Mathula as M.D. of the company.

1965 : HMT’s fourth machinery was set up a Kalamassery.

1967 : The fifth machine tool was set up at Hyderabad. During this period,
HMT went for fourth diversification in gear shapers, surface
Grinding machine and sophisticated special purpose machine tools.

1967-69 : HMT experienced a severe recession. The company was forced to

Think about retrenchment of 5000 employees, nearly half of HM’s
Total work force.

1970 : In the second face of diversification, as many as 10 agreements were

Signed with different collaborators.

1971 : HMT diversified into two new product lines – tractors at HMT,
Pinjore in technical collaboration with M/s Motokov of
Czechoslovakia and die casting and plastic injection moulding
Machine at Bangalore in collaboration with M/s Buhler of Switzerland.

1972 : HMT diversified into manufacturing of printing machine in

Collaboration with M/s version of U.S.A second watch unit was set
Up Bangalore in collaboration with M/s Buhler of Switzerland.

1973 : HMT’s hierological machinery division was set up at Bangalore.

1974 : HMT entered a new phase with increasing emphasis being placed
On long range corporate planning and decentralization of
Management with appointment of full directors and representation
Of senior executive on HMT’s board.

1975 : HMT took over the machine tools corporation of India, AJMER as it is
Sixth machine tool unit.
HMT international limited was set up as a subsidiary company to
Handle the international marketing of HMT’s product and
Technological service. During the same year HMT’s third watch
 Factory set up at Bangalore.

1977 : HMT was declared a public limited company with effect from 13th
May, 1977.

1978 : HMT set up fourth watch at tumkur, a backward area in Karnataka

With a capacity of 2 million watch components. The company name
Hindustan machine tool limited was changed to HMT limited with
Effect from 12th sep. 1978 in view of manufacturing and marketing
Of various type of printing machine, watches, tractor, lamp, lamp
Making machine, dairy machine in addition to machine tools.

1980 : Dairy machine set up at Aurangabad, Maharashtra in technical

Collaboration with M/s fortschritt land Mechanism, East Germany.

1981 : Indo Nippon, a state owned bearing manufacturing was taken over
As a subsidiary company. The company subsequently named as HMT
Introduced quartz analog watches.

1982 : HMT set up fifth watch factory at Ranibagh backward hilly a

Backward area in Nanital, U.P, with a capacity manufacturing
2 million watch set components,

1983-84 : HMT set up a separate unit for manufacturing silver axide

Batteries required for electronic watch at Guwahati, Assam
In technical collaboration with M/s Hitachi Maxwell, Japan.

1985 : CNC system division was set up at Bangalore. During this year,
CNC machine were establish in different unit of HMT.

1987 : HMT limited, Ajmer was awarded national productivity award for
1986-87 by the ministry of industry.
1994 : HMT limited, Ajmer become a first unit of machine tools division to
Receive ISO 9001 certificate from the “Indian register quality
System”( IQRS), an affiliate of RAAD-VOOR DE Certificate
(RVC), NETHERLANDS.

1995 : HMT limited, Ajmer received the award for indigestion of defense.
Items from the ministry of defense.

1996-97 : HMT limited, Ajmer reached breakeven and has headed towards
Profits after a decade with highest ever sales and production.

1997-98 : HMT received the all India trophy for highest exportefrom
Engineering export promotion council, Kolkata.

1998 : HMTLtd. Ajmer had achieved “best product at IMTEX 98” from
FIE, foundation.
HMTLtd, Ajmer had achieved “best product at IMTEX 98” from
CMIT-PMT trust award.

1998-99 : HMT ltd., Ajmer had achieved “regional trophy for height exporter
In the group. Services export” from engineering export council,
Southern region Chennai.

2001 : HMT ltd., Ajmer had received “best product at IMTEX-2001” from

FIE foundation.

2001 : HMT ltd., Ajmer had received “best product at IMTEX-2001”

From CMIT-PMT Trust award.

 CORPORATE PROFILE:-

OUR VISION AND MISSION

To be a leading GLOBAL ENGINEERING CONGLOMERATE focused on CUSTOMER

DELIGHT in our fields of endeavour

Our Corporate Mission

To establish ourselves as one of the world’s premier companies in the

engineering field having strong international competitiveness

To achieve market leadership in India through ensuring customer satisfaction

by supplying internationally competitive products and services

To achieve sustained growth in the earnings of the group on behalf of

shareholders

BUSINESS GROUPS

The various business group of HMT Machine Tools Ltd. Are:-

 1) Machine tools business group:

This group mainly manufacturing GPM Tools, SPM tools, CNC machine tools,
horological machine tools, CNC system and marketing of above.

2) Consumer product business group:

This group manufacturing-

a) Hand wound watches.

b) Quartz digital watches.
c) Automatic day and date watches.
d) Quartz analog watches.
e) Population clock.
f) Braille watches.
g) Miniature batteries.
h) GLS lamp.
i) Florescent lamp.
j) Mercury vapours lamps.
k) Sodium vapour lamp.

3) Tractor business group:

This group manufacturing tractor.

4) Engineering component business group:

This group manufactures casting, ball screw and bearing.

5) Industrial machinery business group:

This group manufactures dairy machinery product, die casting and plastic injection moulding
machine.
6)Technology: This group handles corporate technology function including centralized
designs CAD/CAM, technological development, mechatronics centre
Coordination of research and development activity, quality assurance and productivity
improvement programe.
7)Information systems:

This group handles total information system of the company including networking,
integration of database and system planning.

CORPORATE OBJECTIVES AND GOAL

To encourage the modernization of Indian Industry through the supply of engineering goods
and services of world class excellence

To maintain technological leadership through continuous efforts to update product technology

and manufacturing methods

To globalise our operations by developing a mix of international markets and businesses

To ensure a satisfactory return on capital employed, to meet the growth needs and the
aspirations of our stakeholders

To present an active, pleasant and productive working environment

PROFILE

OF HMT MACHINE TOOLS LTD., AJMER

 INTRODUCTION

MTA AT A GLANCE:
 1. Date of registration: 11-01-1967
2. Commencement of production: 1970-71
3. Merger with HMT: 1-04-1975
4. Capital employed (as on 1.4.2007) 201lacks.
5. Land area-total: 178 lacks
6. Plant foundry: 62acres
7. Township: 116acres
8. Covered area (plant): 31848sq.M.
9. No of quarters 136
10. Power required 4.00 lacks unit/month
11. No. of employees(as on 31.7.08) 429
12. No. of machine 250
13. ISO-9001 Certified 1994

Product basket:
• CNC train master machinery center
• Roll chamber grinder
• Knife edge grinding machine
• CNC crank shafts
• Journal grinder
• CNC center less grinder
• CNC turning center
• CNC train master lathe
• CNC precision surface grinder
• Key stone grinder
• Tools & cutter
• CNC internal grinder
• CNC external cylindrical grinder
• Super finishing machine
 • Special purpose machine
• Lens grinder polishing machine
• CNC single axis center less grinder
• CNC trainee lathe 70PC

BACKGROUND OF THE UNIT

This was establish as machine tool corporation of India limited in JAN.1967 keeping in view
the government policy of diffusing new industries in underdeveloped areas of country and
achieving self reliance in production of grinder machine tools which were important.

This unit was subsequently merged with HMT LTD. On 1st april,1975 as sixth machine tool
plant. With this merger, the unit got back up support of HMT. The basic plant was
established with the collaboration of the Czechoslovaian firm M/s Skoda export, praha and
the German firm WMW, then in East German.

Production in this unit standard in 1970-71 with a production of Rs. 8.64 lakh and gone up to
Rs.2225 lakh in 1994-95. Faced with the difficulty procurement of quality machine tool
castings, a capative foundry plant was installed in 1973 with a capital cost of about Rs.2
crore. The present production capacity of this foundry is 1000 MT per annum.

Organization Structure Of HMT M/C Tools Ajmer

The organization structure of H.M.T. Ltd. Ajmer is based on functions performed by various
people. General technical manager is on the top of the hierarchy, assisted by the joint
general manager. The organization structure consist of following management levels in all:-

General Technical Manager

Joint General Manager

Deputy General Manager

Assistant General Manager

Manager

Deputy Manager

Officer

Supervisor

The organization structure of HMT ltd., Ajmer is based on functions. General manager
leading the unit, assisted by the general technical manager, directly control ten department
in all.

Accounts department

Functional role of the department in HMT Ltd. Ajmer

 1. To maintain accounts of all transactions, prepare balance sheet, profit & loss account
& get them audited.

2. To compute cost of products & fix prices.

3. Day to day decision making – procurement, sub contracting, capital items.

4. Arrangement of funds & their effective utilization.

5. To prepare operational plans & keep budgetary control.

6. Liaison & dealing with- banks, excise, sales tax, PF, income tax etc. & satisfying their
requirements.

7. Working capital management.

8. To keep financial control & management in coordination with the top management.

9. Advisory role.

10. To maintain accounts of all transactions, prepare balance sheet, profit & loss account
& get them audited.

11. To compute cost of products & fix prices.

12. Day to day decision making – procurement, sub contracting, capital items.

13. Arrangement of funds & their effective utilization.

14. To prepare operational plans & keep budgetary control.

15. Liaison & dealing with- banks, excise, sales tax, PF, income tax etc. & satisfying their
requirements.

16. Working capital management.

17. To keep financial control & management in coordination with the top management.

18. Advisory role.

The various department of HMT Machine Tools ltd. Ajmer work in close coordination with
the finance department to build a solid & strong system of revenue generation. The health of
the company is conveyed to the head office through monthly monitoring report & annually
through annual reports. Operational plan is made in which future course of action is
discussed. These reports are helpful to fulfill the communication needs of the both the top
management & the lower cadres. HMT has a good & effective MIS (Management
Information System) for communication as it is the key to management.

Technological base

The unit is well equipped with modern machine shops comprising many sophisticated
machine like CNC controlled KTM machine of UK, precision jig boring machine from
DIXI ( Switzerland ), precision coordinate boaring machine from studer & fortuna,
precision slideway grinding machine from waldrich, co burg, CNC horizontal machine
centre from HMT,etc.
Head treatment section is well equipped with gas carburizing and nit riding
furnace. Measuring center is equipped with roundness checking machine, surface
roughness testing machine, etc. the unit is also equipped with CAD system and
electronic lab. Computerization has been introduced in some areas where the paper
work is more and a plan has been made to cover up all the areas in phases.
To meet power requirement during the period of power shortage, the unit
has captive generation capacity of 1850 KVA.

1. The following infrastructure is available in most of the machine tool units

situated in different states of the country. The number/type/capacity will vary
depending on the products and scale of operation.
2. Land and buildings, power supply system, stand by power system, water
supply system, compressed air system
i. Material handling facilities like forklift trucks, mobile
cranes, EOT cranes
ii. Foundry facilities: Pattern making facilities, mould making
facilities, sand plants, induction furnaces, stress relieving
furnaces, fettling equipment, shot blasting and sand
blasting plants. (1 foundry in each of the locations, viz.,
Bangalore, Ajmer, Kalamassery, Pinjore and Hyderabad.)
 iii. Machining facilities: CNC turning centres, CNC machining
centres, CNC gear hobbers H-boring machines, V-boring
machines, slide way grinders, Plano-millers, cylindrical
grinders, polygon grinding machines, profile grinding
machines, sleeve grinding machine, surface grinding
machines, CNC gear grinding machines, optical profile
grinding machines, keyway milling machines, centreless
grinding machines, lead screw cutting machines, etc.
iv. Facilities for heat treatment, induction hardening,
electroplating, ultrasonic testing equipment, etc.
v. Measuring room, calibration and inspection facilities, gear
testing facilities, material testing facilities, three coordinate
measuring machine, profile projectors, etc.
vi. Painting booths with facilities for painting components and
finished machines
vii. Computer centre, communication network, stores for
incoming materials, tools store, foundry material store,
finishing parts store, standard parts store, rejected parts
store, etc.

4 Basic Information on the Company and the

Manufacturing Units

Brief Profile Major Items

Company / Unit Location
of Unit Procured
A HMT Limited
Tractors Division Pinjore, Haryana trpprofile trpitems
Food Processing Machinery Aurangabad,
fpaprofile fpaitems
Division Maharashtra
Bangalore,
Common Services Division csdprofile csditems
Karnataka
Corporate Head Office Bangalore, choprofile choitems
 Karnataka

B HMT Machine Tools Limited

Machine Tools - Bangalore Bangalore,
mbxprofile mbxitems
Complex Karnataka
Machine Tools - Pinjore
Pinjore, Haryana mtpprofile mtpitems
Complex
Machine Tools - Hyderabad Hydrabad, Andhra
mthprofile mthitems
Complex Pradesh
Machine Tools -
Kalamassery, Kerala mtkprofile mtkitems
Kalamassery Complex
Machine Tools - Ajmer
Ajmer, Rajasthan mtaprofile mtaitems
Complex
Machine Tools - Corporate Bangalore,
mtlmprofile mtlmitems
HQ & Mktg Karnataka

C HMT Watches Limited

Bangalore,
Watch Factory - Bangalore wfbprofile wfbitems
Karnataka
Watch Factory - Tumkur Tumkur, Karnataka wftprofile wftitems
Ranibagh,
Watch Factory - Ranibagh wfrprofile wfritems
Uttarakhand
Bangalore,
Watch Case Division wcbprofile wcbitems
Karnataka
Watches - Corporate HQ & Bangalore,
wlmprofile wlmitems
Mktg Divn Karnataka

HMT Chinar Watches Srinagar, Jammu &

D Limited Kashmir
cwlprofile cwlitems

Hyderabad, Andhra
E HMT Bearings Limited Pradesh
blprofile blitems

Bangalore,
F HMT (International) Limited Karnataka hmtiprofile hmtiitems

Hyderabad, Andhra
G Praga Tools Limited Pradesh
ptlprofile ptlitems
 RESEARCH DESIGN
Research design facilitates the smooth sailing of various research operations thereby
making research as efficient as possible, yielding maximal information with minimal
expenditure of effort, time & money. The study of “value added tax.” is descriptive in nature.
In contrast to exploratory studies descriptive studies are typically structured with clearly
stated hypothesis. Descriptive studies are those studies which are concerned with
describing the characteristics of particular individual or group.
These studies are concerned with specific predictions, with narration of facts &
characteristics concerning individuals, groups, or situations. The design in such a study
must be rigid & not flexible & must focus attention on the following:-
 Formulating the objective of the study.

 Designing the method of data collection.

 Collection of data.

 Processing & analyzing the data.

 Reporting the findings.

Techniques Used
 Collection, Classification, Compilation, Tabulation, Analysis and Interpretation of
information, facts and figures relevant to the company.

 Consultation and personal observations.

 Discussions with officers and employees of the company.

  Drawing conclusion through application of various statistical and accounting tools
and technology.

Sources of Information
Primary Sources
 Information schedule is prepared for collecting primary data relevant to the tax paid
by the company.

 Personal observations and interviews with officers.

Secondary sources
 VAT invoice, challan for deposit tax to govt of rajasthan, statements of VAT & CST
paid in 2008-2009,CENVAT credit taken and utilized in 2008-2009 etc..

 Annual reports of the company.

 Reference books, statistical bulletins.

SWOT ANALYSIS
SWOT analysis is a good management approach, which helps the manager to analyze the
strengths, weaknesses, opportunities and threats.
Strengths
S1. Strong brand image and broad customer base.
S2. Experienced and skilled labor for manufacturing grinding machines.
S3. Qualified and experienced design and engineering team.
S4. 38 years of experience of manufacturing grinding machines and SPMs.
S5. Adequate manufacturing infrastructure backed-up by in-house pattern-shop, heat
treatment and foundry.
S6. Well equipped tool room, measuring centre and material testing facilities.
S7. Established training centre for imparting training.
S8. Well set organization structure.

Weaknesses
W1. Declining trend in GPMs.
W2. 80% of plant and machinery are more than 30 years old.
W3. Large variety of products.
W4. Inadequate growth of local infrastructure/ancillarisation.
W5. Poor infrastructure in and around Ajmer for procurement of bought out
parts and raw materials.
W6. Lack of young energetic manpower.
W7. Shortage of professionally qualified engineers.
W8. Dust menace.
W9. Low level of computerization.

Opportunities
O1. Growing economy, rank 4th globally and emerging as a manufacturing hub.
O2. Longer growth life cycle.
O3. Sustained demand of grinding machines from automobile sector.
O4. Sustained growth in over all industrial sector.
O5. Continuous increasing demand for quality grinding machines from various
industrial sectors.
O6. Increased demand from defense and railways.
Threats
T1. Import of machine tools from Taiwan and China at low cost.
T2. Import of old reconditioned machines.
T3. Stiff competition from indigenious manufacturers.
T4. Competitors tie-up with reputed overseas grinding machines manufacturers such as
Toyoda, Voumard, Voca and Tachella.
T5. Professionally qualified people are leaving company and joining
competitors.