You are on page 1of 80

INTERNSHIP REPORT An organizational study At Hindustan Aeronautics Limited Engine Division, Koraput

Master of Business Administration Submitted by ANURAG MOHANTY Reg. No. 10XQCMA013 Under the guidance of Prof. Rohini G.Shetty

M. P. Birla Institute of Management Associate Bharatiya Vidya Bhavan No.43, Race Course Road, Bangalore 1

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


DECLARATION
I, Anurag Mohanty (Reg. No. 10XQCMA013) hereby declare that the internship report, an organizational study conducted at Hindustan Aeronautics Limited, Engine Division (Koraput) submitted in partial fulfilment of the requirements of the Bangalore University for the award of degree in Master of Business Administration is a bona-fide work carried out by me under the guidance of Prof. Rohini G.Shetty, MPBIM, Bangalore. This report has not been submitted earlier to any other university or institution for the award of any degree. The contents of this report are based on the data collected by me at Hindustan Aeronautics Limited, Koraput under the guidance of Mr. B.senapati, Chief Manager (Finance).

Place: Koraput Date:

Name of the student: Anurag Mohanty Reg. No. 10XQCMA013

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

ACKNOWLEDGEMENT

I take this opportunity to thank Mr. B.P. Lenka, ,manager (Training and Development) HAL for allowing me to carry on my project work in this organisation. I am also deeply thankful to Mr. P.K. Sahoo (In-plant training incharge ), HAL for his guidance and support throughout this project. I gratefully acknowledge the assistance to me by Mr. B.Senapati (Chief Manager, Finance), Hindustan Aeronautics Limited, Engine Division (Koraput), for having faith in me by providing me an opportunity to be associated with the organization under his kind guidance and support. I am also obliged to Mr. Mahesh Prasad Mohanty and other staff member of the book keeping and other departments for their help and assistance. I am also deeply indebted to Prof. Rohini G.Shetty (Faculty), MPBIM for the advice and support in the preparation of this project report. At last but not the least I thank my parents and friends whose continuous support made this project successful.

Date: 18th Aug.2011 Place: Koraput

Anurag Mohanty VT No. 6558 MBA (2010-12)

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CONTENTS Chapter 1
Introduction Background Study Industry Profile Company Profile Vision, Mission and Objectives

Chapter 2
Organizational Structure Corporate Organization Structure Departmental Organization Structure Authority and Responsibility Relationship

Chapter 3
Functional Areas Finance Department Marketing Department Human Resource Department Production Department Quality Management Department IT Department

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Quality Assurance Department Purchase Department

Chapter 4
SWOT Analysis Strength and Weakness Opportunities and Threats Problem Identification and Solution

Chapter 5
Observations, Suggestions and Conclusion Major Findings Suggestions

Conclusion

Annexure Financial Statements Bibliography

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CHAPTER 1
INTRODUCTION

10

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Background of the study
Organizational studies, sometimes known as organizational science, encompass the systematic study and careful application of knowledge about how people act within organizations. Organizational studies include the following disciplines: industrial and organizational psychology, organizational behaviour, human resources, change management, ethical and customer value management. Organizational studies encompass the study of organizations from multiple viewpoints, methods, and levels of analysis. the study of "micro" organizational behaviour which refers to individual and group dynamics in an organizational setting and "macro" strategic management and organizational theory which studies whole organizations and industries, how they adapt, and the strategies, structures and contingencies that guide them. OBJECTIVES OF THE STUDY: To familiar with organisations mission, vision, values and objectives. To familiar with the different departments functioning in the organisation. To understand the services and utilities provided by the company to the society. To understand the relationship between the higher authorities and the workmen in order to achieve the organisational goals. To understand the overall development of the HR departments. To understand the key business process are carried out in the organization. To bring out the integrated and coordinated efforts made by the different departments to achieve the organizational goals. To evaluate the efforts and contributions made by the employees towards the overall development of the companys reputation.

11

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

INDUSTRY PROFILE.

The late Seth Walchand Hirachand set up Hindustan Aeronautics Limited at Bangalore in association with the erstwhile princely state of Mysore in December 1940. The Government of India become a shareholder in March 1941 and took over the Management in 1942. HAL is fully concentrating in the field of repair and overhaul of military aircraft and engines to support Second World War efforts to fulfil the fresh mandate of post independent India the mission of the company has been redefined as:

To become a globally competitive aerospace industry while working as an instrument for achieving self reliance in design, manufacture and maintenance of aerospace defense equipment and diversifying to related areas, managing the business on commercial lines in a climate of growing professional competence.

Over the first five decades HAL has spread its wings to cover various activities in the area of design, development, manufacture and maintenance of light aircraft, piston and jet engine of imported category was delivered to HAL, Nasik division in the year 1978-79. A total of 300 engines are to be delivered under this project. Against this task, the division has already delivered 88 engines of different imported categories. The first raw material engine is scheduled for delivery during the year 1982-83.

In august 1966, an agreement was signed with Soviet Union to set up overhaul project in this division and the Govt. Was sanctioned in the year 1967. The factory started overhaul of RF-300 series-JJJ engines from 1970-71 and the first overhaul engine was delivered in Feb,

12

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


1971. The current overhaul programmed covers R11F2 series-JJJ, R11F series-JX and X and R11F2S/F2sk series engines. A total of 1067 engines have been overhauled by the division till the end of March, 1982 .

The division is currently engaged in setting-up of facilities for taking-up the overhaul of R25 series engines from the year 1982-83 onwards. With signing of internal Government agreement for the manufacture of MIG 17M aircraft on 19 th march, 1982, this division would involved in the manufacture of 285 numbers of R29B series of engines from the year 1984-85 onwards. In order to attain self sufficiency and to avoid difficulties regarding supply of raw material and other bought out items from USSR, it was decided to provide indigenous support to spares manufacturing for undertaking the task was received during 1977-78 and the indigenous plan was formed to tackle.

INDUSTRY SCENARIO:
HAL DIVISIONS: The following are the various divisions of HAL across India.

13

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


EXPORTS:

COMPLEXES:
HAL has various complexes such as:

1- Bangalore complex 2- MIG complex 3- Accessories complex 4- Design complex

14

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


1- Bangalore complex

a- Aircraft division b- Engine division c- Helicopter division

- manufacturing jaguar aircrafts - manufacturing jaguar engines - manufacturing helicopters

d- Forge and foundry division - manufacturing high precision casting and forging e- Overhaul division f- Space division g- Servicing division - overhaul of jaguar and other engines - manufacturing of launching of pads and common satellites - for common services to all divisions

2- MIG Complex

a- Nasik division b- Koraput division

- manufacturing and overhaul of air frames - manufacturing and overhaul of MIG engines

15

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


3- Accessories Complex

a- Hyderabad division

- manufacturing of electronics and navigational equipment

b- Kanpur division

- manufacturing of passenger aircraft and gliders

c- Lucknow division .

- manufacturing of hydraulic pumps, fuel pumps and stator generator

16

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

d- Korwa division

- manufacturing of advanced navigational equipment

4- Design complex

a- Bangalore division- modification of any component or unit of an engine

The above are the various divisions of HAL across the country.

17

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Products of HAL
SL. NO. 01. 02. 03. 04. 05. 06. 07. 08. 09. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. AIRCRAFT MiG-21FL MiG-21M/MF MiG-21-BIS MiG-23MF MiG-23BN MiG-25 MiG-27M MiG-29 GNAT HJT-16 HF-24 JAGUAR HS-748(AVRO) MIRAGE-2000 ALLOUTTE AN-32 MI-B MI HPT-32 ENGINE R-11-F2 R-11-F2S/F2SK R-25 R-29 R-29B R-29B R-29B RD-33 ORPHEUS-701 VIPER-11 ORPHEUS-703 ADOVRMK-803 DART-531 M-53 ARTOUSTE-IIIB PISTON ENGINE INDEGENIOS NAME BADAL TRISHUL VIKRAM RAKSHAK VINJAY GARUD BAHADUR VAJ AJEET KIRAN MARUT SHAMSHOR CHITRA VAJRA CHETAKCHEETAH SUTLUJ PRATAP AKBAR -

18

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


HAL CUSTOMERS

INTERNATIONAL CUSTOMER

DOMESTIC CUSTOMER

Airbus Industry, France APPH Bolton, UK BAE Systems, UK Chelton, UK Coast Guard, Mauritius Corporate Air, Nepal Corporate Air, Philippines Cosmic Air, Nepal

Air India Air Sahara Airports Authority of India Bharat Electronics Boarder Security Force Coal India Defence Research and Development organisation Govt. of Andhra Pradesh Govt. of Jammu & Kashmir Govt. of Karnataka Govt. of Madhya Pradesh Govt. of Rajasthan Govt. of Uttar Pradesh Govt. of West Bengal Indian Air Force Indian Airlines Indian Army Indian Coast Guard

Dassault Aviation, France Dowty Aerospace Hydraulics, UK EADS, France ELTA, Israel Gorkha Airlines, Nepal Hampson, UK Hoeneywell International, USA Island Aviation Services, Maldives Israel Aircraft Industries, Israel Messier Dowty Ltd., UK Mistubishi Heavy Industries, Japan MOOG, USA

19

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

Namibian Air Force, Namibia Peruvian Air Force, Peru Rolls Royal Plc, UK Royal Air Force, Oman Royal Malaysian Air Force, Malaysia Royal Nepal Army, Nepal Royal Thai Air Force, Thailand

Indian Navy Indian Space Research Organisation Jet Airways Kudremukh Iron company Limited NALCO Oil and Natural Gas Corporation Limited Ordnance Factories Reliance Industries United Breweries

Smiths Industries, UK Snecma, France Strongfield Technologies, UK The Boeing Aircraft Company, USA Transworld Aviation, UAE Vietnam Air Force, Vietnam

20

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


LIST OF SOME OF THE APPROVED SUPPLIERS:

Jayems Engineering Company Professional traders Bombay tools supplying agency Aero spares equipments Atul enterprises M.B.Corporation Bhatia tools and technology Mahr Gmbh Esslinger Hitech INSTRUMENTATION (India)pvt. Ltd.

Mumbai Panchakula Mumbai Vishakhapatnam Kolkata Vishakhapatnam Bangalore Germany Mumbai

Romada Engineering works Karthik Industries J.S. Precisions M.H.M Tools Srinivasa industries Metal cloth products Bangalore Kamala precisions Aryan Aerospace tools ECP Indian limited T.H.Habib & co.

Mumbai Chennai Bangalore Bangalore Hyderabad Bangalore Hyderabad Nasik Bangalore Kolkata

21

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Indian tools and instruments co. Empire machine tools Accurate sales & services pvt. Ltd. Tools and tools (India) Apex commercial corporation Jai enterprises K. Jagannadha Rao Makaram marketing Sri Sakti trading corporation Sri Hanuman electric and trading co. Belavadi tool room Fujiyana tool tech. S.N. Tools Kalyani Engineering works Titanium Tantalum products Modern Engraves Pratibha industries Chanakya wire tools Nagasai Mumbai Mumbai Pune Kolkata Kolkata Bhilai Vishakhapatnam Bangalore Kolkata Kolkata Bangalore Hyderabad Balasore Ghaziabad Chennai Mumbai Bangalore Hyderabad Hyderabad

22

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


GROWTH OF HAL IN THE PAST DECADES THE FIFTIES
In March 1950, the government entered into licence agreement with DeHavilland of UK for the manufacture of Vampire fighter Aircraft. In August 1956, a major design and development programmed was launched for HF-24(Marut) transonic jet fighter was the Bristol Orpheus engine. Dr. Kurt tank, a renowned German designer responsible for the Fockewulf-190 fighter of World War II was appointed as director of engineering, leading composite design team of German and Indian engineers. The mass prototype flew on 17 th June 1961. In September 1956, the government entered into licence agreements with Follands And Bristol Aero Engine Company of to undertake manufacture of grant aircraft and Orpheus engines. Another major design and development project sanctioned December 1959 was16(Kiran) basis jet trainer aircraft. The chief designer for the kiran (as also the Puspak & Krishna) was Dr. V.M Ghatage.

THE SIXTIES
Aeronautics India Limited was set up by the government India on 16th August 1963 to undertake manufacture of the MiG FL aircraft, for which the government entered into collaboration agreement with the government of USSR in August 1962. Factories were set up at Nasik for manufacture of the MiG avionics. The first 21FL aircraft was produced in July 1996. Aircraft manufacturing depot was established at Kanpur January 1960 as an air force unit for manufacturing of Haw Siddley HS-748 twin turbo prop transport aircraft fitted with Rolls Royal Dart engines. Hindustan Aircraft Limited was dissolved and its assembly merged with those of Aeronautics India Limited on 1st October 1964 to form Hindustan Aeronautics Limited. The Rail co. Factory at Bangalore continued to be a part of Hindustan Aeronautics Limited until January 1965 when it was separated from HAL and merged with Bharat Earth Movers Limited.

THE SEVENTIES
On the recommendation of Aeronautics committee (1969), separate division for manufacture of Alouette III (chetak) lama (cheetah) helicopter was set up at Bangalore in july 1969. Also on the recommendation of Aeronautics committee, Government decided to set up facilities for manufacturing aircraft instruments and accessories at Lucknow.

23

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Avionics design bureau was formed in 1971 by merger the special project Te-M(SPT) was established earlier at Bharat Electronics Limited, with the R&A department of the Hyderabad division. A design bureau was set up at Lucknow in 1973, design and development of accessories. A relatively MiG project for design and development of Basant Agricultural Aircraft was undertaken between 1970 and 1974. In April 1979, the government of India with BA entered into licence agreement for manufacture of the Jaguar aircraft and with Royce-Turbomeca for manufacture of the Adour engines fitted the jaguar aircraft.

THE EIGHTIES
The year 1980-81 was a bad year for the company as there was unprecedented pronged strike of 77 days of the issue of the party with BHEL. Besides the order book position for division of Bangalore complex and Kanpur division was very unsatisfactory. In March 1982, an agreement was signed with USSR authorities license production of the swing-wing MiG 27M aircraft as a follow on project for the MiG 21 BIS. In August 1980-81, government approved the proposal for setting up advanced systems divisions at Korwa. A major milestone 1983 was the formulation of a design perspective plan, which envisages design, and development of a portfolio of projects including the basic turbo prop trainer, advanced jet trainer Hindustan Pressurized Light Transport (30-35 seats) light component aircraft etc. in the period 1984 to 1994.

BUSINESS ALLIANCES
The aerospace industry requires a highly innovative technology which is evolving continuously. HAL has products following from Russian as well as European collaborators besides those developed indigenously. The company imports raw materials, system and components from foreign suppliers. The company has adopted the strategy to conclude longterm business agreement to ensure timely delivery of material at agreed prices. The company has formed 10 joint ventures companies (JVCs) with international major viz. BAe system plc. (UK), RAC MiG (Russia), Snecma (France), Elbit systems (Israel), CAE (Canada), Edgewood Venture LLC (USA), Rolls Royce, UK & India majors including the TATA group, InfoTech enterprises & samtel group with a view to develop indigenous capabilities and product.

24

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


UNIQUE ACHIVEMENTS:
HALs supplies/services are mainly to Indian Defence Services, Coast Guards and Boarder Security Forces. Transport Aircraft and Helicopters have also been supplied to Airlines as well as State Government of India. The company has also achieved a foothold in export in more than 30 countries, having demonstrated its quality and price competitiveness.

HAL has won several International and National Awards for achievement in R&D, techno logy, managerial performance, exports, energy conservation, quality and fulfilment of social responsibilities.

HAL was awarded the INTERNATIONAL GOLD MEDAL AWARD for corporate achievement in quality and efficiency at the international summit (Global Rating Leaders 2003), London, UK by M/s Global Rating, UK in conjunction with the International Information and Marketing Centre (IIMS). HAL was presented the international- ARCH OF EUROPE Award in gold category in recognition for its commitment to quality, leadership, technology and innovation. At the national level, HAL won the GOLD TROPHY for excellence in public sector management, instituted by the standing conference of public enterprises (SCOPE).

The company scaled new heights in the financial year 2004-2005 with a turnover of Rs. 4534 Crores and exports over Rs. 150.05 Crores.

25

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


COMPANY PROFILE ORIGIN AND HISTORY OF HAL (KORAPUT DIVISION):
An agreement was signed in August, 1962 with the Soviet Union for manufacture of MIG-21 E7FL Aircraft under license the Aero engine factory at Koraput (Orissa), the Air frame factory at Nasik (Maharashtra), and the Avionics factory at Hyderabad (Andhra Pradesh) have been set up to meet this requirement on the name of Aeronautics India Limited which was formed on April 1964 and new company under three name of Hindustan Aeronautics Limited was formed.

The Government sanction for the first phase of construct of the aero engine factory at Sunabeda (Koraput) was accorded March 1964 and the factory started manufacture of R11F2 Series-JJJ engines for the fitment of MIG-21FL Aircraft from 1969 onwards. The first engines of imported category manufactured in December 1968 and various category of engines were produced during the subsequent years. The first raw material engine was produced in February 1971.

The production programmes for the factory also include manufacture of forgoing and casting required for MIG-Aircraft.

To meet the Air force requirement for improved fight interceptor Aircraft, an agreement was signed with USSR in August 1976 for manufacturing MIG-21BJS Aircraft. The power plant of this Aircraft is the R25 Turbojet engine. The government approval for setting up capital facilities was accorded in October 1977. The first engine of imported category delivered to HAL, Nasik Division in the year 1978-79. The FJ raw material engine was delivered during January 1983.

With signing the inter Government agreement for manufacture of MIG 27M Aircraft on 19 March 1982. This Division would be involved in the manufacture of R29b series of engine from the year 1984-85.
th

26

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


In order to attain self-sufficiency to avoid difficulties regarding supply of raw material and other layout items from USSR, it was decided to provide indigenous supply of spares manufacturing for overhaul/maintenance of the fleet. The government approval for undertaking the tax received during 1977-78 and the indigenous plan was formed to tackle.

ARS and first moving spares Metallic Material Non-metallic material Ready-made articles.

The activities towards this area being progressed as per the approved time frame. A corporate plan of this division for the next 10 years has been worked out basing on his delivery/production tasks indicated to us. The total man power of this division has increased from 378 during 1965-66 to 3522 as on 31st March 1982. The man power potential of this division will go further ahead in the years to come in light of corporation plan.

GEOGRAPHICAL LOCATION OF HAL, KORAPUT


While installing an industry, the entrepreneur has to choose the location properly, considering the pre-requisite like availability of land, labour, power, raw materials and communication facilities. if these factors are taken as unit of measuring rod the company (HAL), Koraput Division is located in a very advantageous position. This company is situated in sunabeda IN Koraput district, Orissa that is about 130 KM from Vizianagaram. The river Karandi which act as a perennial source for supplying water is flowing from northern side to HAL, Koraput division and Sunabeda. More over the factory is adjacent to the national highway no.-43 linking Vishakhapatnam- Raipur. The nearest railway link is at Koraput (16 KM from Sunabeda). An airfield is located at Jeypore, 39 KM from Sunabeda. There is a helipad facility at HAL Township and also a proposed for construction of a preeminent airfield is under progress.

The location of the factory has got many advantages. The hilly area of Koraput district is highly strategic from defence point of view. The dense forest provides the factory from aerial view from the thick angle on enemy plane. May this be the location of the plant, supply of power from Orissa Electric Board, which has a separate grid.

27

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

HAL harbour is available at cheap rate. The atmosphere of Sunabeda is cold and is less populated and less polluted which is an extra advantage.

CORE BUSINESS OF HAL (KORAPUT DIVISION):


HALs core business is as follows: Design and development of fixed and rotary wings aircraft, avionics and accessories. Export of aero structures to leading world Aircraft manufactures for their Aircrafts. Manufacture of structural components for satellites, launch vehicles and missiles. Design consultancy. Design and extension of military, civil updates. Modernization, manufacture, maintenance, repair and overhaul of fighter and trainers aircrafts. Commercial and transport Aircrafts, Helicopters, Aero engines, Industrial and marine gas turbines. Ground support equipments (GSE) Accessories (Mechanical/Electrical/Fighter control/Fuel) High technology castings, forging fiber composite parts, Aircrafts transparencies, powered metallurgy.

28

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


PRODUCT LINES OF HAL (KORAPUT DIVISION):

SL. NO. 01. 02. 03. 04.

ENGINES R-11-F2 R-F2S/F2SK R-25 RD-33

AIRCRAFTS MiG-21FL MiG-21M/MF MiG221BIS MiG29

INDIGENIOUS NAME BADAL TRISHUL VIKRAM VAJ

MAIN CUSTOMERS OF HAL (KORAPUT DIVISION)


The Indian Aircraft is HALs principal customers. Around 95% of the total of the total sale is to Indian Air force. The other customers for Aircraft & Helicopters produced by the company are

Indian Navy (Kiran- Jet trainer indigenous developed): chetak- Helicopters & advanced light Helicopters etc. Indian Airlines (HS-7481-Transport Aircraft produced under licence.) Others (HS-7481 to BSF,DGCA etc., HT Puspak to Civil Clubs, Basant- Agriculture Aircraft indigenously produced to directorate of agricultural aviation, chetak helicopters to state Govt. coast guard, private firms ONGC etc.) Overseas customers supplies sub-contracted work to world leaders like air bus industries, Boeing and Rolls Royce. Besides these other export customers are like UK, France, Italy, Nepal, Malaysia, Mauritius, Canada, Chile and Iraq etc. MITSUBISHI HEAVY INDUSTRIES, Japan is a prestigious addition to this list.

29

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


VISION, MISSION AND OBJECTIVES

VISION:
To make HAL a dynamic, vibrant, value-based learning organisation with human resources exceptionally skilled, highly motivated and committed to meet the current and future challenges. This will be driven by core values of the company fully embedded in the culture of the organisation.

MISSION:
Achieving excellence in the manufacture of aero engines and spare parts. Offering matchless overhaul and repair services Providing total customer support through continuing pursuit of technical excellence, outstanding product qualities, reliability and services. Striving constantly for self-reliance and self-sufficiency in all operation. Becoming the Asian leader in aero-engines production, ready to share technically knows how for setting up project abroad. Maintaining and developing a team of highly motivated trained professional. Making frays into the export market as an ISO-9002 company.

OBJECTIVES:
In April 1971, the board of directors of HAL appointed committee known as review committee as review committee of HAL to review the functioning of the company and make its recommendations. Committee formulated a statement of basic objective adoption by HAL, as details below: To serve as an instrument of the national policy to achieve self-reliance in the design, development and production of aircraft and aeronautics equipment to meet the counter changing and growing needs with special emphasis on millet requirement. To ensure availability of total quality people to meet the organizational goals and objectives.

30

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


To have a continuous improvement in knowledge, skill and competence (managerial, behavioural and technical.) To promote a cultural achievement and excellence with emphasis on integrity, credibility and quality. In fulfilment of these objectives, the company shall regard its fundamentally responsible for design and development, rely however, upon such relevant facilities as are available into national institutions, but always holding itself basic a responsible for the growth and furtherance of the counter aeronautics capabilities. To conduct its business economically and efficiently it can contribute its due to the national effort achieving a self-reliant and self-generating economy. Towards this end, to develop and maintain an organisation which will readily respond to and adopt the changing matrix of socio techno-economic relation and where in a climate of grow professional competence, self-discipline, mutual understand deep commitment and a sense of belonging will be fostered and each employee will be encouraged to grow n accordance with potential foe the furtherance of the organisation. The recommendations of the review were subsequently approved by the board of directors in September 1972 and forwarded to the Government, who informed the company in May 1973 that they might adopt these objectives. These objectives remain essential unchanged to date except that they have been amplified in 1983 through the medium of MDs date 14th 1983 emphasizing the following: 1. That our products are of the highest quality and reliability. 2. That our products are fully supported after sale to customer,. 3. That the capacity utilization is optimised, restoring which is necessary to diversification and export. 4. Greater thrust towards indigenization of materials and product to improve self-reliance. To maintain a motivated workforce through empowerment of individual and teambuilding. To enhance organisational learning.

31

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


STRATEGY:
To be in total alignment with corporate strategy. Maintain Human Resource at optimum level to meet the objectives and goals of the company. Be competent in mapping, analysis and upgradation of knowledge and skills including training, re-training, multi-skilling etc. Cultivate leadership with shared vision at various levels in the organisation. Focus on development of core competence in High-Tech areas. Build cross-functional teams Create awareness of mission, values and organizational goals throughout the company. Introduce / implement personal policies based on performance that would ensure growth, rewards, recognition, and motivation.

VALUES:
Integrity- Every employee of HAL shall deal on behalf of the company with professionalism, honesty, integrity as well as high moral and ethical standards. Excellence- HAL shall be committed to supply goods and services of the highest quality standards. The company seeks to scale the height to excellence in all that it does. Responsibility- HAL shall be committed in all its actions to benefit the economic development of the countries in which it operates and shall not engage in any activity that would adversely affect such objective. Understanding- Employees of HAL shall be treated with dignity and respect. Employees policy and practices shall be administered in a manner that would create a harmonious relationship between the employees and management. Agility- HAL shall be able to respond to customers needs with speed. This would involve continuous reduction in cycle time of various processes.

32

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CHAPTER 2
ORGANISATIONAL STRUCTURE

33

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


CORPORATE ORGANISATIONAL STRUCTURE BOARD OF DIRECTORS

MANAGING DIRECTORS

GENERAL MANAGER

DEPUTY GENERAL MANAGER

CHIEF MANAGER

SENIOR MANAGER

MANAGER

DEPUTY MANAGER

SUPERVISORS

WORKERS

34

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


DEPARTMENTAL ORGANISATION STRUCTURE
EXECUTIVE MANAGER

GENARAL MANAGER

CHIEF MANAGER

Senior Manager (P&A) Manager (Training)

Senior Manager (Training)

Manager (P&A) ESIT

Manager (Legal)

Asst. Training Officer Official Language Cell Printing Press

Asst. Legal Officer

Manager Industrial Relation

Secretariat

Personnel Officer (Policy & statistics) Personnel Officer (Establishment)

Industrial Relation Officer

Deputy Personnel (Recruitment)

Personnel Officer (Recruitment)

Asst. Industrial Relation Officer

Asst. Personnel (Disciplinary)

Engineer (Transfer)

AAO Russian Enclave

Asst. Personal Officer (Establishment)

AAO Officer (HACCS)

Manager (Township)

AAO Guest House

35

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Authority and Responsibility:

Board of directors:
The board of the directors of the company has the following responsibilityTo ensure that the companys goals, values and objectives are clearly described and communicated to the employees. Determine the goals and objectives of the company based on the needs of the stakeholders (creditors, government, customers, employees, shareholders etc.). Appoints and regulates the general director to coordinate the workings of the organization. Board of directors, general managers are solely responsible for the formulation of rules, regulations and policies of the company.

Managing Directors:
Coordinate and communicate with the general and deputy general manager of each department to formulate the strategies and plan of actions to achieve the organisational goals. During the decision making process, the valuable suggestions and viewpoints of the low level employees are also taken into consideration by the higher authorities. Manager Directors on a continuous basis keeps a review on the working of different departments. Managing directors address the joint consultant meeting, management training meeting, and MD coordination meeting.

General Manager: - Responsible for the arrangement and development of training programs at HAL. - Responsible to report the managing directors about the progress rate of the respective
departments.

- Issues orders and instructions to the low level management.

36

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

Deputy General Managers:


Acts as a communication channel between the top management and low management. Responsible for encouraging the employees by promotional and reward scheme.

Senior Manager and Chief Manager:


Responsible to communicate the workings, policies and plan of actions to the supervisors and workers.

Supervisors:
Guide the workers in the workplace. Solve or communicates the issues of the workers.

37

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CHAPTER 3
FUNCTIONAL AREAS

38

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


FINANCE DEPARTMENT

Finance is the lifeblood of every organisation. Finance is the basic foundation of all kinds of economic activity. Therefore, efficient management of every organisation is closely linked with efficient management of finance. It expresses the strength and weakness shows through financial performance of every business organisation. But in HAL government in favour of nation welfare takes everything which related to finance decision. The decision like capita budget, dividend decision, working capital management, and investment to fixed assets and other financial decision which corporate office has established under preview of government and also aims to meet the requirement with its product, supplying mainly to the defence organisation of our nation, HAL is running as a cash rich government sector undertaking. Government itself holding the entire HAL share capital and major financial activities are organised by its corporate office and also controlling all division of HAL. The engine division being carrying a 300 crores turnover in every year that 80% finance go into purchasing of materials from foreign countries. 20% of profit declared as a dividend in the year 2002-03. The finance department of HAL is divided in different sections namely:

Material accounting section Book keeping section Cash section Bills payable section Bills receivable section Costing section

39

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


MATERIAL ACCOUNTING SECTION:The main function of this section includes Maintenance of material ledger for all material held in the stores. Reconciliation of the balances with general ledger. Quality reconciliation of the bin-card balances material ledger balances. Maintenance of loan register for material issued as loan and follow up for return. Scrutiny of slow, non moving and redundant inventories. This section reviews various documents and sends the same to computer/data processing section for processing and obtaining necessary accounting output statements.

RECEIVING REPORTS (RR):- This section takes the pricing of RR on its copies priced by their bills payable section and sent the same for processing on day to day basis. These priced RR form the basis for accounting receipts to various inventory accounts. MATERIAL ACQUISITION (MR):- This section receives the MA/Issue vouchers are scrutinised and sent for processing and pricing at weighted average rates. STORES CREDIT NOTES (SCN):- SCN in respect of return of excess materials drawn, are received from stores department for scrutinizing and then processing. Items manufactured on stock orders and credited to the stores are not priced by quantity records are maintained since the values of these items help under WIP. ACCOUNTING PROCEDURE: - The accounting of the receipts of material by various issues thereof to various work orders and expenses accounts is done by the generation of the following output statement received by the computer section Material issue analysis statement Stock transfer/stock re-classification statement. Stock verification statement Samples/condemned stores statement

STOCK VARIFICATION NOTES:-SVN received from the stores are similar in their accounting procedure to ST/SR

40

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


BOOK KEEPING SECTION:The functions of book keeping section are as follows: Maintenance of journal and general ledger. Preparation of trial balance, P/L accounts, balance sheet. Maintenance of capital assets ledger and allocation register. Preparation of fixed assets and depreciation schedules. Furnishing data for determination of income tax liability. Disposal of surplus/condemned plant and machine and other assets. Reconciliation of control accounts of the divisions/corporate office. Liaison with audit authorities.

ACCOUNTING PROCEDURES: - The accounting aspects of book keeping comprises of the accounting of capital assets: Depreciation Maintenance of journal and general ledger Preparation of trial balance, O/L accounts, balance sheet Furnishing data for determination of tax-liability Disposal of surplus/condemned plant and machinery and other assets Reconciliation of inter-divisional control accounts Accounting of semi-perishable equipment/miscellaneous equipment.

CASH SECTION:This section is responsible for all payments of Cash/Cheques and accounting of its books. The main functions of this section are: Receipts of cash, postal orders, cheques, bank-drafts etc. and issue of official receipts of the same.

41

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Banking of all receipts. Drawing of cash from bank to carter for daily needs. Payments of vouchers by cash/cheques. Writing of cash/bank books. Preparation of bank reconciliation statement. Safe custody of cash, cheques books, bank guarantee, fixed deposit receipts and other investments etc.

BILLS PAYABLE SECTION:Bills payable (Inland) This section deals with the aspects of supplies and services rendered by inland vendors and contractors to the company:Inland vendors Payments and accounting of advances to other vendors. Payments and accounting of final bills. Bank dealings with relation to suppliers. Adjustment/recovery of advances. Accounting/adjustment of earnest money and security deposit from supplier. Accounting and pricing of receipts vouchers. Bills payable (Foreign) This section deals with the aspects of supplies and services rendered by foreign vendors and contractors to the company. Foreign vendors Payments and accounting of customer duty, freight bills, agency commission bills etc. Payments and accounting of advances to suppliers and services obtained fom collaboration and others. Adjustments/recovery of advances.

42

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Accounting and pricing of receipt vouchers Opening of LC and dealing with banks for obtaining foreign exchange release and payment thereof. Maintenance of deferred liabilities and commitment register for budgetary purpose.

BILLS RECEIVABLE SECTION:This section is responsible for preparing and submission of invoices to customers for supplies made and services rendered and follow up of recovery of amount and its accounting. The functions of this section are: Scrutiny of sales orders including expert sales. Preparation of invoice for work done/to be done and services rendered. Review of closed work-orders for which invoice are to be prepared. Recording of invoice rendered. Accounting for sales equipment and services rendered. The following are the registers and subsidiary registers maintained in this section: Sales journal for manufacture of equipment, overhaul of equipments, manufactures of spares, miscellaneous. Invoice register. Stage payments register for manufacturing, overhauling, RMS orders. Dispatch advices register. Sundry debtors ledger. Claims/accounts received ledger.

43

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


COSTING SECTION:The system of cost accounting followed in HAL is batch costing. It is designed for the purpose of carrying work in HAL. The others are standard costing.

Batch costing:- In this system all the components minor assembly, sub assemblies etc. require for batch of aircraft/engine/equipment are manufactured on batch orders. Though job costs/job tickets are issued for manufacture of individual components cost is recorded separately and labour and material costs are booked on work orders. In this system the cost relation to all components in a completed batch determined by dividing total cost recorded on the batch work order by the number of units produced in the batch.

Job costing:- This system is followed in the case of repair/overhaul of aircrafts: Engineers, equipments etc, and for manufacture of spares of HAL/IAF stores, RMS orders and miscellaneous jobs. In this system individual work order is issued for overhaul of each project and for manufacture of each item of spares.

Standard costing:- It is a technique for control of cost, it should be extended to manufacturing project, including fabrication of detailed components, sub-assemblies, major assemblies and final assemblies. It can be extended for periodical overhaul of major products like air frames, engines avionics, wheel assemblies and high value notables where work schedules are available. Standards for labour and material should be fixed for the purpose of deriving variances under each category for control.

44

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


MARKETING DEPARTMENT
Marketing is an important activity for any organization irrespective of its nature, size and type of industry in which it operates. Marketing and selling are often mistaken as synonyms but hold a complete different meaning individually

FUNCTIONS: a- Exploring new customers: One of the important functions of marketing department is to find new customers for the products. This is mainly done through browsing the net. Through internet, the department tries to identify new customers, who are interested in the company products and services and influence them to contract with the company. The other means of exploring new customers is through answering verbal enquires from the prospective customers. b- Expansion of the business The company is widening its scale of operation with its new and prospective customer for domestic as well as export business. It is also finding new means to expand business by diversifying into different fields in recent years. The main area in which it has diversified is in the software field. It has started a software company in collaboration with British aerospace in the year 1999-2000 to take advantages of the opportunities available for the software companies in the Aeronautics. It has also diversified into Industrial and Marine Gas Turbine business c- Receipts and screening of Enquiries from customers The activity involved in the receipts and screening of enquires from the customers include the following: Manufacturing department receives the tenders/enquires issued by the customers and details of defence, civil and export customers are recorded separately. The prices are prepared as per the approved guidelines in case of items covered in the approved price lists. But delivery of the items shall be verified from production engineering before sending. If items are not covered in the approved price lists, the enquiry is forwarded to the respective production engineering to confirm that the requirements are adequately defined and also to ensure that they are within the capability of the division.

45

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


d- Customer Support One of the important functions of the marketing department is to provide customer support. The main purpose is to establish a procedure for carrying out after sales servicing function. Along with this, the department provides after sales service function for both Indian and overseas customers. The main objectives of marketing department regarding customer support are: To provide technical and logistics support through the exploitation of HAL products ensuring high quality reliability. Identifying the needs of the customer by the way of requirements of publication, spares, repair/overhaul, ground support and test equipment and updating to improve the efficiency of the product. Understanding the areas of concern on the products and taking prompt action to assist the customers to the extent possible. Having a system of information feedback from the customer and take prompt corrective action to resolve customer complaints.

e- Preparation of Estimates Supply of spares

The production engineering furnishes the raw material require for fabrication and also the lead time. In case of items that could be spare from stock/work in progress, the same will be indicated. The material planning group of IMM indicates the cost of raw material. The management service section gives HAL-fabricated items. Repair and Overhaul of Engine and Rotables

The production engine department (overhaul and assembly) furnishes estimated work content (material requirement and labour hours), which is generally done after receipt of the item and strip examination. Supply of Tooling Items

The tool planning department furnishes the standard man hours required to fabrication and delivering lead items.

46

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Miscellaneous Services

The respective department furnishes the estimated work content in terms of material and standard man hours including man days in case of field services.

f- Submission of QuotationsThe procedures involved in case of submission of quotation are: The marketing section computes the price based on the above inputs and the standard man hours rate in accordance with the formula. The price proposed is then put to the competent authority for approval and the quotation is forwarded to the customers.

g- Follow up on Quotation and negotiations for ordersThe marketing department after the submission of quotations keeps contact with the customers to influence them to place the orders with the company. The department therefore responses to any further queries placed by the customer and make sure that the customer is satisfied with the information provided and explained him about the details furnished regarding his clarification. Thus the department tries to negotiate with the customers to contact with the company. The company also participates in the negotiation meeting held by the customers to clarify the terms and conditions to get the orders.

h- Receipts of orders and vetting order (contract review) Once the formal order is received, the deputy manager scrutinized the order to check whether it confirms the terms and conditions of the quotations. The procedure involved in the contract review is: The review is documented in contract review form. If there are any deviations, it is brought to the notice of the customer for the remedial actions and issue of amended sales order. If there are no deviations, the order is acknowledged consisting a contract. In case order received without quotation, the same is scrutinized as in case of enquiry.

47

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


In case of RMS order placed by IAF, Navy and army, it is governed by GOI and ministry of defence.

i- Issue of sales order The authority for approving the various sales proposals is governed by the delegation of powers approved by the Board of Directors and circulated by the corporate office at divisional levels. GM has sub-delegated the powers to approve price proposals. A sale order is issued by making an entry into sales order register and the date is maintained.

j- Attending customers complaints The marketing department after executing sales order received feedback from the customers regarding the items supplied queries or complaints if any. In case of complaints from the customers, it verifies as to what aspect the customer is dissatisfied and tries to take suitable corrective action and assure the customers that he will be supplied with items as expected by him.

k- Providing after sales service The marketing department with the coordination customer support department provided after sales service to the customers so as to retain them and to maintain the companys image and also to build the confidence in the company. The after sales service include Supplies of spares, technical snag rectification, repair party arrangement etc. Providing technical advices to the customers. Providing bulletin or technical letters issued by the original designer or manufacturer. Providing for inspections, overhaul of engines of certain schedules. Sending technical expert teams to war fields for providing necessary repair and other help during war times. Providing training to technicians of the customers.

48

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


l- Follow up for paymentsThe marketing department should see that the customer to whom the items are supplied makes payments within the stipulated time. It should keep contact with the customers and send reminder letters to those customers who fail to pay the amount in coordination with the finance and customer support department.

Some secondary functions of Marketing Department Disposal of surplus and scrap material (if not handled by central salvage) Issue of sales bases and also facilitate withdrawal of necessary items. Obtain advances CCPS/license for duty free importing of raw material against export orders and discharges of export obligations.

49

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


HUMAN RESOURSE DEPARTMENT
The strategic goal of HR department of HAL is to create an atmosphere of technological and managerial excellence to become globally competitive aerospace industry. With the changing environment, rapid technological changes characterized by a paradigm shift from licensed production to R&D based production duly balanced with co-development technological, up-gradation etc, greater customer demand focused diversification to civilian and expert market. The overall objective of the HRD plan is to build a vibrant and learning organisation, so as to meet the challenges of quality & excellence; recruitment and retention of competent human resources and develop high commitment and a sense of belongings to the company.

Focus of HR policy Competence building Commitment Motivator Employee relations In the backdrop above, the focus of HRD initiatives at HAL emphasize the following:HR planning- Outsourcing of low tech and medium tech jobs Fresh induction only in critical/highly specialised areas based on requirements due to increase in work load and super annuation profile (Annexure2) in the workmen cadre, induction will be restricted to direct workmen only. Improving the existing qualification profile by focusing on induction of professionally qualified personnel and diploma holders, hence focus of recruitment would be to recruit people with a combination of knowledge, skills experience and attitude in line with the organisational requirements through appropriate man power plan both short term and long term programme.

Training and developmentTraining is one of the most important tools for developing human resource. Hence, identification of training competency profile in terms of vision mission of the company would be the strategic point of the training and developing strategy of the company. The following objectives have been set in this regard.

50

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


To provide training to all employees at regular intervals in a plan period of 5 years. Training to become an integral component of individual professional by: Updating knowledge to avoid obsolescence. Enhancing professional creativity. Enables employees to shoulder higher responsibility The goal of training will be to progressively achieve 7 days training per employee per year with a budget of 2% of annual wage bill, keeping in view the organisation requirement and goals and objectives of training, the following have been identifies as the key, focus area of the training- technology, tooling, quality, information technology.

Performance AppraisalApproving people for meeting the company goals would be the prime focus of performance management. The new performance appraisal system based on work planning and commitment (mutually agreed tasks) self-review and performance analysis, performance review and feedback would ensure that the focus would be on value adding activities rather than on routine activities which bear no relationship with the organisational goals and objectives. Identification of low performers and resultant corrective action throughout the company would be given priority. Similarly faster career growth opportunity would be provided to high performers.

Reward SystemsThe focus of the reward system in the country is to promote team work and cultivate a sense of achievement and excellence in the organisation. This is in addition to the existing scheme of reward for an individual who innovatively and creatively makes exemplary contributes in the key through area of company that would lead to its achieving overall excellence.

Scheme for Learning and Certification for ExecutivesA learning organisation is essential for survival in the present era of liberalisation and globalisation. Therefore knowledge is the only core competence of organisation for coping with changes. Since individual knowledge is the starting point for organisation knowledge, it is only the employee who can convert knowledge into efficient action.

51

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


In the above lines the philosophy among other initiatives like institutionalising learning counters in division etc. HAL has also introduced the scheme for learning and certification for executive as starting point for building individual knowledge. The scheme provides an opportunity for the junior and middle management cadre executive to broaden the perspective by not only learning about all functions and procedure in their respective discipline but also in related areas and overall knowledge about the organisation and its environment. So far approximately 45% of executive have been certified. It is proposed to expand the coverage of this scheme further, if required, by linking, the scheme to some kind of reward mechanism. Lastly the HRD plan will also include time to time OD inventions to address specific requirements of the company.

Incentives schemeWage incentives are one of the means of sharing directly the benefits of higher productivity. The scheme has been designed basically to motivate employee in three stages based on performance of individual shop and division.

The benefits of the schemes are Increased production. Reduction of waste of all type of employees. Reduction in unit labour cost. Improved quality. Reduced down time of machinery and equipment. Less accident and improve safety. Reduced absenteeism.

52

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


PAY-ROLL SECTION:The main function of pay-roll covers the following: Placements of time punching cards in the time care racks for recording attendance. Maintenance of leave records and filling of attendance data to computer with reference to the documents received, where applications are sent directly to time office by respective departments. Receipts of approved leave applications, OT authorities, attendance sheets, and employees gate pass.

Pay-roll Disbursement of salaries and wages. Payment and recovery of advances. Recovery of dues from employees. Payment of travel and LTC advance and adjustment thereof. Remittance of amounts recovered from employees to various agencies. Accounting of pay-roll transactions. Maintenance of employee card.

PROVIDENT FUND SECTION:This section mainly deals with the transaction preparing to PF such as: Account of provident fund transaction. Remittance of amounts recovered from employee to a fund called provident fund trust fund. Providing refundable & non-refundable loan & adjustment thereof.

53

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

PRODUCTION DEPARTMENT
The engine divisions production department is conducting with activities of production, planning and control. This states the manufacturing, repair and overhaul of aero engines and their components. It includes spares, accessories, ground handling equipments, tools and test equipments and also services includes technical assistance and training of customers personal in operations and maintains of aircraft and other engines.

The main objective of this department is projecting the future production task in accordance with available direct man power machine capacity and monitoring performance in shop floor activities. It ensures effective and monitoring performance in shop floor activities. It ensures effective utilisation of production facilities and inventory control.

This department is equipped with three types of manufacturing process, they are; Production based production is used in the pipe line, gear shop and blade shop etc. Process based production is used in the heat treatment etc. Transfer line based production is used in continuous process designed activities.

The management of task of production department through following steps, they are: Centre planning Shop scheduling Shop progress Store credit Dispatch Offloading sub contract Annual physical verification.

54

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

OBJECTIVES:1- To determine the most efficient and economical method of proving a component or assembly. 2- To ensure the requirements of production tools. 3- To ensure availability of plants and machineries suitable for manufacture of components. 4- To identify the requirements of all type of material in time to time meet delivery schedule. 5- To identify availability of required heat treatment, protective treatment facilities. 6- To satisfy necessary inter-changeability requirements. 7- To ensure availability of ground test equipments and special tools required for manufacture. 8- To satisfy the customer needs by way of technical vetting/furnishing cost quantities for spare requirements.

OPERATION PROCEDURE:1- Input documents. 2- Preparation of drawing breakdowns. 3- Allotment of rationalised code number. 4- Preparation of process sheets. 5- Special process. 6- Quality betting of master process sheets. 7- Drawing discrepancy reports. 8- Production query. 9- Production permit. 10- Process Sl. No. Summary 11- Final material summary.

12- Planning breakdown. 13- Shop-floor planning. 14- Processing of modification.

15- Equipment rotables servicing. 16- Preparation of cost estimates.

55

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

FUNCTIONS: 1- Resource planning:Planning and procurement of plant and machinery, ground handling, testing and inspection equipment etc. is a part of function of method department. A separate group assigned with this task.

2- Capital Budget:This budget is meant for planning and commitment for various capital facilities that is plant and machinery, civil works and other infrastructure services needed to achieve performance objectives. The expenditure to be incurred for the commitments that are likely to materialized during the budget. All capital requirements along with the justifications by the various departments will be sent to planning and material procurement group who in turn project the same at the time of capital budget proposal to the management annually:Plant and machinery are procured under the following capital head: New project Improvement/rationalization Replacement Welfare Technology improvement/development

3- Manufacturing Facilities:CNC shop- The division has extensive manufacturing facilities consisting of conventional machines as well as CNC facilities. Some of the CNC facilities are as follows: Seven axis automatic CNC NGV grinding centre with facilities like an auto loading and uploading by robotics and integrated CMM. Double axis machine centres both single spindles and twin spindles. Four axis and three axis machine. Vertical torrent lathes with line spindles.

56

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Disc lathe with touch probe facilities. Twin spindles vertical grinder. Jig boring. Turn mill centre. CNC Gear Grinder.

4- Engine test facilities:Besides capabilities in design and commissioning of engine test beds on turnkey basis, test facilities for testing of the aero-engine component have been establishedcompressor, combustion chambers, and turbines. An online data acquisition is being used to augment testing and performance analysis in real time.

5- Other facilities cover fabrication, coating, welding machineries and non-conventional machines facilities. Few of these are: Electron beam welding. Robotic plasma sprays facilities. CNC electrical discharge machine. Wire EDM. Electro chemical forming. Chemical size reduction. Segmental and other coatings. And all types of electroplating.

The division can manufacture varieties of parts ranging gears, castings, blades, impeders, stators for each type of product assembly line and test cell exist. Thus facilities uninterrupted supports to all customers.

57

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


QUQLITY MANAGEMENT SYSTEM DEPARTMENT
General requirement: HAL has established, documented, implemented & maintains as QMS to continually improve its effectiveness by: Identifying the processes needed for the QMS & their application through the division. Determining the sequence & interaction to these processes. The interaction of the processes identified in the respective process procedure & as flow chart as under. Determining criteria & methods needed to ensure that both the operation & control of these processes needed are effective. Monitoring, measuring & analyzing the processes. Implementing actions necessary to achieve planned results & continual improvement of these processes, this is achieved PDCA approach in each procedure & by the identified procedure for this activity.

HALs QMS comprises of the core & support business processes, which take inputs & converts them into value added outputs that satisfy customers needs & expectations. Every business process is aligned to deliver the business goals & is linked to key performance indicators, which are used to monitor the achievements. The core business process represents how market opportunity is turned into profitable outcomes through satisfied customers. Its effectiveness is maintained & enhanced by support processes. The core & support processes cross original boundaries, which enable everyone to have a clear focus on the requirement that have to be satisfied for business to be successful. Each process has an owner who has the prime responsibility for ensuring that the process. Achieves its objectives. Is under continual review for improvement. The structured documentation of the management system identifies what activities are carried out in the business & provides as base line from which improvement can be identified & best practices implemented. Special purposes are not outsourced.

58

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Management Responsibility:HALs top management defines, develops & implements the Quality Management System. The G.M. is the head of the division ensures that employees at all level within their groups understand the goals & objectives of programmes & circulars.

Planning QMSP:When a new product, project or contract is evaluated for adoption into engine divisionHALs quality system, the appropriate staff members meet to define & document how the requirements for quality will be met. The integrity of the QMS is maintained, when changes to QMS are planned & implemented.

Internal Communication:HAL communicates the effectiveness of its QMS to staff through: Departmental meetings. Notice boards. Management Review Meetings.

Resource managements:1- Provisions of resources: - HAL has determined & provided resources needed. To implement & maintain the QMS & continually improve its effectiveness & To enhance customers satisfaction by meeting customer requirements. The resources could be man, machine, material & method apart from accessibility to information & time for performing the activities. Provision of resources is taken up as a core business process, namely management process vide process procedure. 2- Human Resources: - HAL determine the necessary competence for personnel performing work affecting product quality, by periodic reviews by the concerned departmental heads/ groups in-charge. Based on the requirements & introduction of any new processes, equipment & technology, whenever required, training is provided or actions taken to satisfy those needs, after which effectiveness of actions taken is evaluated. It is ensured that our employee is made aware of the relevance &

59

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


importance of their activities & how they contributed to the achievement of the quality objectives. 3- Work environment: - HAL determines & manages the work environment needed to achieve conformity to product/ overhaul/ repair requirements. The products are properly handled & stored & environmental & other safety requirements for products & processes are ensured. These are addressed under process procedure for product realisation process. 4- Infrastructure: - HAL determines & maintains the infrastructure needed to achieve conformity to product requirements, including the supporting services for transportation & communication.

Quality measurement, analysis & improvement of the products: HAL determines the monitoring, measurement, analysis & improvement processes, including methods such as statistical techniques that are needed to: Demonstrate conformity of the product. Ensure conformity of the QMS. Continually improve the effectiveness of the QMS. This process is carried out as a product process namely monitor, measurement & improvement process provide process procedure & detailed procedures are also available in the departmental procedures.

60

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


IT DEPARTMENT
HAL has decided to take up IT as business initiatives with its existing expertise in IT and rich domain knowledge in servicing and allied areas, HAL can leverages itself to diversify into the new economy section of Info Tech IT enable services. The company is strengthen its IT linkages within the organisation and is evaluating its approach towards emerging opportunities in IT, including e-business which is fast transforming the traditional ways of transitory business. With this strategic initiatives and continuous effort to enhance its competitiveness by reducing cycle time and costs, improving quality opportunity in the environment, HAL is on its way to achieve its vision of being world class innovation, competitive and profitable enterprise providing total business situation. Computerisation in HAL commenced at the very inception of the company in the series. Initially the manufacturing units were depended on the technology transferred from the collaboration supplied system/procedure and computer programs with suitable adaption. The system and procedure formulated. Days laid a strong foundation for the development of IT base in the years that followed. Over the years, technology was gradually upgraded in line with the functional needs of the company and suitability adapted to the changes in the scenario. Today, computerised system base supported by state of art IT. The major units have centralised mainframes computers; whereas minor ones have got mini-computer system. The front end user friendly desktop personnel computers are used in each of the units extensively. In the data communication area, all the units are linked up through wide area corporate data network. Each of the major units have set up its campus wide backbone network supported by LAN for inter office/department connectivity for system integration. The company has a professional outlook towards IT strategies and strengthens in IT infrastructure in line with the future business required. A core group of IT personnel is available in each of its unit with proper support and direction from a similar apex body at the corporate level. The enterprise wide computerised system, web enabled technology, ecommerce concepts, collaborative and concurrent engineering simulation modelling and video conferencing are some of the newer areas considered for absorption today for meeting the business challenges of the future. ERP systems are being introduced on whole divisions, which are under process in engine division, after the success achieved in the other divisions like Aircraft division, Helicopter division and corporate office that ERO is already established. IFS one of the top fortune 500 companies is doing the installation and designing for engine division.

61

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


QUALITY ASSURANCE DEPARTMENT
OBJECTIVES AND FUNCTIONS Manufacturing Inspection:This department is responsible for inspection and sub assemblies manufacture in house/ outsource including indigenised items. The type of inspection carried out is Dimensional inspection Non-destructive testing Process inspection and protective treatment Calibration of instrumental and gauges Leasing with customer inspection (military, civil and export) for approval acceptance and certification of components Coordinating with design liaison for disposition of non conforming components Providing inspection support to indigenisation activity.

Assembly Inspection: The assembly inspection is presently carrying out the following tasks; inspection of transmission components for production CAT-B engines, major servicing, rotables and RMS order belonging to both military, civil and export orders, defect investigation and transmission components of military, civil and outside agencies, defect investigation of structural components and systems, accidents/incidents investigation, servicing, categorisation of accident engines and components repair/overhaul at operating units

Steps for quality improvement: -

62

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Annual quality improvement plans. Internal quality audits. Quality cost consumptions. Advance quality system Supplier control.

Future Strategies: Analyzing internal failure cost to minimise refection and rework. Plans to minimise external failure costs. Enhance investment on prevention costs byo Training and development o Process control o Quality improvement project o Vendor development o Better inspection and test facilities.

Steps in corrective and preventive action response Description of defect finding Correction of defects Finding of root cause Corrective action verification plan Follow up.

63

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


PURCHASE DEPARTMENT
The purchase department plays an important role in an organisation. The main objectives of the purchase department is timely procurement and supply of material to the departments on time as non-receipt of material in time may result in production hold-ups and receipt of material ahead of time would be a burden to the cash flow of the company, as the opening cycle would become longer and realisation from such projects will be less as compared to what estimated and at to the inventory carrying cost. It is important to have the right source who is well equipped to meet the requirements of the company as an when the need arises, to achieve that each department in HAL engine division shall carry out intensive market survey and prepare a register of approved supplies.

OBJECTIVES: To buy competitively and wisely authorised supplies to desired specifications from approved/reliable sources at the reasonable prices within the time schedule to support production plans and other requirements. To ensure that fair & open purchase practices are followed and a healthy & good relationship develops with suppliers to foster the commercial interest of HAL in the local, national and international market. To ensure timely formulation and commitment of purchase budget, including foreign exchange requirements. To serve as information centre on materials knowledge prices, source of supply, specification etc. to all other departments. To ensure that investment made on inventory is at an optimum level. Training of purchase personnel in the latest techniques of materials management.

FUNCTIONS: Creation of a comprehensive & continuously updated register of selected reliable vendors. Maintenances of vendor evaluation & rating records. Market survey with a view to establishing/ developing new reliable & better sources of supply by providing information on latest products/ development. Analysing bids/ offers for decision-making by the competent authority.

64

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Arranging negotiations with the parties when necessary. Issue of purchase order in time. Timely release of foreign exchange, obtaining technical clearance & import license when required. Follow-up of purchase orders till the arrival of materials at destination & to ensure after sales service during warranty & post-warranty periods. To work out periodically procurement lead time for various categories of items from international & local markets and advice the same to user department so that they take timely action in initiating purchasing request. Maintaining library of product catalogues & manufactures/distributors price list etc. Maintaining up to date information regarding sales tax, excise & custom duty-rates etc. Submit MIS reports on performance of purchasing organisation. Entering into service contracts for Transportation, Customers clearance and other miscellaneous services like repairs to capital equipment/plant, advertising, printing, packing, tailoring, maintenance service contracts, material handling services etc. Entering information contracts for sub-contracting prototype development, trial orders etc. Finalisation & operation of license agreement. To ensure that objective of purchase are realised & exceptional cases are brought to the notice of divisional heads/management. To be alert & responsive to the changes in production programmed & change in requirement of material.

CLASSIFICATION OF MATERIALS: For efficient purchasing it is necessary that the relevant classification of materials are properly understood, so that purchasing methods may be adopted for the purchase in question. Broadly, the following classifications are pertinent to HAL purchases:

65

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Capital equipment- Capital equipment consists of machine tools, plant, test equipment, workshop/ office furniture, vehicles etc. The requirement of capital items for the division is sanctioned by the Board in the annual capital budget. Purchase department is responsible for ensuring timely commitment of annual purchase budget. Production material- Production materials are those which are directly consumed in production. These are raw materials, consumables, components, spares and accessories, castings and forging etc., which go into the manufacture/ repair/ overhaul of aircraft/engines and other systems. Commercial materials- All other types of materials which are directly used in production but are required for the functioning of the organisation are classified as commercial materials. Those may be future sub-categorised.

The different kinds of requisition raised by different departments: MRP: Material Purchase Request. CRP: Capital purchase Request. MSR: Material Sub-contracting Request. UFR: Urgent Purchase Request. PPR: Petty Purchase Request. (If it is less than Rs. 200.)

66

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CHAPTER 4
SWOT ANALYSIS

67

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


STRENGTHS:MONOPOLY: - HAL enjoys monopoly over the producers of aircrafts, engines and helicopters in India to support defence and transportations. Since HAL stands with huge investment, this is a big strength to the company and the country. HAL also fetches huge returns to the nation. TECHNOLOGY: - With increased sophistication in design and configuration of aircraft machinery has also taken a very high technology leap. CAD/CAM features will be extensively used thereby reducing manufacturing cycle time. HAL can be considered as an embodiment of the nations aspiration to attain self sufficiency in modern technologies as represented by production of aircraft and allied equipment, while progressively building up the capabilities to undertake the Nova design and development of aircrafts engine and system. JOB SECUTITY: - HAL offers employment opportunities for thousands of people and raises the living standard of the people. Job security is one of the blessings bestowed by HAL on its employees. DEFENCE MARKET: - HAL with its products and services, fully engaged in proving backbone around which the IAF has built tough physical presence well able to take care of the multifarious tasks demanded of it. So Indian Defence market can be considered as the main strength of HAL. SKILLED AND DEDICATED MANPOWER: - Induction of young technicians in multi skills and transferring the skills from highly skilled technicians before they retire. NAVARATNA COMPANY: - HAL is one of the Navaratna Companies. So it has goodwill and market image.

WEAKNESS:ABSENCE OF MARKET STRATEGIES: - Through HAL produces a wide range of products, it is yet to be backed by effective marketing strategies. It can be seen as an obstacle for future prospects in the aerospace market. LICENSE DEPARTMENT: - It is largely dependent on its license in international business transaction. ENCUMBARANCE:- HAL too faces the problems which are common to public units like strict government regulation in technical upgrading etc.

68

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Investment made in R & D is inadequate. As in other government organisation, excess of manpower than required in the organisation.

OPPERTUNITIES:GROSERY MARKET: - The aerospace market has the growing in a rapid pace and there are untapped areas and markets to be explored further. This opens a level plain field for HAL. TIE-UPS: - HAL has been associated with the technological advancements in the industries and has brought tie-ups with majors like Rolla-Royce and various others. HIGH PENETRATION POTENTIAL IN THE FOREIGN MARKETS: - The foreign market for the products like ALH and LCA are found to be expanding and it creates a room for HAL to penetrate the foreign markets. HAL has entered into a licensed agreement with U.K for servicing of DART engines in South East Asia. New initiatives in R&D like ALH (advanced light helicopter), LCA (light combat aircraft) MIG and JAGUAR update programs provide scope for further expansion of the business.

THREATS
GOBAL COMPETITERS: - Competitors like Boeing air bus, lock head martin etc has potential edge and they are established in the design and development of aircrafts and others are having high aircraft technologies. LOW PRODUCTIVE: - As it takes six months for engine to complete manufacturing, this long process tells of its low productivity. LOW MOTIVATION: - The employees are not motivated to perform the gap most efficiently, as they are not identified, appreciated and reinforced. THREAT FROM MNCS: - Ever since Mr. P.V Narsimha Rao has signed LPG, after globalisation, trade and commerce has lead to the flooding in MNCs into Indian economy. They provide huge salary and amenities that the government could not afford. This may attract the efficient employees into those companies.

69

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

CHAPTER 5
OBSERVATIONS, SUGGESTIONS AND CONCLUSION

70

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


OBSERVATIONS
The following are the major observations derived from the organisational study of Hindustan Aeronautics Limited, engine division (Koraput): The companys product are stable efficient with proper inventory and working capital management. The workers are committed to their work and duties. There have been good initiating measures undertaken by the company to upgrade the quality and efficiency of its products and machinery. The finance position of the company is good though there are some indirect losses. There is a good coordination among all the departments of the company. The companys commitment towards its customers, employees and other share holders and society in general are tremendous. Absence of some HR terms like job specification, job distribution, job rotation etc.

SUGGESTIONS
The suggestion for effective growth is an attempt to provide better management solution from the available resources. The suggestions below should not be a criticism over the existing system. The profits generated by the organisation can be utilised to improve the work life of the employee by providing better infrastructure facilities within the organisation. The subsidised canteen facilities have resulted in high expenditure which reflects the cost and ultimately profit, therefore a recession of canteen charges can be considered. It can be though to discontinue by the way of outsourcing. The organisation structure must be flattened for quick decision making which will result in high profit ability. Define individual goals to achieve the corporate objective. Long procedure has to be reduced. Proper incentives schemes for the efficient work of efficient must be introduced.

71

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


The company should implemented and practice TPM philosophy in all departments of the factory, which is currently being maintained in few lines of the factory. The company should go for job rotation in the factory where in the employee is rotated to another job where similar skills are required in the factory. This would enable an employee to familiarise with different work system in the factory and subsequent help to the management in filling the emergency vacancies at any time besides uninterrupted career growth for such job rotated employees. Registering slow growth. It should concentrate on three critical factors:o Powerful consumer insight o Intense focus o Top quality innovation The suggestion can be validated and adopted if it in accordance with the companys policies.

CONCLUSION
The objective of this study is to assume and learn the various functional aspects of the organisation and possible comments on its activities. In the context of this report, it can be said that the production of the companys product is stable and efficient with proper inventory and working capital management. The workers are committed to their work duty. There have been good initiating measures undertaken by the company to upgrade the quality and efficiency of its products and machinery. The firms commitment towards quality is worth appreciating. Good coordination among all the department of the division. Financial position of the organisation as whole is sound. The commitment of the company towards its consumers, employees, shareholders and society as a whole is very high. If you are willing to work diligently towards your goal, you will surely succeed. The good things in life can be yours if you have truly a strong motivation for achieving them. Ones attitude determines ones future. This is what every one learns from a good corporate like HAL. Work is the key to happen. We line in deeds not in years, in thought not in breath, in feelings and not figures on the dial. This moral I learnt in HAL.

72

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


ANNEXURES PRODUCT PROFILE:-

ADOUR MK 811:

GARRETT 331_5:

Artouste IIIB 536- 2T

DART 533-2

ORPHEUS 70105

73

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


ADOUR MK 804E

AVON

GNOME 1400_IT

74

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


FINANCIAL STATEMENTS
Profit & Loss A/C for the year ended 31st March 2009, 31st March 2010 and 31st March 2011 of Hindustan Aeronautics Limited, Koraput Division (Rs. In Lakhs) PARTICULARS INCOME Sales Transfer to Inter Divisional Units Charges in WIP/SIT/Scrap Other Income Charges received on inter divisional transfer Total EXPENDITURE Consumption of Raw Material, Components Amortisation Salaries & Wages Other expenses Charges paid on Inter Divisional Transfers Interest Depreciation Provisions Inter services/ common services Total 123734 15215 21105 8462 3 1 3686 9219 1586 183011 139591 14943 18003 9368 18 1 4242 5914 940 193021 140420 12459 22521 11711 24 4324 10061 1127 202647 140992 754 36767 4749 75 183337 133541 59 62722 4337 6 200666 176196 424 30647 2667 42 209976 2009 2010 2011

75

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Less: Expenditure relating to capital A/C Net Expenditure 11643 171368 11969 0 0 0 11969 0 11969 5290 187731 12935 0 0 0 12935 0 12935 4911 197736 12239 0 0 0 12239 0 12239

Profit of the year Less: provision for current taxation Provision for deferred taxation Provision for taxation of earlier years Profit after tax Balance brought forward from last year Profit available for appropriation APPROPRIATION Debenture redemption reserve Research and development reserve Proposed dividend General reserve Balance carried to balance sheet Total of appropriation

0 0 0 0 11969 11969

0 0 0 0 12935 12935

0 0 0 0 12239 12239

76

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Balance Sheet as on 31st March 2009, 31st March 2010 and 31st March 2011of Hindustan Aeronautics Limited (Rs. In Lakhs) PARTICULARS SOURCES OF FUNDS: Share holders fund: Head office control A/C Reserve & Surplus 4712.75 11968.86 16681.61 Loan Funds: Secured Loans Unsecured Loans 259.75 259.75 Deferred Liabilities Total sources of Funds APPLICATION OF FUNDS Fixed Assets: Gross Block Less: Depreciation Net Block Capital work-in-progress 60432.55 23502.14 36930.42 7143.75 44074.16 Special tools & equipments Investments 113380.82 67432.44 27738.48 39693.96 3147.59 42841.55 115159.33 70371.36 32056.39 38314.94 2519.11 40834.08 113164.02 0.44 16941.80 364.54 364.54 0.12 30291.91 95.11 95.11 -0.18 -95123.03 166992.37 12934.88 29927.25 -107457.42 12239.46 -95217.96 31ST March2009 31st March2010 31st march2011

77

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


Current Assets, Loan & Advances: Inventories Sundry debtors Cash & bank balances Loan & advances 154197.27 14655.86 11.95 89141.87 258006.95 Less: Current liabilities & provisions Liabilities Provisions 408546.14 22538.14 508682.10 26051.52 634488.75 33297.00 256533.47 23918.95 16.88 95198.45 375667.75 311483.61 24198.85 8.97 40860.92 376552.35

Net Current Assets Intangible assets: Gross carrying amount Less: cumulative amortisation & impairment loss Net carrying amount Total application of funds

173077.33

159065.87

291233.40

44467.53 11903.38

46904.69 15547.79

60364.03 18251.77

32564.15 16941.80

31356.90 30291.91

42112.26 -95123.03

78

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.


BIBLIOGRAPHY

BOOKS:
Kotler Philip & Keller Kevin Lane, Marketing Management Twelfth Edition 2006 Krishnaswami O.R. & Ranganatham mM, Methodology of research in social sciences Management Accountancy by Sharma & Gupta.

WEBSITES:
www.hal-india.com www.managementparadise.com www.defence-discovery.com

REPORTS, MAGAZINES & JOURNALS:


Corporate Plan (Draft) Employee Handbook ISO 9000:2001 Manual of Management service department Annual book report of HAL

79

M.P. BIRLA INSTITUTE OF MANAGEMENT, BANGALORE.

-: THANK YOU:-

80