Developing an E-Module on the

Procure To Pay Policy of

Honda Cars

Summer Internship Project Report

Submitted towards Partial

fulfillment
of
Post Graduate Diploma in Management/

(Approved by AICTE, Govt. of India)

Academic Session

2017-19

Submitted By:
Aakriti Gupta
2017001

Under the Guidance of:

Industry Guide Faculty Guide
Mukund Keshoraiya San Dr. Anindita Sharma
DY. MANAGER Associate Professor
Honda Cars India Limited JSB, Ghaziabad
 DECLARATION

I hereby declare that this Summer Training Project Report on “Developing an E-

Module on Procure to Pay Policy of Honda Cars” is my own work, to the best

of my knowledge and belief. It contains no material previously published or

written by another person nor material which to a substantial extent has been

accepted for the award of any other degree or diploma of any other institute,

except where due acknowledgement has been made in the text.

Name: Aakriti Gupta

Roll No. : 2017001
Date: __/__/__ Institution Name: Jaipuria School Of Business

2
CERTIFICATE

3
 ACKNOWLEDGEMENT

I, Aakriti Gupta, the student of JAIPURIA SCHOOL OF BUSINESS,

INDIRAPURAM, am extremely grateful to HONDA CARS INDIA LIMITED,

for confidence bestowed in me and entrusting my project entitled “Developing an

E- module on Procure to Pay Policy of Honda Cars.”

At this juncture I feel deeply honored in expressing my sincere thanks to Mr.

Mukund Keshoraiya San (Industry guide) for making the resources at right time

and providing valuable insights leading to the successful completion of my

project.

I express my gratitude to Mrs. Sweety Singh for arranging the summer training in

good schedule.

I also extend my gratitude to my Project Guide Dr. Anindita Sharma, who assisted

me in compiling the project.

I would also like to thank all the faculty members of PGDM Department

(JAIPURIA SCHOOL OF BUSISNESS, INDIRAPURAM) for their critical

advice and guidance without which this project would not have been possible.

Last but not the least I place a deep sense of gratitude to my family members and

my friends who have been constant source of inspiration during the preparation of

this project work.

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 EXECUTIVE SUMMARY

1.1 This report presents the findings of a study that was carried out to gain

information on the Importance of Procure To Pay Policy at HONDA CARS

INDIA LTD. The report also outlines the meaning of Procure To Pay Policy and

its requirement in HCIL for any kind of activity.

1.2 The concept of this policy starts from different step: The complete cycle of

“Procure to Pay” is a 4 steps process:

Step 1. Budget Approval

Step 2. Work/Expense& Vendor Approval

Step 3. Verification of Work

Step 4. Payment including Accounting

1.3 The main objective of this study is to assess the effectiveness of this policy

implemented at HCIL. The analysis has been made on the basis of preparation of

E-Module on the P2P policy of HCIL. This module will help in the better

understanding of the policy and the 3 main powers ruling this policy.

1.4 All 3 powers lies in different authorities and approval by different authorities

according to the limit of expenses and work done. Further these steps involves

different processes and work approval mechanisms.

1.5 Vendor Selection „Yes‟, where multiple vendors are available for any activity

Vendor Selection „No‟, where

 No vendor required for conducting the activity or govern by separate

policy

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  Only single vendor is available for the activity (Need to justify)

 Vendor already approved for similar activity like AMC or earlier contract

is valid etc.

 For genpo / inter-genpo payments

1.6 All Operations to present the minimum requirement as mentioned in

Annexure 2or in the format suggested by BMD and also add justification sheets

as they deem fit.

1.7 There is always 2 level check at every level of work done or payment made.

Several details on the NFA need to be filled by the user and approving authority

and invoices are need to be attached with the NFA.

1.8 User will take NFA no. and submit the original copy to Admin deptt. User will

submit the fully filled payment request form (left side) to Planning/ Kanri team.

1.9 Planning/ Kanri will verify approvals as per mentioned Procure to pay process,

NFA, agreement etc. and will forward it to BMD for further processing.

1.10 Understanding of PO /WO / Engagement letter/ Agreement. All advance

payments will be paid according to the terms & conditions mentioned in the

Purchase Order / Work Order / Engagement Letter.

1.11 In case of any clarification/ ambiguity, following stepwise contact points are:

1st Point - Respective HOD/ Kanri team/ Divisional Head

2nd Point - Respective Operating Head

3rd Point - GA/ BMD Kanri team

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1.12 General Purchase will continue to follow their own procurement process. In

case of absence of Director (Finance), necessary approval can be taken from

Director (GA).

This developing of e- module was much needed in the Honda because every

department was facing issues regarding the procedure of the policy and they had

faced many budget related problems.

The company allotted me the work to make the e- module on the policy which

will be uploaded on the Honda website with voice modulation.

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 TABLE CONTENTS

S.No. Particulars Page no.

1. Cover Page 1

2. Declaration 2

3. Certificate 3

4. Acknowledgement 4

5. Executive summary 5-7

6. Table of Contents 8-9

7. Abbreviations 10

8. Chapter-1 About the Company 11-21

1.1 History 11

1.2 Logo 13

1.3 Mission & vision 13

1.4 Group of companies 15

1.5 Awards & achievements 17

1.6 SWOT 20

1.7 Organisational structure 21

9. Chapter-2 Literature Review 22-52

2.1 Objective of the study 26

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 2.2 Background of the Policy 29

2.3 About the Policy 31

10. Chapter-3 Limitations 53-54

3.1 Significance 54

11. Chapter-4 Methodology 55-61

4.1 Major Concern 58

4.2 Other works 60

12. Chapter-5 Learnings 62-70

5.1 Conclusion 63

5.2 Annexures 65

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 ABBREVIATIONS

Ki - Financial year

Kanri - Planning

HCIL - Honda Cars India Limited

P2P - Procure To Pay

PDCA - Plan Do Check Act

IBM - Internal Board Meeting

NFA- Note For Approval

GA- General Affairs

BMD- Business Management Department

ORBT- Original Budget

PRBT - Press Release Budget

CFT – Cross Functional Team

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 CHAPTER-1

ABOUT THE COMPANY

Honda Cars India Ltd (HCIL) is a subsidiary of Honda of Japan for the

production, marketing and export of passenger cars in India. Formerly known as

Honda Siel Cars India Ltd, it began operations in 1995 as a joint venture between

Honda Motor Company and Usha International of Siddharth Shriram Group. In

August, 2012, Honda bought out Usha International's entire 3.16 percent stake

for 1.8 billion in the joint venture. The company officially changed its name to

Honda Cars India Ltd (HCIL) and became a 100% subsidiary of Honda.

It operates production facilities at Greater Noida in Uttar Pradesh and

at Bhiwadi in Rajasthan. The company's total investment in its production

facilities in India as of 2010 was over 16.2 billion.

HCIL's first manufacturing unit at Greater Noida began operations in 1997. Set up

at an initial investment of over 4.5 billion, the plant is spread over 150 acres

(0.61 km). The initial capacity of the plant was 30,000 cars per year, which was

thereafter increased to 50,000 cars on a two-shift basis. The capacity has further

been enhanced to 100,000 units annually as of 2008. This expansion led to an

increase in the covered area in the plant from 107,000 square meters

(1,150,000 sq ft) to over 130,000 m2 (1,400,000 sq ft).

Honda set up its second plant in India at Tapukara in Alwar

District of Rajasthan, spread over 450 acres (1.8 km) with an investment of 3526

crores. It operates under the ISO 9001 standard for quality management and ISO

14001 for environment management.

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FOUNDER

From a young age, Honda‟s founder, Soichiro Honda (本田宗一郎, Honda

Sōichirō) had a great interest in automobiles. He worked as a mechanic at a

Japanese tuning shop, Art Shokai, where he tuned cars and entered them in races.

A self-taught engineer, he later worked on a piston design which he hoped to sell

to Toyota. The first drafts of his design were rejected, and Soichiro worked

painstakingly to perfect the design, even going back to school and pawning his

wife‟s jewelry for collateral. Eventually, he won a contract with Toyota and built

a factory to construct pistons for them, which was destroyed in an earthquake.

Due to a gasoline shortage during World War II, Honda was unable to use his car,

and his novel idea of attaching a small engine to his bicycle attracted much

curiosity. He then established the Honda Technical Research Institute in

Hamamatsu, Japan, to develop and produce small 2-cycle motorbike engines.

Calling upon 18,000 bicycle shop owners across Japan to take part in revitalizing

a nation torn apart by war, Soichiro received enough capital to engineer his first

motorcycle, the Honda Cub. This marked the beginning of Honda Motor

Company, which would grow a short time later to be the worlds largest

manufacturer of motorcycles by 1964.The first production automobile from

Honda was the T360 mini pick-up truck, which went on sale in August 1963.

Powered by a small 356 cc straight-4 gasoline engine, it was classified under the

cheaper Kei car tax bracket. The first production car from Honda was the S500

sports car, which followed the T360 into production in October 1963. Its chain

driven rear wheels point to Hondas motorcycle origins.

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LOGO

The Honda logo depicts attractive and stylish letter ”H” inscribed in Roman style

which gives it a simple yet eye-catching look. Another feature that makes this

badge so popular in comparison with others is its bold font. Honda has various

logos for different departments. But all badges have one single basic which is

confined in letter “H”. For example, Honda motorcycles have the famous Honda

Wings badge while letter “A” can be found on the bodies of Acura autos. It

actually looks more like reversed letter “H”. Traditional badge is broader on top

and thinner at the bottom. The Honda symbol features liver-grey metallic tone that

adds inspiring and radiant look for the logo. At the same time it looks simple,

elegant and stylish. Such combination represents the philosophy of the brand

which is based on magnificence, durability and confidence.

MISSION & VISION

Vision Basic Principles

Respect for the individual.

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The Three Joys (buying, selling and creating).

Honda believes that each person working in or coming in touch with our

Company, directly or through our products, should share a sense of joy through

that experience. This feeling is expressed in what they call "The Three Joys"

Honda‟s Goal is to provide joy through their Business:

The Joy of Buying: For those who buy our Products

The Joy of Selling: Engage in selling our products and services

The Joy of Creating: Involved in business of creating our Products Company

Principle (Mission Statement) Maintaining a global viewpoint, Honda is dedicated

in supplying products of the highest quality, yet at a reasonable price for

worldwide customer satisfaction.

Management Policies

 Proceed always with ambition and youthfulness.

 Respect sound theory, develop fresh ideas, and make the most effective use of

time.

 Enjoy work and encourage open communication.

 Strive constantly for a harmonious flow of work.

 Be ever mindful of the value of research and endeavor. .

Honda Cars India Limited (HCIL‟s) stated vision and goal is to become a

company that society wants to exist. In order to meet the expectation of the

stakeholders and the society, Honda Corporate Governance (HCG) System has
14
been set up. As part of Corporate Governance system, the Business Ethics

Proposal Line (BEPL) – VIGIL MECHANISM Policy has been established, with

the aim to enable Directors, employees and Business partners to report any

instance of unethical behavior, actual or suspected fraud or violation of Honda

Code of Conduct, internal policies and statutory laws in the Company.

GROUP OF COMPANIES

1. HONDA WORLDWIDE

Honda Motor Company, Japan with its headquarters in Tokyo, has manufacturing

operations in 28 countries with 73 plants.

The company principal of Honda Worldwide is dedication to supplying products

of the highest quality yet at a reasonable price for worldwide customer

satisfaction.

It has 3 business divisions namely 2-wheelers, 4-wheelers and Power Products.

Apart from HMSI that manufactures 2-wheelers, the other business divisions in

India include Honda Cars India Limited (HCIL) and Honda Siel Power Products

Limited (HSPP)

2. HONDA CARS INDIA LTD.

Honda Cars India Ltd., (HCIL) is a leading manufacturer of premium cars in

India. The company was established in 1995 with a commitment to provide

Honda's latest passenger car models and technologies, to the Indian customers.

The company is a subsidiary of Honda Motor Co. Ltd., Japan.

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The company's product range include Honda Brio, Honda Jazz, All new Honda

City, Honda Civic, Honda CR-V, Honda all new WR-V and Honda Accord hybrid

which are produced at the Greater Noida facility. Honda's models are strongly

associated with advanced design and technology, apart from the established

qualities of durability, reliability and fuel-efficiency.

HCIL's first manufacturing unit was set up at Greater Noida, U.P in 1997. The

green field project is spread across 150 acres and has an annual production

capacity of 100,000 units. The company's second manufacturing facility is in

Tapukara, Rajasthan. This facility is spread over 450 acres and currently has a

state-of the art Power train and Press shop. The first phase of this facility was

inaugurated in September 2008.

3. HONDA SIEL POWER PRODUCTS LTD.

Honda Siel Power Products Ltd (HSPP) is a Joint venture between Honda Motor

Co., Japan and SielLtd.India. Currently Honda Motor Company, Japan has a 67%

Equity Stake in this company.

It was incorporated in September 1985 and produces a range of Power Products in

India, like Portable Gensets, Portable Engines, Portable Water Pumping set and

Lawnmowers

4. HONDA R&D (INDIA) PVT.LTD.

Honda R & D ( India ) Pvt. Ltd., is a 100 % subsidiary of Honda R & D Co. Ltd.,

Japan, which is a group company of Honda Motors Co. Ltd., Japan. HRID is

formed to carry out Local Research and Development activities related to

Motorcycle & Power Products on the directions provided by Honda R & D Co.

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Ltd. of Japan. HRID was initially set up in India in the year 1998 as liaison office

of Honda R&D Co Ltd., Japan. Later a domestic company was incorporated in the

year 2003 to carry out R & D operations in India. Since then HRID has been a part

of many successful development projects related to Indian market products. HRID

pledges to contribute to society by developing quality products & technologies.

5. HONDA MOTOR INDIA

Honda Motor India the wholly owned subsidiary of Honda Motor Co. Ltd

Commences Operations, Beginning with HSCI Parts Operations (HMI)

formally began its operations from its corporate office in Greater Noida,

Uttar Pradesh, India from December 1, 2006.

The plan to set up HMI was first announced by Mr Takeo Fukui, President and

CEO, Honda Motor Co., Ltd, during his visit to New Delhi. Formation of HMI is

part of the overall strategy to strengthen and integrate operations of Honda

companies in India with respect to service parts.

AWARDS AND ACHIEVEMENTS

I. BRAND HONDA AWARDS

o MANUFACTURER OF THE YEAR

Bloomberg TV Autocar Awards

o MANUFACTURER OF THE YEAR

Car India Awards

o MANUFACTURER OF THE YEAR

Motor Vikatan

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 o MOST RELIABLE / ECO FRIENDLY

Apollo Tyres Auto India Best Brand Survey Award 2010

o VERY RELIABLE ENVIRONMENT FRIENDLY & GOOD

AVERTISING

Apollo Tyres Auto India Best Brand Survey Award 2010

II. AUTOMOBILE AWARDS

JAZZ

o HATCHBACK OF THE YEAR

Car India Awards 2016

o READERS CHOICE AWARD

Car India Awards 2016

o DESIGN OF THE YEAR

Zeegnition Auto Awards 2016

AMAZE

o AUTOPORTAL BEST UPGRADE AWARD

Autoportal best upgrade 2017

ACCORD

o GREEN CAR OF THE YEAR

AUTOCAR AWARDS 2017

o BEST TECHNOLOGY AWARD

AUTOPORTAL 2017

MILESTONES

a) AUG 22, 2016

HCIL announced the opening of 300th dealership in India with the

inauguration of Perfect Honda in Kochi.

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b) DEC 23, 2016

HONDA CARS INDIA LTD. Reached the 100 million unit milestone in

cumulative global automobile production.

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 SWOT ANALYSIS

STRENGHTS
1.Competence in engine
manufacturing - company‟s core
product WEAKNESS
2.Diversified product portfolio Low investments in research
3.Dominance in motorcycle and and development (R&D) leading
engine industries leading to a high to innovative products
brand awareness
4.Strong position in Asia‟s
motorcycle markets

OPPORTUNITIES
1.Increasing government
regulations THREATS
1.Increased competition
2.Timing and frequency of new 2.Rising Japanese Yen exchange
model releases rates
4.Low fuel prices are increasing 3.Natural disasters
the demand for pickup trucks and
SUVs

Figure 1. SWOT Analysis of HONDA

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ORGANISATIONAL STRUCTURE

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 CHAPTER-2

LITERATURE REVIEW

CASE STUDY OF PEPSI CO

PepsiCo developed a mobile-first solution to train and develop their international

salespeople.

The challenge

PepsiCo has over 15,000 frontline salespeople spread out across Sub-

Sahara and Europe. Almost all of their salespeople use their own device

and are in regions with poor Wi-Fi and data access. 10,000 out of their

15,000 salespeople are in Turkey, Russia and South Africa – all places

where internet access is unreliable at best. Upwards of 95% only speak

their local language with a basic understanding of spoken English. With

over 40 different languages to accommodate, PepsiCo‟s plans for using

technology to deliver their training was ambitious. But for PepsiCo and

their learners, it was the difference between something and nothing – and

for PepsiCo, that made the endeavour worthwhile.

PepsiCo wanted to provide induction and sales training they‟d originally

had to forgo or wait months to deliver. Efforts involved, travel costs, and

disrupting work schedules meant training was infrequent. New learning

was cascaded down in face-to-face sessions, from the head office to the

regional and local, and then finally to the frontline managers and

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 salespeople. This meant learning could get muddled and lose effectiveness.

And though all talented at coaching and assessing, their frontline mangers

weren‟t always the best teacher, and so the quality of training wasn‟t

consistent.

A new approach to learning and development was needed, but for it be

effective the solution needed to meet their salespeople‟s work lifestyle.

The solution needed to:

 overcome internet and device challenges by being accessible via responsive

platform or an app that worked offline, and the two had to integrate

seamlessly

 scale quickly and be cost effective to localise the platform, app and courses

 be bite-sized so learning could be done between meetings and would be

quicker to download and sync, saving data costs.

The solution

PepsiCo‟s focus for their solution was on providing the right support and

tools for their markets and learners so they could make the learning their

own. By starting smart and scaling, PepsiCo was able to adapt to these

needs, and as a result, it became evident the new solution could revitalise

training and become an effective blend in which learners could practice

learning in the field while being supported and assessed by their managers.

To meet demands for localised and accessible learning no matter where

learners are based, PepsiCo chose the flexibility of Totara Learn‟s

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 platform, dominKnow‟s offline app, and Kineo‟s expertise to implement

their Totara Learn and build an integration between the two solutions. The

solutions were chosen because both were easy to localise and brand and

were accessible on different device types and sizes. Depending on needs,

PepsiCo‟s markets have rolled out both platform and app to learners,

whilst others have only done one or the other.

The development of an integration to sync information behind the scenes of the

two solutions was essential to create a seamless experience. This integration

means that when a course is uploaded to Totara and pathways are designated, the

course is immediately viewable to the right demographic either via the platform or

app when connected online – and can be downloaded to the app to take offline. To

use dominKnow‟s app offline, learners download courses when connected to Wi-

Fi. Results sync back to Totara Learn whenever the learner is online again.

To generate excitement and global uptake by making training their training,

PepsiCo hosted a competition to recruit local champions to narrate learning in

their local markets, and also developed a process to localise courses by training

markets to use templated Storyline modules. This process in addition to making

bite-sized courses, kept costs down and made learning quicker to develop and

deploy. A microlearning approach reduced internet usage and storage challenges

for their learners, but it also meant that PepsiCo could meet the needs of their on-

the-go learners by ensuring learning fit their schedules and could be put into

practice in the field.

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The results

PepsiCo‟s goal was to start smart and scale quickly so that the solution met

learner demands. Their new solution is proof that even the smallest

solutions have big impact. As a result of this initiative to use technology

for sales and induction training, PepsiCo has a new learning strategy which

is supported by their mobile-first and microlearning approach and enables

their learners do the theory in their own time and the managers focus on

coaching and certifying in the field.

Reaction has been positive. Managers have reported they no longer need to

focus on teaching theory and learners reported feeling more prepared for

situations in their daily work. One learner praised that „…you can easily

reach a piece of information when you forget it‟. Many respondents in a

survey said they revisited the material regularly to improve their skills and

found the examples memorable. 95% of respondents also demonstrated a

change in behaviour with a willingness to try new methods and increased

confidence.

As for costs and uptake, the total estimated cost per course run in 2017 is

$0.20 and 2017 has more than doubled 2016 figures for number of courses

run. Over 40,000 courses were run through the platform in the first eight

months of 2017 and another 40,000 through the app. When the UK only

had two modules live, they halved induction training from ten days to five,

saving costs and resources.

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 OBJECTIVE OF THE STUDY

The main objective of the study was to develop E- Module on the P2P policy for

the better and easy understanding of the policy.

In the big company like Honda, there occur many activities and for approval of

these activities there need to approve budget for easy completion of these

activities. These activities involve many steps from Budget approval to Payment

to the vendor. This all work is done by different authorities and users to avoid any

fraud/misrepresentation etc. As the different work is done by different users it

makes the process very technical as many annexure need to be attached and

approvals to be taken from approving authorities. To make this process easy

company decided to make E-Module of this policy which will help the users for

understanding the process so that activity work should be accomplished by

following all steps. Honda hired a vendor who will make this E-Module, where

Intern made that vendor understand the whole policy and the requirement of the

policy.

Firstly Intern sent all the details regarding the policy and showed him some

presentations on the policy. Then, Intern made Table of Content finalized for the

policy which contains all the information required in the e- module, with the help

of her supervisor which Intern sent to the vendor for starting the storyboard.

Then, he sent the storyboard for finalizing, where Intern made some changes and

told him to do the updations in the storyboard.

The final storyboard will be developed into an e – module which will be showed

on Honda website. The person whosoever wants to know about the detailed

26
procedure involved in the policy can play the e-module from that website which

will be given with voice modulation.

Conclusion: A-00 of “Procurement Approval – to – Pay” Process

Budget : Plan activities to maximize bottom line as per P&L of

Approval company

Request for : Work/activity approval as per company’s

Work requirement

Vendor : QCDM basis impartial vendor selection

Appointment

Verification of : Ensure work done as per plan

Work

Payment : Actual payment to genuine vendor

including

accounting

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28
 BACKGROUND OF THE POLICY

Presently, we have a policy for Procurement Approval to Pay Process released on

November 2, 2015. This policy governs all work/expenses of HCIL. There are 20

SGA heads as per Annexure 1(General Administrative expenses – 18 and Selling

- 2) which are governed by above guidelines.

Since the time of launch of this policy in 2015, it has been observed that there

have been some incidences where the policy is misunderstood/misinterpreted

resulting in possibility of different practices across different operations, lack of

clarity and possibility of inadequate checks/ balances leading to Risk Management

issues.

Furthermore, after rotating PDCA it has been found that some activities where

financial transaction is involved were not covered under the purview of this policy

and also while approving a budgeted work/expense, Top Management has no

visibility of final cost / scope of activity / selected vendor etc.

Additionally, the current approval limits mentioned in the policy were finalized in

2009 and since then these were not revised resulting into increase in number of

proposals going to IBM. Moreover, certain activities / expenses which are regular

in nature and are required to ensure continuity of business, were covered in the

29
category which mandates suitable approval (incl. IBM) and therefore was

adversely affecting Business Efficiency.

Therefore, in order to assure adequate Risk Management along with proper

Business Efficiency, following revised Procurement Approval to Pay Process is

proposed:

 Scope:

 Inclusion items :

 All SGA & Capex related expenses

 Recovery from Dealer including JDAP expenses

 All Incomes (excl. from Car sales)

 Genpo Payment / Recovery

 Exclusion items :

 Mass production parts / Repair & Maintenance / PT Dies

 Capacity Expansion, New Manufacturing facility which are

separately evaluated

 Items governed by a separate policy such as Warranty, Event

cars etc.

 Income from Car sales etc.

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 ABOUT THE POLICY

 Proposed Process:

A. Steps :

The complete cycle of “Procure to Pay” is a 4 steps process:

Step 1. Budget Approval

Step 2.Work/Expense& Vendor Approval

Step 3. Verification of Work

Step 4. Payment including Accounting

B. Basic Principle :

 Clear separation and independence of responsibilities/ accountabilities

in

Step 1-2. Budget Approval & Request for Work/ Expense

Step 2-3. Vendor Appointment& Final Cost Approval

Step 3-4. Verification of Work& Payment including Accounting

for ensuring transparency, fairness and highest level of Corporate

Governance.

31
  Minimum two level check/ verification at each step.

The detailed process, formats and mechanism of each step are explained below:

Step 1 : Budget Approval

 A00 / Objective – To plan financial activities properly in order to

maximize bottom line.

 Detailed item wise Budgets for any Ki to be prepared at ORBT timing

and need to be reviewed on quarterly basis in case of changes.

a) Process :

For ORBT Timing:

Detailed hearing to BMD
Director
Budget preparation by Approval by Div. Final document
(In case if President wants,
Deptartment Director submission to BMD
then BMD will arrange
operation wise hearing)

For Quarterly Reviews (QFC):

In case of revision, Summary hearing to BMD Final document

Approval by Div.
Director of change points
preparation of budget Director submission to BMD
(President, if required)

a) Format :

All Operations to present the minimum requirement as mentioned in

Annexure 2or in the format suggested by BMD and also add justification

sheets as they deem fit.

32
 b) Procedure :

Budget review will be done at ORBT level and approved as per above

mentioned procedure. Post approval of ORBT, for subsequent quarterly

Budget Approvals, actual till date, projections for remaining period and

change points from previous event should be explained as per the above

procedure. BMD will compile overall HCIL budget and present to

Management through Quarterly Jikon meetings.

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 3 of10

Step 2 : Work/ Expense & Vendor Approval

 A00 / Objective - Work/Expense/Income approval as per company’s

requirement & QCDMS based impartial vendor selection for

Work/Expense.

 Scope : Budgeted and Un Budgeted – SGA & Capex Expenses,and

Incomes / Royalty / Commission etc.

 Work/ expense can be classified under following 3 categories on the

basis of risk management and business efficiency.

33
Details Category  Category  Category 

Activity
Mandatory / Non-Mandatory /
(Extent of
Compliance Important / Regular Recurring at
need, Timing,
related varied intervals
Frequency)

Specification /
Fixed Fixed / Variable Variable
Policy

Fixed Variable

Expense (as per Govt. (as per inflation & Variable

notification) Manpower)

Supplier Fixed Variable Variable

ARAI/ICAT Testing/ Insurance (Non-

Electricity Bill / Warranty / mandatory) /

Example
Custom / Tax /Stationary/SIAM Media Event /

Fee Survey / Training

 Incomes / Earnings also need to be defined so that check & control can

be ensured.

Category ① – Work/ expenses are mandatory; specification are fixed or

governed by policy and supplier is also fixed. (mostly to Govt.) :

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 Operations
S.
Group Expense Type Cust.
No. Mfg BMD GA Pur Mktg. IT
Ser.

Rates & Taxes - Pollution,

1 Water, factory Licences paid  

to Govt. authorities

GA Development Charges, Rent

2 & Fix Charges paid to  

RIICO, GNIDA, etc.

3 Associate Travelling       

4 Custom Duty 

GST, TDS and all other

5       
Govt. taxes

Electricity expenses to
Others 6 JVVNL /NPCL/ Electricity  

Board, etc.

Fuel - IGL, Vehicle Maint,

7 Petrol, Vehicle Insurance,      

Toll tax for Company Cars

35
 Document No: HC/GA/P&S/01

Revision No : 02

Page No : 4 of10

 Format: For above activities mentioned in Category 1, NFA is not

required. However, post Work/Bill verification, Payment Request Form

needs to be filled and approved as per defined limits for Payment.

Category ② - Work/ expenses which are regular in nature and which are

required to ensure business continuity.(Annexure – 3).

In case of Category②, since the expenses are regular in nature, Div. Director and

BMD Director approval will be considered equivalent to IBM approval. Although

NFA and rest other steps to be followed.

Category  - All other work/ expenses which are not covered in Category ①or②.

Common guidelines for Category②& :

 Format [For Category ②&only ] :

 For initiating the activity, NFA should be approved in standard format

as per section 1 of Annexure 4 with minimum two levels of

verification at user end.

 NFA will be valid for 1 year or completion of work, whichever is

earlier, but in case of projects, NFA will be valid till the completion of

project.

36
  In NFA, user will also select whether vendor selection is required or

not as per the expense categorization in 3 categories based on below

understanding and subject to approval of Management as per limits:

 Vendor Selection „Yes‟, where multiple vendors are available for any

activity

 Vendor Selection „No‟, where

o No vendor required for conducting the activity or govern by

separate policy

o Only single vendor is available for the activity (Need to justify)

o Vendor already approved for similar activity like AMC or

earlier contract is valid etc.

o For genpo / inter-genpo payments.

 Even in case of „No‟ vendor selection, appropriate reasons have to be

mentioned in Sec. 2 and verified by Kanri / CFT team and approved by

Div. Director.

 Approvals [For Category ②&only ] :

For initial approval for Work/ Expense NFA Sec. 1 to be filled by user and

approval to be taken as per following limits which will be the budgeted

amount.

SGA & Capex - Work/ Expense Approval limits (value on per annum per

activity basis)

Operating Head Divisional Director

Budgeted < INR 10.0 Lakh > INR 10.0 Lakh

37
 Un Budgeted < INR 2.0 Lakh > INR 2.0 Lakh

User will provide necessary approval for work/ expenses in Section 1 of NFA,

including scope of work/ activity/ expense, budget details, evaluation

parameters (RFQ), probable/ existing/ past vendor details, PDCA of last year

activities, desired terms/ conditions and any other details that may be

necessary for the vendor selection co-ordinator. User may use extra sheets, if

required.

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 5 of 10

Vendor Selection & Approval

The agency / person responsible for vendor selection should be different from

user, to ensure no bias/ conflict of interest in the process, to ensure fairness

and transparency.

a) Process :

After taking approval in NFA Sec.1, user will propose the vendor selection

option as per the below process.

b) Vendor Selection Proposal:

38
 Work/ Expense value on per annum per activity

basis

< INR 2.0 Lakh > INR 2.0 Lakh

Vendor Selection
Purchasing/ CFT/ Kanri Head
Option (Any one)

Authority to decide

which selection Operating Head (OH) Divisional Director (DD)

option

Authority to decide

members in case of  

CFT (Annexure – 5)

Activity done by Purchasing will be governed through the Standards

Operating Procedure (SOP) of the Purchasing operation.

c) Vendors selection Co-ordinator :

By Kanri / Planning team of each operations or any other associate(s)/ team

may be from same Div./Department/Operation (other than user) as nominated

by Operating Head. Vendor Selection Co-ordinator to take help of user for

technical inputs, DA sheet etc. as they deem fit.

d) Procedure: Detailed process flow chart for vendor selection through CFT is

as follows:

39
 Document No: HC/GA/P&S/01

Revision No : 02

Page No : 6 of 10

Note:

1. Minimum 3 vendors to be evaluated for selection of service providers / job

work.

2. RFQ formation will be done by user, and will be approved by CFT.

3. QCDMS parameters weightage can be proposed by user, and will be

approved by CFT.

40
 4. Vendor selection coordinator will keep the records of communication /

negotiation with the vendors (Minutes of meeting / E-mail communication

/ QCDMS Evaluation Sheet etc.)

5. Members of the CFT must not have any financial or personal relationship

(as per companies act definition) with the vendor. In case of any perceived

conflict of interest, the CFT members should declare it to other members

of CFT and should not accept any CFT assignment in case any conflict of

interest exists.

 Selection of multiple vendor or Panel –

o In case of engaging multiple vendors, selection will be based on

QCDMS rating. Minimum share of business to each vendor has to be

defined by Vendor selection authority (Purchasing / CFT / Kanri

Head).

o In case of requirement of vendor panel such as legal services, hiring of

Lawyer/Law firm/Consultant is to be done from the Panel, Pre-

approved by Cross Functional Team (CFT). In case of hiring of new

Lawyer/Law Firm/ Consultant, vendor selection and appointment

process will be followed.

e) Vendor selection Proposal in NFA Sec.2

 CFT Working Committee / Purchasing / Kanri Head will propose selected

vendor for approval by signing in NFA Sec.2. Signing members should be

M-II & above.

41
  In case where Kanri team doesn‟t exist, approval will be taken by the user

from the person(s) nominated by Operating Head to act as Kanri for that

particular activity.

f) Vendor selection Approval in NFA Sec.2

 First approval will be taken by the user from CFT Approving Committee /

Kanri Divisional Head.

g) Final Approval for Work/Expense & Vendor in NFA Sec.2

 Final approval for the activity along with the selected vendor& final cost

will be taken as per the revised approval limits in NFA Sec.2.Revised

expense approval limits are as follows:

a) SGA and Capex – Budgeted#

S Approval
Amount Approving Authority
No. Document

NFA/ IOM/
1 Up to INR 50 Thousand Operating Head (OH)
E-mail

More Than INR 50 Thousand

2 Operating Head (OH) NFA
and up to INR 2 Lakh

More Than INR 2 Lakh and

3 OH + Division Director 
up to INR 20 Lakh

4 More Than INR 20 Lakh and OH + Division Director + 

42
 up to INR 45 Lakh Director (Finance), In case of

Dir (Fin.) -->Dir (GA)

5 More than INR 45 Lakh IBM 

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 7 of10
#
b) SGA and Capex - Un Budgeted

S Approval
Amount Approving Authority
No. Document

Upto INR 50000 per

1 transaction or INR 4 OH + Division Director NFA

Lakh per annum

Upto INR 2 Lakh per

OH + Division Director +
2 transaction or INR 10 
Director (Finance)
Lakh per annum

More than INR 10 Lakh

3 IBM 
per annum

# Management Control & Approval Guidelines (Adminstration/HR/OO/073)

will also be suitably revised to reflect above changes.

Note:

43
  Approval to be taken for final negotiated price with the vendor, along
Revision:02
with the saving/increase in the final price from budgeted amount.

 In operations where both, Operating Head & Joint Operating Head are

signing the approval formats, it will be considered equivalent to

Divisional Director‟s approval.

 User will take NFA no. and submit the original copy to Adminstration

department.

Vendor Separation & Approval

 Procure to Pay policy also highlights the separation of vendors which

are separated based on account of non-performance / governance issue

/ unhealthy financial situation / any other perceived risk to HCIL.

 However the procedure for separation or re-engaging the vendor along

with clarity about the approval authority will be defined under separate

guidelines.

 Complete information about separated vendors will be maintained

Revision:02
operation wise at defined central location accessible to all associates.

 Negative Client‟s feedback should be supported by sufficient

documentation before CFT consideration.

h) Award of Work

Before start of Work/Expense receipt, a Purchase Order / Work Order /

Engagement Letter / signed contract must be put in place.

44
  Purchase Order/ Work Order / Engagement Letter / Agreement &

Contract

After taking NFA no. user can proceed for the PO/WO/Engagement
Revision:02
Letter/Agreement &

Contract as per the terms & conditions agreed during negotiation:

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 8 of 10

Note:

1. T&C of PO/ WO to be verified by Legal Department once.

2. EL/ Agreement/ Contract to be verified by Legal Department In

case where standard draft has been provided by Legal Department

45
 and changes/ deviations is proposed/ suggested by vendor in the

standard draft, then only to be checked by Legal Department.

3. *WO to be issued in case of activity/ job work to be executed is for

short term and where prices are firm.

4. **EL to be issued in case of engaging/ hiring/ availing services like

lawyer, consultants, auditors, events, trainings, etc.

#
5. Agreement to be executed where continuous activity is undertaken

for a longer duration (1 year or more) and/or there are chances that

things may change (price, taxes, duties) during the period of

execution.

6. Agreement/ Contract/ Engagement letter shall be executed only

after NFA has been taken and approved.

i) Signing of Agreement/ Contract: All the EL/ Agreement/contracts

will be signed as per guidelines dated January 21, 2014 (Annexure 6).

In case of emergency, SVP & Director GA is authorized to sign the

Agreement/Contract.

ii) Storage of Agreement/ Contract: The original signed

Agreement/Contract will be kept by the user department with access

for Legal & BMD Department reference.

 Entry & Uploading of Agreements/Contracts in HCM: After execution

of the EL/ Agreement/contracts the User to upload the soft copy and

details of the EL/ Agreement/contracts in the Honda Contract Manager

46
 within 7 days. Accordingly, BMD will refer these EL/

Agreements/Contracts, wherever required.

Step 3 : Verification of Work –

 A00 / Objective – Ensure work done as per plan

 Once the work / Activity has been done, it is important to ascertain the

completion of work as per the contract terms and also genuinity of

bills / invoice submitted.

a) Process :

1. Invoice Submission : The vendor shall submit the invoice as per the terms

of Agreement / Contract / PO / Work order / Engagement Letter to the

Person Incharge of user department/ division.

2. Work Verification : The work done is to be verified as per the terms of

Agreement/ Contract / PO / Work order/ Engagement Letter by the user

department. User department shall verify the fee charged as per the work

done (quantity and quality – specs etc.) as per the Agreement/ Contract

and have 2 levels of verification along with compliance of all its terms

and conditions.

47
b) Format :

Payment Request Format: User must fill the Payment Request Format

(Left Side)(Annexure 7), and get it approved :

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 9 of 10

Category as

mentioned in Step 2
< INR 2.0 Lakh > INR 2.0 Lakh
(Request for Work/

Expense)

By Divisional Head/
Category ① 
Operating Head *

Director

(Also OK by OH, if valid

Category ②& OH
agreement as per

guidelines – Annexure 7)

* Including Zonal Heads for category ①ZO expenses.

 User will submit the fully filled payment request form (left side) to

Planning/ Kanri team.

48
  In case of any postponement of expense / capex beyond INR 1 million

and if incurred after the month in which it was budgeted, user would be

Revision:02 required to mention the reason of postponement in the request form and

get the same also approved by signatories as per the payment approval

matrix (till 1 million by divisional director and for more than 1 million by

divisional and finance director)

 User will mention HCM generated Contract ID and Expiry Date of

Contract in Payment Request Form.

c) Approval :

Planning/ Kanri will verify approvals as per mentioned Procure to pay

process, NFA, agreement etc. and will forward it to BMD for further

processing.

Step 4 : Payment including Accounting

 A00 / Objective – Actual payment to genuine vendor

 BMD should make payment to vendor only after all relevant

documents and approvals including NFA, Agreement, etc. are

provided as supporting documents.

a) Checking by BMD

BMD will again check the conformance of payment request with relevant

documents and fill Payment Request Format (Right side) (Annexure 7).

49
 b) Advance Payments

 All advance payments will be paid according to the terms & conditions

mentioned in the Purchase Order / Work Order / Engagement Letter.

 All advances to service providers / vendors / employees other than those

covered by specific policy like travel advance, salary advance, Leave

travel advance, etc. shall be made after approval of two directors as

follows:

Limits First Approval Second Approval

Upto INR 1 Lakh Operating Head Divisional Director

Director (Finance)
More than INR 1
Divisional Director In case of Dir. (Finance) 
Lakh
Dir. (GA)

Document No: HC/GA/P&S/01

Revision No : 02

Page No : 10 of 10

Payment to Vendor

1. Payment to vendor will be normally done through online transfer.

2. In case of cheque, the same will be handed over to user only after entry in

record register properly approved by Divisional Head/ Operating Head.

50
Notes:

1. In case of any clarification/ ambiguity, following stepwise contact points

are :

 1st Point - Respective HOD/ Kanri team/ Divisional Head

 2nd Point - Respective Operating Head

 3rd Point - GA/ BMD Kanri team

2. All ambiguity / clarifications related to this policy will be suitably

answered in Amendments / Modifications released by joint team of GA &

BMD.

3. No separate approval (Budget/ NFA) for taxes incl. GST / TDS are

required as the same is part of expense approval.

4. General Purchase will continue to follow their own procurement process.

5. New Model evaluation having the quorum equivalent to IBM will not be

part of above guidelines.

6. HGID & EGID will follow this policy for all expenses, excluding part

related procurements. Further, HGID will continue to follow their own

limits based on the IBM approval.

51
 7. Monthly Selling Expenses/Activity approvals taken in Seihan meeting

have to be regularized through NFA as per Expense Approval limits.

8. In case of emergency, work/expenses which mandates IBM approval can

be incurred post approval from any two Directors, but must be ratified in

subsequent IBM along with reasons.

9. In case of absence of Director (Finance), necessary approval can be taken

from Director (GA).

10. All expense limits are for one year. Amount cannot be broken in monthly /

quarterly amounts for approval purposes.

11. Approvals to be taken for annual menseki amount, not for the rates.
Revision: 02

12. In case of „Out of Pocket‟ expenses, user should mention the Amount /

Percentage for the same in NFA.

The above guidelines will come in effect from January 22, 2018.

(K. Iwashita) (Praveen Paranjape)

Director – GASVP & Director – GA

52
 CHAPTER-3

LIMITATIONS

Intern faced lot of hurdles while working for this e- module although it is a very

important policy as each operation in Honda needs to work according to this

policy. Following are the problems faced by the intern:

 The main and major problem is the time issue as everyone is occupied

with so much work and daily meetings pressure that intern gets rare time

to discuss about the policy with the superior and mentor.

 Once the policy was approved by GA department, the other department

like BMD make changes according to their requirement. This makes in

delay of work because in a big company like Honda, once the policy is

made it is circulated in every department for their separate approval.

 The time of internship for this project was 2 months, which was the

biggest time constraint, because this policy minimum needs 6 months from

making TOC to making final storyboard to the final follow up action.

 The other major problem was that the vendor who is making the e- module

takes lots of time for doing the work and still missed out any point which

leads to again working and describing the policy to him again.

 In Honda there is the trend of making many and different versions of same

report until it is approved by all operations. Taking time from other

operations at different intervals makes the delay of work.

53
 SIGNIFICANCE

There is a lot of significance of making this e- module like:

 Before this e- module every department if have any query regarding P2P

policy need to come to GA for solving there queries. But after the e-

module, they themselves get the answers of there queries.

 This e- module shows the reasons of making the e- module, and what can

be the issues that other operations faced. This e- module also contains

different FAQ „s which are normally asked by everyone.

 There is step wise explaination of all the information and the approving

authorities. Proper information about NFA and Payment request Form is

given with the callouts.

 This e- module did not make the viewer bored because there is a regular

coversation of Honda Girl San and Honda Boy San is shown.

 The vital need of maker – checker is also ensured in the policy in regard to

government efficiency and risk.

54
 CHAPTER-4

METHODOLOGY

This is a descriptive form of study because there is all the conceptual information

which is used in the developing the e- module in the policy.

Intern started the work from reading the past P2P policies and need of the policy.

Intern made herself clear the whole concept and why revisions are made in the

policy.

After that Intern made the Table of Content (TOC) which was required by the

vendor for making the e- module. Many versions of TOC were made to ensure

that it contains the information from beginning of the policy till the end. When the

last version of TOC was approved by all the higher authorities in Honda , it was

called final TOC and was sent to the vendor for sign off to begin its work.

Once the vendor starting working on the TOC he asked many queries about the

policy.

55
Intern tried her best to give all the answers to his queries if not she asked her

superior to help her out.

After this he sent the first storyboard, from which intern figure out many mistakes

and changes about the colours used in storyboard and many confidential errors.

I st STORYBOARD

This storyboard was made after the approval of Final TOC , to make it interesting

and not monotonous , team introduced several FAQ‟s. After the completion of the

whole e- module, there will be result marksheet showing total scores scored by the

56
viewer. If the viewer has any doubts regarding any step or process , he/ she can

view it again by clicking on Return To Course.

57
 MAJOR CONCERN AREAS

Why is a 2-level verification required in this process? Why Kanri has to verify the

invoice?

 The first level of verification is done by the user. The second level of

random verification is done by the Kanri. These verifications are

performed to ensure efficiency of work or as we have already explained

earlier, to ensure the maker-checker combination.

Points to be remembered:

 Respective HOD/Kanri Team/Divisional Head/Operating

Head/GA/BMD/Kanri team

 No separate approval for taxes, including GST/TDS

 General Purchase will continue to follow their own procurement process

 In case of absence of Director (Finance), approval from Director (GA)

 Even in case of ‘No’ vendor selection, appropriate reasons have to be

mentioned in Sec. 2 and verified by Kanri / CFT team.

 No vendor required for conducting the activity or govern by separate

policy

 Only single vendor is available for the activity (Need to justify)

 Vendor already approved for similar activity like AMC or earlier contract

is valid etc.

58
 For genpo / inter-genpo payments.

 First level verification of work done will be done by user.

 Second level random verification will be done by Kanri.

 NFA validity is 1 year. In case of Project, it is valid till completion of

project.

59
 OTHER WORKS

Intern learnt a lot about the work culture in Honda and even authorized

with different works with this specific project.

As in Honda initially, there is lot of manual work and now it is shifting to

making best use of technology by making less paper work and more

computerized work. Firstly all the NFA‟s record is manually maintained,

now all the NFA‟s from April‟18 have been made online and online record

is maintained.

Intern uploaded all the previous NFA‟s online as instructed by BMD.

As every work in Honda is done on QCDMS basis, therefore selection of

quotes are done which Intern learnt that how to make comparisons. Some

activities are not based on all factors of QCDMS but some factors like here

the cost matters while comparing the transport quotes of specific location:

60
61
 CHAPTER-5

LEARNINGS

 Always do work according to your superior‟s expectations.

 Keeping in mind what can be their point of view.

 Don‟t ever write documents name similar.

 Be the part of every activity like environment week.

 Gift policy on every new launch.

 How to work on i- manage and booking of pool car etc.

 Send calender of meetings scheduled on regular intervals of time and

before the meeting day.

 Before working for any activity, make a demo plan for that activity.

 Do lots of trials before putting plan into action.

 Always be confident while putting your point in front of others.

 Always prepare minutes after the meetings so to further work accordingly.

62
 CONCLUSION

Intern have come to the end of this course. Let‟s look at the key learning

points now:

 Procure to Pay policy – applicable in all work-related expenses and

incomes

 Three powers –

User, Purchasing/CFT/Kanri Head and BMD

 Four steps – Budget Approval, Work and Vendor Approval, Work

Verification and Payment

 User - responsible for budget and activity approval

 Purchasing Team/CFT/Kanri Head - responsible for vendor selection and

activity execution

 BMD - responsible for verifying the work done and approving payment to

vendor

63
Intern did the work upto the Alpha version of Storyboard as there needed more

time to complete the work . Many modifications and changes will be done from

time to time till the completion of work.

64
 ANNEXURES

ANNEXURE-1

65
ANNEXURE-2

66
ANNEXURE-3

67
ANNEXURE-4

68
I-MANAGE SOFTWARE OF HONDA

69
THANK YOU

70