CONTENTS

Particulars Page
INTRODUCTION TO THE PROBLEM
• A Background of the task undertaken
• The scope
OVERVIEW OF THE COMPANY
• History Of Areva T & D
• Vision and mission of the company
METHODOLOGY
Advantages & Disadvantages of data collection Methods
PART A:- MARKETING RESEARCH
• Major customer in India
• Market Competition
• The product power transformer,Noida AREVA works
• The range of Product
• Our Area of expertise.
• Competitors
• SWOT Analysis
• Questionnaires
PART B : - STANDARD OPERATING PROCESS
• Excise & sales Tax department
• Manufacturing Department
• Purchase Department
• Planning Department
• Account Department
• Annual Report
CONCLUSION
BIBLIOGRAPHY

Introduction about subject / overview about subject

1
• Financial analysis of Areva T&D Naini unit in detail to understand the
contribution of the unit in Areva T&D India ltd.

• To use various kinds of financial & statistical tools to analyze the current
performance & position of the unit in detail &the company as a whole in general.

• In our study we have firstly tried to understand the business operation and
working style of Areva T&D India and then tried to study the business operation
and working of Naini unit in detail.

• Further we visited various departments in the unit under study to understand the
standard operating process followed by the company.

• With the help and reference of our project guide we interviewed various key
personnel in management of the unit.

• We were provided with a separate cabin & financial statements & other required
data to analyze the performance & position of the unit , interpret the information
available to us to reach at a position to help the department with suggestions that
could lead the unit &the company as a whole in taking important decisions in
near future.

Importance of the study

2
 To analyze the performance of the Naini Unit & to compare it with units of
similar other companies.

 To assess strengths & to identify the relative weaknesses of the unit.

 It is difficult to see how a company is doing by looking at large number of figures

at its annual report & other financial data or statements, thus a need was felt to
summarize the figures in such a form that could be easily understood, interpreted
& used by the management & other interested parties.

 To analyze the financial statement of the company and give a proper suggestion
for improvement.

3
 Research methodology

Research process consists of series of the action or step necessary to effectively

carry out research and desired sequencing of these steps-

 Research Design

 Collection of data

 Analysis of data

 Interpretation of data (i.e. processed data)

Research design

“A Research Design is the arrangement of conditions for collection and Analysis of

Data in a manner that aims to combine relevance to the research purpose with

economy in Procedure”

For the collection of data, I interviewed the key people of the organization.

Before going for any interview with any of the in charge of different departments of the

company I used to prepare a list of questions in according to fulfill my purpose of

collecting data.

I visited to different departments of the company to collect information, which

helped me to understand the process and the nature of the organization.

4
Data collection

Sources of collecting data:

• Company SAP(soft copy)

• Interview with Officers & Employees

• A Performa describing, the standard terms & conditions for supply of power

transformer.

• Other record files

• Company site.

• Excise Law & procedure.

• Role of IEEMA (Indian Electrical and Electronics Manufacturer’s Association).

• Financial data of PTI Unit for three years.

• Annual report 2008

Analysis of data

For the analysis of data I used two types of tools:

• Financial tools

• Statistical tools

5
Financial tools

. The different financial tools I have used in the project are ratios analysis, trend

analysis, comparative analysis and common size analysis. With the help of these tools I

analyzed different items of the balance sheet and profit and loss account of the company.

Statistical Tools

I have used bar graphs, tables, and pie chart to show the trend of the company and

to compare the financial data.

6
 ABOUT COMPANY

Electricity is our business:

We have over 100 years of expertise and dedication in bringing power to people
worldwide. From rural electrification to turning the wheels of industry and facilitating the
trading of energy, we bring power to your projects.

Your solution provider based upon a superior product offering:

Our products and systems serve to transmit and distribute electricity, ensure the
reliability, quality and safety of energy flows, as well as operate efficient networks
through information management.

We are present at all stages of the supply power chain, from the generator to the large
end-user, backed by a comprehensive services portfolio.

As a solution provider, we bring together and optimize different disciplines, T&D

businesses and third-party suppliers, to address your specific problems, however
complex, and add value to your business. We bring solutions that draw upon market
segment expertise and are price-competitive.

A global presence:

We are one of the world's leading T&D companies. We have over 25,000 employees
located in more than 30 countries, with a dedicated sales force serving customers in over
100 countries.

AREVA NP is the world leader in the design and construction of nuclear power plants
and research reactors, engineering, instrumentation and control, modernization,
maintenance and repair services, component manufacture and supply of nuclear fuel. The

7
jointly-owned company is headquartered in Paris, with regional subsidiaries in the U.S.
and Germany. AREVA has a 66% and Siemens a 34% stake in AREVA NP.

HISTORY OF AREVA T&D

8
125 YEARS OF HIGH PERFORMANCE

AREVA T &D’s leading position in today’s energy market follows over 125 years of
pioneering innovation, technological expertise and unwavering commitment to
quality. From our initial
Creation in 1878 to company growing worldwide presence today, AREVA T&D has

gone from strength to strength.

1878:

Creation of Societe Alsacienne De Construction Mecanques (SACM) in France,

Predecessor of AREVA T&D

1918:

Creation of English Electric Company Limited (Later known as GEC) in the UK.

1928:

SACM merges with Thomson-Houston, forming ALSTHOM SA.

1983:

ALSTHOM SA acquiers Compagnie Electro-Mecanique(CEM).

9
1986:

Acquisition of Sprecher and Schuh’s high and medium voltage activities.

1988:

Acquisition of the Relays and instrument transformer divisions of Schlumberger

Industries. Merger with General Electric Company (GEC) to create GEC-ALSTHOM,

later known as ALSTOM.

1996:

Acquisition of Allgemeine Electricitats-Gesellschaft(AEG).

1998:

Acquisition of CEGELEC T&D.

2003:

Four joint ventures in China

10
2004:

ALSTOM T&D joins the AREVA group, to form AREAV T&D.

2006:

Acquisition of the high-voltage activity of the RITZ Group.

2007:

Acquisition of Passoni & Villa, manufacturer of high voltage bushings. Acquisition of

VEI Power distribution S.P.A.’s medium-voltage activities in Italy.

2008:

Acquisition of the Finish Company Nokian Capacitors Ltd., manufacturer of power

system components, such as capacitors.

11
12
13
COMPANY PROFILE WORLDWIDE

14
The AREVA group is organized around a Supervisory Board, an Executive Board and

an Executive Committee assisted by the Corporate Departments. These bodies supervise

and pilot the group operations, divided into four divisions

organized as business units.

With manufacturing facilities in 40 countries and a sales

network in more than 100, AREVA offers customers reliable technological solutions for

CO2-free power generation and electricity transmission and distribution. Company is the

world leader in nuclear power and the only company to cover all industrial activities in

this field. Our 58,000 employees are committed to continuous improvement on a daily

basis, making sustainable development the focal point of the group’s industrial strategy.

AREVA’s businesses help meet the 21st century’s greatest challenges: making energy

available to all, protecting the planet, and acting responsibly towards future

generations.

15
SIMPLIFIED LEGAL ORGANIZATION CHART

16
 VISION AND MISSION OF COMPANY:

Vision:

At AREVA to make the highly profile of company at to create the brand name of whole
words. Its best performance product for tranmission and distribution.

Mission:

At AREVA you’ll face new and exciting challenges every day as you support the needs
of our customers. But there’s also a bigger picture to your career. Our businesses help to
meet the needs of the great endeavors of the 21st century – making energy available to
all, protecting the planet, and acting responsibly for future generations. It’s a vision that
includes innovating cleaner, safer, and more attainable energy to drive economies,
develop cultures, and deepen life experiences.

Brand Essence:

AREVA participated in the last two America's Cup races and is still as committed as ever
to helping the French team win. This year, AREVA is sponsoring the French Match
Racing Team consisting of five crews of talented, seasoned sailors from a variety of
backgrounds selected by the French Sailing Federation. This is the first French team to
have been formed specifically for match racing. The team will participate in this year's
prestigious World Match Racing Tour (WMRT), an international championship of ten
match races held at various locations around the world.

17
T&D DIVISION:

18
 20

The AREVA T&D division supplies products, systems and services for electricity
transmission and distribution. They are used to regulate, switch, transform and dispatch
Electric current in electric power networks connecting the power plant to the final
user.AREVA T&D products and solutions play an essential role in electricity network
reliability, quality and safety. The division's customers are electric utilities as well as the
oil, mining and metals, wind energy, paper and glass, transportation, and power
engineering industries. This division consists of the four following business units:

(A) PRODUCTS

The Products business unit designs, manufactures and delivers a complete range of
products covering every stage of electric power transmission and distribution. The
business unit's specialized equipment is used for:

• High voltage power transmission (52 kV-800 kV): conventional equipment, insulated
substations, instrument transformers and power transformers;

• medium voltage primary and secondary power distribution (3 kV-52 kV): compact
transformer substations, distribution transformers, circuit breakers, switchgear,
engine starting cells and lightning arrestors;

• Substation control and safety.

The business unit operates production units in 25 countries on six continents. The group
serves more than 30,000 customers around the globe. The key strengths of the Products
business are its research and development expertise, its understanding of changing
customer requirements, quality management, and optimized production site operations.

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(B) SYSTEMS:

The Systems business unit offers turnkey projects and grid management systems.
Customers turn to the Systems business unit for substation engineering experience,
electric power supply system expertise, command of advanced technologies, and project
management know-how. The business unit's main customers are power companies and
industrial groups that use large quantities of electricity. The unit offers:
• High voltage and medium voltage substations; power electronics for direct-current
substations and systems to increase existing grid capacity and quality;
• Operating systems for transmission and distribution networks;
• Electric power market management systems.
The Systems business unit's key strengths are technology and applications expertise,
particularly power electronics, know-how in real-time electric current management, and
partnerships with suppliers.

(C) SERVICES:

In addition to product-related services, the Services business unit provides network

management services, operating support, and maintenance services to power companies.
The business unit offers medium and long-term contracts covering the entire life cycle of
its customers' electric power systems. These contracts allow power companies to
optimize equipment costs and performance while ensuring operator safety.

The Services business unit offers a wide range of services:

• Power system engineering, consulting, training, and transmission and distribution
expertise;
• Long-term maintenance contracts for products and substations;

20
• Repair services, spare parts and product start-up services;
• Electrical substation upgrading and refurbishing;
• Information technology support for grid management systems and safety/control
products.
The key strengths of the Services business unit are a keen understanding of its customers
and the T&D products they use, the ability to supply products and related services, quick
turnaround times, and project management expertise.

(D) AUTOMATION:

The Automation business unit answers to demand for fully integrated energy
management networks. The business is built around three main activities: automation and
information systems, automation products and application and support services. The
business unit supplies equipment and information technology systems, including
computerized power management systems used to operate power transmission networks,
determine customer needs and regulate the flow of power from power plants to the
distribution network.

In particular, the business unit provides Information Systems solutions for deregulated
energy industry applications, large information technology control systems (SCADA)
and telecommunications equipment for power lines. The Automation business unit also
provides equipment for power networks and substation protection, control and
monitoring.

21
MAJOR CUSTOMERS IN INDIA:-

• All State Electricity Board

• Power Grid Corporation of India

• National Hydro Power Electric Corporation

• Kolkata Electric Supply Corporation

• Ahmadabad Electricity Company

• New Delhi Municipal Corporation

• Tata Iron and Steel Company (TISCO)

• Bhilai Steel Plant

• Indian Iron and Steel Company

• Bharat Heavy Electricals Limited (BHEL)

• Kribhco

• National Fertilizers Limited

• ACC

• Birla Cement

• Century Cement

• L&T

• Western Collieries

• Eastern Coalfield

• Santa Eastern Coalfield

22
• Oil and Natural Gas Corporation

• Indian Oil Corporation Ltd

• HPCL

• Cochin Refinery

• Reliance Textiles

• ABB

• TC Engineers

• POIL

• Engineers India Ltd

• Indian Railways

• HINDALCO

• Bihar Caustic and Chemicals Limited

• Ashok Leyland

• Damodar Valley Project

• GRIDCO

23
MARKET COMPETITION:-

Major Competitors in India

a) ABB

b) BHEL

c) CGL

d) EMCO

e) BBL

f) Siemens

g) Crompton Greaves

h) TELK

i) L&T

j) SCHINDER

k) ECE

24
l) T&R

The power transformer-manufacturing unit at Noida works. India belongs to the Tower
Transformer Business that is a part of the power Transmission & Distribution Sector
(T&D), which was part of the ALSTOM.

The transformer division is further divided into two:

• Power Transformers.

• Distribution Transformers.

26

25
EXPORTS

Zimbabwe Brazil

China Myanmar

Argentina Australia

Bangladesh Bhutan

Malaysia Nigeria

Kenya Iran

Columbia Croatia

Greece Malawi

Nepal Uganda

Vietnam Canada

France UK

Libya Tanzania

26
OUR AREAS OF EXPERTISE:-

AREVA T&D's technologies and expertise ensure higher safety, reliability and
capacity of power grids around the world.

We provide global solutions to industrial partners in their need for flawless energy and
to utilities in their mission to supply energy to people around the world.

• Substation equipment: - Such as high and medium voltage transformers, circuit

breakers, disconnectors and instrument transformers.

• Turnkey substations: - Bringing together the right mix of products, expert

engineering and complete project management.

• Network management: - Protection and control solutions.

27
 • Network consulting: - Asset management, refurbishment and spare-part
solutions to manage electrical installations in a secure and efficient way
throughout their lifecycle.

HISTORY OF AREVA T&D NAINI, INDIA

28
History of AREVA at Naini is not so long. As AREVA has taken over Naini T&D
division from ALSTOM in 27 September 2005 as well as the following division of India:
• Kolkata.
• Chennai.

AREVA T&D NAINI WORKS

The Naini site is one of AREVA T&D’s successful and highly developed power
transformer production plants. Globally, we have factories and technical centers
dedicated to power transformers in nine countries spread across four continents.
Incorporated in 1957, the Naini transformer factory has more than 50 years of excellent
operating experience in manufacturing power and distribution transformers.

Before 23rd September 2005 it was known as ALSTOM Limited. It is located 12

km from Allahabad in the state of Uttar Pradesh (about 600 kms from New Delhi & 800
kms from Kolkata). The unit is spread over a total are of 87276 meter square providing
employment to nearly 700 people. The unit has the certification of IMS. The unit is
engaged in the production of power transformers, distribution transformers and MV
product lines. It is the only unit in India producing the oil base transformers. The Naini
factory pioneered in the manufacture of shell type furnace transformers in India and
holds “Numero Uno” position in arc furnace duty transformers. AREVA Naini has
supplied the largest number of transformers in this category to its customers all over the
country

29
The range of products at Naini Works:

At present Naini Works has the capacity to manufacture 6000 MVA Power transformer
annually. The power transformer-manufacturing unit at Naini works, Allahabad, India
belongs to the Tower Transformer Business that is a part of the power Transmission &
Distribution Sector (T&D), which was part of the ALSTOM.

The transformer division is further divided into two:

• Power Transformers.
• Distribution Transformers.

THE PRODUCT POWER TRANSFORMERS, NAINI WORKS:

The Naini unit plant was set up in 1957 and today it can provide up to 400kv
transformers. At present, the units for power transformer in India are located at one place,
Naini, Allahabad.

The range:

AREVA Transformer Unit at Naini offers the following range of products:

• Power transformers up to 315 MVA 3 phase & 600 MVA 3 phase bank, 400 kV
class.
• Single-phase trackside Transformer for Railways.
• Transformers for Locomotives.
• Scott connected Transformer up to 200 kV.
• Rectifier Transformers.
• Shunt reactors of coreless and gapped core type.
• Current limiting series reactors.
• Arc furnace transformers.

The unit has a well-maintained private railway siding, which allows consignments
weighing upto180 tones to be dispatched by Rail wagon. Road dispatches are affected
through special low bed trailers that are provided by dedicated transporters and can
handle consignment weights up to 250 tones.

The efficiency of transformers is rated from 96% to 99% if the user takes the
proper care, 25 years is generally is the normal transformer life.

30
 SWOT ANALYSIS

STRENGTH

• HUMAN RESOURCE

The employee strength of the Company stands at around 3,500 as on December 31, 2007.
During the year under review, hiring quality work force and retention of talent posed a
serious challenge to the Company, and this was carefully addressed. AREVA`s HR team is
sufficiently geared up to meet these challenges.

• TECHNOLOGICALLY STRONG

AREVA is fully equipped to face the technological challenges of the T&D market and has
various solutions in its portfolio to address most of the segment.

• BRAND VALUE

The brand value of AREVA T&D is well recognized in the market.

• EXPANSION

Capacities of the manufacturing plants are being continuously increased to meet the
increased demand of the market.

• STRONG COMMUNICATION NETWORK

One-on-one meetings with the investor community and web based interactive sessions to

discuss the progress and performance of the Company.

31
 • STRONG FINANCE AND ACCOUNTING SERVICES

Finance Shared Service Centre at Chennai, in each location, the accounting and controlling
team is being segregated with clearly defined responsibilities. The accounting team
emphasizes strict implementation of various accounting standards with the implementation
of Internal Controls to foster best practices. The controlling team concentrates on profit
optimization actions to boost profitability growth. Both accounting and controlling processes
are aimed at becoming benchmarks in world class finance.

WEAKNESS

Even after adapting new IT enabled processes there are number of paper works carried out in
AREVA which is a bottle neck in its functioning.

AREVA has heavily experienced staff but they are not well versed with IT applications.

The prime customers for the company are SEB in the MV switchgear segment. They don't
pay the dues on time making the company lose interest cost on the due amount.

• The production process has to wait for a number of different approvals.

OPPORTUNITY

The increasing requirement of High Voltage Substations provides a good opportunity for the
growth of our Turnkey Systems, Products, Automation and Service businesses.

Power Grid is also planning to scale up the voltage level of the Transmission Network in the
country to 800kV DC by 2010 and to 1200kV AC by 2012. This will provide a significant
opportunity for companies engaged in the manufacture of high technology equipment.

32
Areva`s upcoming manufacturing facilities at Varodara, Hosur and Padappai will enable
Areva to meet the needs of the growing market in the future.

Areva is the first to have launched the construction of a local manufacturing facility for High
Voltage Gas Insulated Switchgears.

THREATS

A delay in funding, results in a further delay in the award of projects. During the previous
year, we observed a delay of several months for projects earmarked under World Bank
financing. Several large 765 kV substations & HVDC are to be implemented in the 11th
plan. A delay in such projects would have an impact on the planned growth of AREVA.

A rise in raw material costs, especially metals may put a strain on margins. The price of
copper, the main raw material required by your Company has increased substantially during
the last year.

Accelerated Power Development and Reform Program 2 is an important investment

scheduled during the 11th plan, but not cleared by the Government. This may impact the
growth of the Distribution segment business.

Future IPOs of private sector power projects, if not completed on time, may affect the growth
of the T&D business.

• Further, any unforeseen slowdowns affecting the growth of the Indian economy, may

adversely affect investments in the Power sector.

33
 Standard Operating Process
FUNCTIONS OF DEPARTMENT AT AREVA T&D

1- EXCISE & SALES TAX DEPARTMENT-

The Levy

Excise duty is the single largest source of revenue for central government in India.
Authority to impose excise duty by government has been given by article 246 of
constitution and at entry no-84 of list no i (union list) and entry no 51 of list no ii (state
list).under this authority constitution bifurcates alcoholic liquors opium and narcotics
from other goods and duty is levied on these products by state government called as state
excise duty. Central excise is a tax on act of manufacture or production while sales taxis
a tax on act of sale of goods. For manufacture of all the goods duty is levied by central
government called central excise.

At present the rate of excise duty for most of the product is @8% + educational Cess @
2% of ED + secondary & higher educational Cess @ 1% of ED except some items such
as petroleum products where the rate of ED is still 14%.

Registration

Every manufacture / First and second stage dealer of dutiable excisable goods desiring to
issue Cenvetable invoices is required to take a central excise registration. However if a
manufacturer is SSI and his yearly clearance is less than Rs. 90 lacs then he is not require
to get himself registered with central excise (Rule 9 of Central Excise Rules 2002).

34
Procedure for Registration

Before starting production or dealership to issue cenvatable invoice, an application in

prescribed format (annexure -1) with PAN no., detail of goods to be manufactured and
retail of premises has got to be submitted to Asstt. / Dy. Commissioner of Central Excise.
A registration certificate allocating PAN based 15 digit registration no shall be issued
within 7 days.

Even if there is some change in information furnished or change in constitution of the

firm, the registration will not change. However the change has got to be intimated to
issuing authority within 30 days of the change.

If the factory is required to be closed down or business is not carried, registration

certificate should be surrendered to the Superintendent of Central Excise.

Application form for Central Excise registration

-Annexure-1

Central Excise registration certificate (NW)

-Annexure-2

Valuation-

The Excise duty is payable on “transaction value” which means the price actually paid or
payable for the goods, when sold , and includes in addition to the amount charged as a
price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by
reason of, or in connection with the sale, whether payable at the time of the sale or at any
other time, including, but not limited to, any amount charged for, or to make provision
for, advertising or publicity, marketing and selling organization expenses, storage,
outward handling, servicing, warranty, commission or any other matter; but does not
include the amount of duty of excise, sales tax and other taxes, if any, actually paid or
actually payable on such goods.

Invoice-

35
 Under rule 11 of Central Excise Rules2002, The excisable goods will generally be
removed from a factory under cover of an INVOICE. The invoice shall be serially
numbered in triplicate and shall contain the registration number, address of the concerned
Central Excise Division, name of the consignee, description, classification, time and date
of removal, mode of transport and vehicle registration number, rate of duty, quantity and
value, of goods and the duty payable thereon.

Before making use of the invoice series, in each financial year the serial numbers of the
same shall be intimated to the Superintendent of Central Excise having jurisdiction.

Excise Procedure-

Removal of Goods, Payment of Duty & Assessment As per rule 6, and assesses shall
himself assess the duty payable on the excisable goods and under rule 12 submit
following returns:-

(1) ER-1- Monthly return to be submitted by tenth of every month for production ,

clearance, duty payable and duty paid for previous month( annexure-3).

(2) ER-4- Annual financial information statement to be submitted by 20th November

of every year (Annexure-4).

(3) RR-5- Annual information regarding principle inputs to be submitted by 30th

April of every year (Annexure-5)

(4) ER-6- Monthly return to be submitted by 10th of every month for receipt and

consumption of principle inputs for previous month. (Annexure-6)

36
Tendering Department Process-
ISO

Unit (Tender Dept.)

Complete study of the specification

Data entry in enquiry (PROPAL)

Technical & commercial

Target Price Evaluation

Pass on to design department with

target price and target date (PMS)

Design gives PMS with raw materials

to be used and quantities

Offer submitted based on EAS

Tender Department fills 37

up the price for each raw
material in the PMS from
IEEMA
 Then EAS (Estimation analysis sheet) is
prepared and final selling price is brought
out

Utility (one shot tender) Industry (negotiation based)

Opening of offers in front of all After first stage of offer

bidders done submission, it is followed by 2-3
times of negotiations

Lowest bidder gets the order Customers evaluate each bidder

technically as well as commercially &
then finally places the order on the best
suited bidder

Order handing over to contract execution

Customer
departmentSpecification + final Offer +
Purchase Order + Amendment &
classification+ Final EAS & PMS

Role of IEEMA (Indian Electrical and Electronics

Manufacturer’s Association)-

38
IEEMA issue prices of raw materials every month. The price quoted is based on the cost
of raw material and labor cost as on the date of quotation. In case of any change in price,
then supplier give additional bill on the name of price variation. It is a liability of
customer to pay that bill. It may increase or decrease. In both cases details must be given.
Price variation is calculated according to following formulae-

Where,

P= Price payable as adjusted in accordance with above formulae

Po= Price Quoted

Co=Average LME settlement price of copper wire bars, two months prior to the date of
tendering

ESo=C&F price of CRGO, one month prior to the date of tendering

ISo=Wholesale price index no. for iron and steel, three months prior to the date of
tendering

Imo=Price of insulating material, one month prior to the date of tendering

TOo=Price of transformer oil, one month prior to the date of tendering

Wo=All India average consumer price index no. for industrial workers as published by
labor bureau , Ministry of Labor, Government of India, three months prior to the date of
tendering

39
 MANUFACTURING

Different steps are involved in manufacturing are shown in this flow chart-

Core cutting

Coil winding

40
 Core building

Dummy coil assembly

Active part assembly

Tanking

Testing

Dispatch

MANUFACTURING

Manufacturing plays vital role in supply chain system. It completes with the help of
many steps and these steps are interrelated to each other. In manufacturing one step act as
supplier for other step and other step act as customer for previous step so, manufacturing
proceed in a specific manner. Manufacturing of specific job will be completed in two to
three month. Different manpower involves in different steps of manufacturing. Various
steps of manufacturing are describe as follows-

41
Core cutting and core assembly-The basic raw material is core. It is made up of Cold

Rolled Grain Oriented steel (CRGO), also known as lamination. CRGO purchased from

A.K.Steel Corporation Butler U.S.A. . Laminations are cut according to design given by

customer. These sheets are of 0.23 to 0.35mm in thickness. These laminations are

assembled in such a manner that there are no gaps between joints of two consecutive

sheets. The entire assembly is done on a frame with the help of a tie rod and core bolts.

The entire core assembly is lifted and is used; mainly Meter cut line is used for giving

specific shape.

42
Coil winding- The winding are design to ensure high short circuit withstand capability,

uniform surge voltage distribution and effective heat dissipation are critical to

transformer reliability. Winding are made on layer setting winding machine vertical as

well as horizontal machines are available. A solid cylinder former of predetermine

diameter and length is used as base for winding disc and layer winding are manufacturing

according to design requirement. Complete set of low voltage, high voltage and tap

winding are assembled at this stage. Moisture content in insulating material of winding

assembly is removed by oven (winding autoclave) and before assembly winding are

individually pressed in a hydraulic press to required size.

43
Core and coil assembly- The component produced in coil winding and core assembly

stage is then taken into core coil assembly stage. The core assembly is vertically placed

with the foot plate touching a special assembly platform. The top yoke of the core is

renamed and the winding are assembled with core. Special core is given to electrical

connections of leads and tap changes. All the necessary joints are made secured by

applying special patented crimping technology carried out by trained personnel.

Vacuum drying- The active part can absorb moisture during assembly process;

therefore, a final drying process is carried out in a completely automated vapors phase

drying plant. This ensure through and uniform drying resulting in a clean and dry core

coil assembly which ensure long transformer life.

44
Tanking – The core coil assembly after drying and the tank supplied by the fabrication

department are taken into tank up stage. C ore coil assembly is placed into tank after

complete trimming and tightening procedure and properly locked up. Fitting like drain

values, high voltage and low voltage bushing, conservator, oil level indicator and

explosion vent are fitted on the tank.

INSPECTION

Basically three types of inspection carried out by customer are as follows –

Pre-inspection- Pre-inspection done, when raw material purchased from supplier or

vendors.

In-process inspection- This type of inspection is carried out during manufacturing or

product development.

Final-inspection- This type of inspection is done when product is finally developed and

ready for dispatch.

TESTING

Testing laboratory Designed following the most modern concepts of high voltage

technology available, in the testing laboratories all transformer and reactors are subjected

to the routine tests and measurement specified and accordance with IEC (International

Electro-chemical Commission) Keema, Netherlands and IS (Indian Standard) New Delhi

specification. These routine tests may be complemented by type and special tests, which

are carried out at the customer’s request or as part of an internal sampling procedure to

monitor quality on an ongoing basic.

45
Testing on reactor-

Routine test for 400kv class-

• Resistance Measurement (winding)

• Magnetizing Current

• Insulation Resistance Value

• Flash Test

• Partial Discharge Test

• Reactant Measurement

• Noise Level

• Vibration

• Impulse Test

• Switching Impulse Test

• Loss Measurement Test (with ten delta method)

Type test- Only one method is used in type test-

• Temperature Rise Test

Special tests-

46
 • Zero Phase Sequence Test (relay trip)

• Capacitance Test & Delta Measurement

• Stress Measurement Test

MANUFACTURING PROCESSES

CORE CUTTING

The cold rolled, grain-oriented silicon steel (GOS) lamination are cut by microprocessor-
controlled slitting and cropping machines with an extremely high dimensional accuracy.

CORE BUILDING

Core laminations are carefully assembled and built-up erected on a specially made core
building platform, avoiding any unnecessary mechanical stresses.

COIL WINDING

Spiral, helical, continuous, intershielded and interleaved disc windings with multiple
strands of copper conductors are our standard for power transformer.

ASSEMBLY & TERMINAL GEAR

After pre-assembly, the coils are lowered on to the core legs. After top-yoke filling, they
are clamped using a hydraulic tool that ensures uniformly simultaneous pressure to secure
the windings. The current carrying joints are made by a fully automatic crimping machine.
DRYING & IMPREGNATION

47
 A highly efficient vapor phase drying process, which ensures complete moisture extraction
with uniform heating at 120°c for 96 hrs, is used to coils and insulation components. In the
presence of vapor short circuits will happened.

TANKING

During tanking and final pipe assembly work, bushings and coolers are fitted onto the
transformer to prepare it for testing. Especially design, sophisticated tools and handling
equipment is employed to carry out all final assembly activities.

TESTING

The factory test laboratory is fully equipped to conduct all routine and type tests as per
national, international and in-house standards. On request, special tests such as Frequency
Response analysis (FRA) can also be conducted.

PACKING, DISPATCH & DELIVERING

Road dispatches used special low-bed mechanical / hydraulic trailers provided by

dedicated transporter to accommodate large consignments.

48
 PURCHASE DEPARTMENT

SOURCING:-

• Sourcing refers to “a number of procurement practices, aimed at finding,

evaluating and engaging suppliers of goods and services.”
• Sourcing in Areva refer to the strategic planning of procurement of the material
with best quality at the best possible rates with best delivery schedules without
comprising on Areva values and quality.

BASIC FUNCTIONS

1. Market analysis

2. Vendor mapping

3. Vendor evaluation

4. Procurement

5. Performance monitoring

6. Minimizing the vender data base

49
 7. Strategic procurement from soc(CHINA, INDIA, COREA)

8. Rate agreements

9. Vendor development

CHALLENGES IN SOURCING

1. Hike in raw material price

2. Availability issue in certain commodities like oil bushing

3. Reduce the customer complaints

4. Quality issues

5. Supplier OTIF(on time in full)

6. Inventory management

TYPES OF PURCHASE ORDER

Import P.O.-deals with import

Capital P.O.-capex procurement
Production P.O.-deals with the bought out items in production
Subcontracting P.O.-deals with the processing work on raw material
Non production P.O.- deals with the genex procurement
Service P.O.-deals with the services rendered by the supplier

50
 PROCUREMENT PROCESS:-
(When rates & supplier are fixed)

PURCHASE REQUISITION

Purchase order (PO)

PURCHASE ORDER (PO) release

Follow up with the suppliers

51
PROCUREMENT PROCESS FOR THE MATERIAL NOT HAVING RATE

AGREEMENT

PURCHASE REQUISITION

RFQ (REQUEST FOR QUOTATION)

SELECTION ON QCD (QUALITY COST &

DELIVERY) BASIS

52
PURCHASE ORDER
 PURCHASE REQUISITION

RFQ (REQUEST FOR QUOTATION)

SELECTION ON QCD (QUALITY COST &

DELIVERY) BASIS

PURCHASE ORDER

PURCHASE ORDER RELEASE & FOLLOW UP

WITH SUPPLIER

Basic terminology in purchase

53
 • INCO Terms

• Payment terms

• Warranty and guarantee

• Lead time

Designing works before releasing the tender.

I S O (INTERNATIONAL SALES ORGANITION) place the Tender in marketing

department and marketing department sends it to design department for technical analysis
and subsequent preparation of PMS (Price Make-up Sheet)

Designing will be prepared based on the following basic requirement of the customer:

1:- M.V.A.(MEGA VOLTAGE AMPERE)RATING

2:- VOLTAGE RATIO (220/132/11)

3:- PERCENTAGE IMPENDNCE (REDUCE FAULT)

(IMPENDNCE MEANCE COMBANITAION OF RESISTANCE AND INDUCTION)

4:-TAPS (OLTC, OCTC)

This preliminary design as per specification is completed and decides and estimates
about 80% costs of copper and core. Overall costing depends upon the above analysis of
Core and Copper. Preparation of price making sheet and guarantee technical particulars
by design department, will take from two to seven days. Complete set of Tender
documents are being submitted to the customer for their review and analysis. If being L1,
and adhering to the Technical requirement of the customer, order will be placed on us.
Role of Design Department commences after getting the order. They do detail
engineering and designing of the job as per the approved GTP. This is the mutual
exercise of the Electrical and the Mechanical Team. Complete drawings in turn will be
54
sending to the customer via marketing department for their approval/comment. If there is
any comment from the customer, then that comment will be incorporated after discussion
and mutual agreement with the customer. After getting the final approval from the
customer, Design department releases the drawings to the purchase department for the
procurement of the raw material and other long lead items.

Planning Department
MAIN RESPONSIBILITIES

· Hands on knowledge of Planning, Commercial aspects, Material procurement

coordination, Site management issues

· Erection and Commissioning of substation

· Site identification and Survey.

· Drawings preparation and approvals and coordination.

· Forecasting of material required for project.

· BOQ of line & substation.

· Communicating and coordinating with client & vendors.

· Invoicing of supplied material to client.

· Daily progress report and gap analysis

· Implementing quality and safety plan.

· Knowledge of Cable Laying., termination

· Statutory documentation

· Plant Electrical work execution

· Auditing

55
This position will be responsible for: Management of GIS substation orders from the date

of receipt of commercially and technically clarified order to the date of final handover to

the customer at site.

1. Project Management

Set-up project organization (team-time-cost) and appropriate action plans. Prepare

milestones and deliverables

2.Customer interface

Communication with the customer to clarify all technical requirements and delivery

deadlines during contract implementation.

3. Production coordination

Interface with Sourcing, SCM and Production to ensure the timely manufacturing of the

equipment in order to meet the contractual deadlines

4. Interface with GIS Service

Coordinate site erection and commissioning with GIS service. Scheduling, resource

planning etc.

SAP (Systems Applications and Products)

56
SAP was founded in 1972 in Walldorf, Germany. It stands for Systems, Applications and
Products in Data Processing. Over the years, it has grown and evolved to become the world
premier provider of client/server business solutions for which it is so well known today.
The SAP R/3 enterprise application suite for open client/server systems has established a
new standard for providing business information management solutions.

SAP, started in 1972 by five former IBM employees in Mannheim, Germany, states that

it is the world's largest inter-enterprise software company and the world's fourth-largest

independent software supplier, overall. The original name for SAP was German:

Systeme, Anwendungen, Produkte, and German for "Systems Applications and Products."

The original SAP idea was to provide customers with the ability to interact with a

common corporate database for a comprehensive range of applications. Gradually, the

applications have been assembled and today many corporations, including IBM and

Microsoft, are using SAP products to run their own businesses.

In 1973 the SAP R/1 solution was launched. Six years later, in 1979, SAP launched SAP
R/2. In 1981, SAP brought a completely re-designed solution to market. With the change
from R/2 to R/3 in 1992, SAP followed the trend from mainframe computing to client-
server architectures.

The development of SAP internet strategy with mySAP.com redesigned the concept of
business processes (integration via Internet). SAP was awarded Industry Week’s Best
Managed Companies in 1999.

SAP R/3 is arranged into distinct functional modules, covering the typical functions in
place in an organization. The most widely used modules are –

1. Financials (FI)

57
2. Controlling (CO)

3. Human Resources (HR)

4. Materials Management (MM)

5. Sales & Distribution (SD) and

6. Production Planning (PP)

SAP R/3 is a client/server based application, utilizing a 3-tiered model. A presentation

layer, or client, interfaces with the user. The application layer houses all the business

specific logic and the database layer records and stores all the information about the

system, including transactional and configuration data. SAP R/3 functionality is

structured using its own proprietary language called ABAP (Advanced Business

Application Programming). ABAP, or ABAP/4 is a fourth generation language (4GL),

geared towards the creation of simple, yet powerful programs. R/3 also offers a complete

development environment where developers can either modify existing SAP code to

modify existing functionality or develop their own functions, whether reports or

complete transactional systems within the SAP framework. Thus we deal with the

58
various tasks and activities carried out in sales, delivery and billing. Key processes are-

Start

59
 Start

Create an order

D Is t Yes
el he
iv re Outbound
e
Ite ry r any Delivery
m ele
va
nt

No PGI

Billing

Stop

60
1. Creating Sales Orders-

There are various types of orders with which I have to deal such as.

a. Domestic Order

b. InterUnit

c. Export

d. Price Variance

e. Free of Charge

f. Repair

g. Spare Parts

h. Debit Memo Request

i. Credit Memo Request

2. Delivery- Delivery consists of four steps

a. Outbound Delivery

b. Picking

c. Packing

d. Goods Issue

3. Billing- There is following types of billinga.

a. Proforma

b. Invoice

C. Cancellation Document

61
d. Debit Memo

e. Credit Memo

There are specific transaction codes for all the above mentioned transactions such as

VA01 for creating new sales order, VL01N for outbound delivery etc.

PAYMENT CYCLE-

62
 Finished product

Inspection approval by the customer

Delivering information from customer (D.I)

NO
YES

Sales invoice is prepared by commercial If site is not prepared for installation

department.

Sales Invoiced sends to the purchaser of

transformer

Purchaser becomes debtors

Payment is received on due date

63
 BILLS PAYABLE & RECEIVABLE

Mode of payment-

1- Cash

2- Cheque

3- Letter of credit

4- Direct payment

Note- In AREVA payment occurs through letter of credit

Letter of Credit-

Letter of credit is most secure instrument available to international traders. It is

A commitment by a bank on behalf of the buyer that payment will be made to the

exporter provided that the terms and conditions have been met, has verified, through

the presentation of all required documents. The buyer pays its bank to render the

service. It is useful when reliable credit information about a buyer is difficult to

obtain. It also protects the buyer since no payment obligation arises until the goods

have been delivered as promised.

Document Collection-

It is a transaction whereby the exporter interests the collection of the payment

to the exporter’s bank which sends documents to importer’s bank along with

instruction for payments, lading receipt, insurance, bills of entry, etc.

64
Types of letter of credit-

1- Confirmed

2- Unconfirmed

3- Confirmed Letter

65
 ACCOUNT DEPARTMENT

(Bills Payable Process)

Assume that we have already got customer order

Design Particulars Quantity (kg) Rate (Rs)

Dept
Copper ----- ----

CRGO ----- ----

Transformer oil ----- ----

tank ----- ----

Material requirement Planning (MRP)

Purchase Requisition (PR)

66
Purchase Order (PO)

Create Sourcing Team

Vendor

Requisition material check by the factory gate man like- purchase order no., vehicle no.,

goods, etc.

Goods received by store department

Checking

MIGO entry (assuming that no damage of goods and no insurance claims)

Stock A/c Dr.

To GR/IR (goods received / inventory received)

67
Checked by Quality department

Account department

Availed of CENVAT

Bills Processing

Accounting – GR/IR Dr

To Creditor A/c

(Payments are made through bank)

Creditor Ageing

Vendor Amount Due 0-30 (days) 30-60( days) 60-90(days) 90 above(days)

(Rs)
A ---Cr
B ---Cr
C ----Cr
D -----Cr
E -----Cr
F ------Cr

Payment EFT (Electronic fund transfer)

68
Creditor A/c Dr.

To Bank A/c

(Bills Receivable process)

Sales

Invoice

Billing (If delivery instruction received),

6 sheets prepared- 1- Original copy (Customer copy)

2- Duplicate copy to Transporter

3- Sales tax Department

4- A/c dept. & Excise Dept.

5- Gate Entry

Released Entry

Accounts Entry – Debtors A/c Dr.

To Sales A/c

To Excise

Debtor Ageing

Cash collection instruction by Accounts Dept.

69
 RATIO ANALYSIS

A ratio: Is the mathematical relationship between two quantities in the form of a

fraction or percentage.

Ratio analysis: is essentially concerned with the calculation of relationships

which after proper identification and interpretation may provide information about the
operations and state of affairs of a business enterprise.

The analysis is used to provide indicators of past performance in terms of critical

success factors of a business. This assistance in decision-making reduces reliance on
guesswork and intuition and establishes a basis for sound judgments.

Significance of Using Ratios

The significance of a ratio can only truly be appreciated when:

1. It is compared with other ratios in the same set of financial statements.

2. It is compared with the same ratio in previous financial statements (trend
analysis).
3. It is compared with a standard of performance (industry average). Such a standard
may be either the ratio which represents the typical performance of the trade or industry,
or the ratio which represents the target set by management as desirable for the business.

70
 CALCULATIONS & ANALYSIS OF RATIOS

1. LIQUIDITY RATIO:

a) Current ratio = current asset / current liability

2007

= 2255686 / 1495282

= 1.51

2008

= 3340415/ 1981004

= 1.69

2009

= 3060659/2105725

= 1.453

71
2007 2008 2009

1.51 : 1 1.69 : 1 1.453: 1

Interpretation and analysis :( current ratio)

1- Liquidity is the ability of a firm to pay its short- term liability in near future.
2- If we see the figure of current ratio of the three year i.e. 2007, 2008, 2009 we
find that it is below ideal standards of 2:1.
3- The current ratio for the three consecutive years are, 1.508-
2007
1.690- 2008
1.453-2009

It shows that the liquidity position in the current year (2009) is less than previous
two years; it needs to improve its liquidity position, in the coming years.

Suggestion

The main reason for unsatisfactory liquidity position can be two either money blocked in
debtors & inventory is more than required, due to policy, or due to the effect of global
recession the orders received were still pending for execution, at the unit floor.

b) Quick ratio = (current asset – net inventory- prepaid exp.) / current

liability

2007

= (255686-985774-2948)/1495282
=0.847

2008
= (3340415-1201273-4208)/1981004
= 1.077

72
2009

=2005044/2105725

=0.952

2007 2008 2009

0.847 : 1 1.077 : 1 0.952 : 1

Interpretation and analysis :( Quick ratio)

As per industry standard ideal quick ratio is 1:1, but if we see the trend of this ratio of
this unit (for three year) we see a continuous improvement, i.e.

0.847:1 – 2007,
1.077:1 – 2008
0.952:1–2009

In the year 2007, the ability of the unit was not good enough, i.e. unit is not in a position
to pay of its quick liabilities thus there was a tough struggle for payment, to be made to
unit suppliers.

In the current year 2008, unit marked a good position. Its payment position too seems to
be improved. This could be evidenced by the improved quick ratio marked by the unit
which reached to 1,077:1 i.e. Almost was to industry standard.

In the year 2009, it was again dipped, the struggle for payments continued.

73
 2. ACTIVITY OR TURNOVER RATIO

(i) Stock Turnover =cost of goods sold/average stock

2007

=2345304/985774

=2.37

2008

= 3054527/1093524

=2.79

2009

=3628765/1127473

=3.21

2007 2008 2009

2.37 2.79 3.21

74
 Interpretation and Analysis: (Inventory turnover ratio)

• The inventory turnover ratio shows that how quickly inventory is sold.

(ii) Debtor Turnover Ratio = Sales/Average Debtors

2007

=3657875/1269912

=2.88

2008

= 4449397/1704527

=2.61

2009

= 5002903/2073065

=2.41

2007 2008 2009

2.88 2.61 2.41

Interpretation and Analysis: (Debtors turnover ratio)

Same in the case of debtor turnover ratio, it too declined from

2.88 in 2007 to 2.61 in 2008 & further to 2.41 in 2009, showing the declined in pace of
turnover of debtors as compared to net sales figures.

75
 Thus money blocked in debtors is for more period of the Time in 2009 as
compared to previous few years, thus effecting greatly on the liquidity position of the
Naini unit.

(iii) Fixed Asset Turnover Ratio = cost of goods sold/net fixed asset

2007

=2345304/589153

=3.98

2008

= 3054527/677020

=4.51

2009

= 3628765/847034

=4.28

2007 2008 2009

3.98 4.51 4.28

Interpretation and Analysis: (fixed asset turnover ratio)

76
(iv) Inventory period= average inventory/cost of goods sold*365

2007

=990740/2545304*365

=142 days

2008

= 1099378/3054527*365

=131days

2009

= 1202438/3628765*365

=121days

2007 2008 2009

142days 131days 121days

(v) Working capital turnover ratio=cost of goods sold/working capital

2007

=2345304/760404

77
 =3.08

2008

= 3054527/1359412

=2.25

2009

= 3628765/954934

=3.8

Working capital is the capital employed by the business for its daily working or
operations i.e. it is the difference between current assets and current liabilities of the
company.
Management is always interested in finding out or knowing the efficiency of working
capital in generating sales.
Thus the ratio is used for the purpose and higher the ratio is more will be the efficiency
of working capital and better it would for the company.
(a) The ratio for the 1st year under study that is 2007 was 3.08:1 i.e. net sales
achieve for the year is 3.08 times of the net working capital of the Naini unit.
(b) But in the next year i.e. 2008 the ratio reduced to 2.25 :1 i.e. net sales for this
year though increase but investment in working capital increase with a greater
pace, resulting in reducing the ratio and efficiency of working capital to
generate sales.
(c) However the ratio increased to 3.8 in 2009.

78
 3. EXPENSES RATIO

a. Material consumed ratio=material consumed /net sales*100

2007

=2317836/3657875*100

=63.36%

2008

= 3058506/4449397*100

=68.74%

2009

= 3541913/5002903*100

=70.8%

2007 2008 2009

63.36 68.74 70.8

79
 b. Direct labor cost ratio=direct labor cost/net sales*100

2007

=35982/3657875*100

=0.98%

2008

= 27924/4449397*100

=0.63%

2009

= 34216/5002903*100

=0.684%

2007 2008 2009

0.98 0.63 0.684
Interpretation and Analysis: direct labor cost ratio

80
 c. Direct charges expenses ratio=direct charges/net sales*100

2007

=8514/3657875*100

=0.23%

2008

= 31903/4449397*100

=0.72%

2009

= 52637/5002903*100

=1.05%

2007 2008 2009

0.23 0.72 1.05
Interpretation and Analysis: direct labor cost

81
 d. Production overhead expenses ratio= Production overhead expenses/net
sales*100

2007

=182069/3657875*100

=5%

2008

= 236014/4449397*100

=5.3%

2009

= 342788/5002903*100

=6.8%

2007 2008 2009

5 5.3 6.8
Interpretation and Analysis: Production overhead expenses

82
 e. Non production overhead expenses ratio= Non production overhead
expenses/net sales*100

2007

=152692/3657875*100

=4.17%

2008

=138116/4449397*100

=3%

2009

= 174400/5002903*100

=3.49%

2007 2008 2009

4.17 3 3.49

Interpretation and Analysis: Non Production overhead expenses

83
 4. PROFITABILITY RATIO

a. Gross profit ratio=gross profit/net sales*100

2007

=1312571/3657875*100

=35.88%

2008

=1394870/4449397*100

=31.35%

2009

= 1374138/5002

=27.46%

2007 2008 2009

35.88 31.35 27.46

Interpretation and analysis: (gross profit ratio)

84
Gross Profit ratio tells the profitability of the unit i.e. trading or manufacturing profit.
There is a downward trend in past three years from 2007 to 2009, it decreased from
35.88% in 2007 to 31.35% in 2008 and finally declined to 27.46% in 2009.

b. Net profit ratio=net profit/net sales*100

2007

=633681/3657875*100

=17.32%

2008

=646432/4449397*100

=14.53%

2009

= 706972/5002903*100

=14.13%

2007 2008 2009

17.32 14.53 14.13

Interpretation and analysis: (net profit ratio)

85
If we see the net profit ratio i.e. ratio of EBIT: SALES {because interest and tax
calculations are performed at Chennai (corporate office) we will find the same trend as of
gross profit i.e. decrease in all three consecutive years.

Suggestion:

Thus we suggest the management of the unit to keep an eye on the direct costs and
overheads expenses of the unit.

86