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“RECONCILIATION AND COST OF CONVERSION”
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
SUBMITTED TO UNIVERSITY OF PUNE
FOR THE ACADEMIC YEAR (2010 – 2012)
UNDER GUIDENCE OF MISS. MOHINI MONDOKHOT BY MR. TUSHAR RAVINDRA LACHAKE MBA (PART – II) FINANCE NGSPM’S BRAHMA VALLEY INSTITUTE OF MANAGEMENT, ANJANERI, NASHIK.
CEAT TYRE LTD. NASHIK PLANT
ACKNOWLEDGEMENT It was a wonderful opportunity for me to work with this organization and to do study on “ Reconciliation and Cost of Conversion”. Firstly, I would like to thanks Mr. Devlalkar Sir (Finance). For allowing me to work on the project and encouraging and introducing me to the working environment of the organization. The project was constantly supervised by Mr.Nikhil Deshpande and Mr Meghe. He personally devoted his valuable time at various stages and was always there to help me out at any confusing moment.
During the project, I got valuable information about CEAT Tyres.ltd. and knowledge about Reconciliation and Cost of Conversion. This project helped me to get in touch with practical use of management studies. I would like to take this opportunity to thank all those account staff members who helped me in completion of my project.
Last but not the least I would like to thank all the faculty members and especially to Miss. Mohini Mondokhot of my Institute, Nasik. Who were instrumental in providing the concepts, which were put into practice in order to complete the project.
MR. TUSHAR RAVINDRA LACHAKE MBA ( PART-II) FINANCE
I Tushar Ravindra Lachake student of MBA (Part-II) 2010-2012 studying at Brahma Valley Institute of Management Anjaneri, Nashik. Solemnly declare that the project work title as “RECONCILIATION AND COST OF CONVERSION” was carried by me in partial fulfillment of the MBA programmed under University of Pune is genuine work of mine. It has not been either fully of partly related to any other institute prior in any other connection. Thus project was undertaken as part of the academic curriculum according to the university rules and norms and by no commercial interest and motives,
Signature of the Student Tushar Ravindra Lachake M.B.A. (Part-II) Finance
CHAPTER NO. CONTENTS PAGE NO.
CHAPTER : 1 INTRODUCTION 1.1 Object of the project 1.2 Selection of the study 1.3 Objectives of the study 1.4 Research Methodology 1.5 Scope of the study 1.6 Limitations of the study CHAPTER : 2 PROFILE OF THE ORGANIZATION 2.1 History of the organization 2.2 Organization Chart 2.3 Products / Services of the organization 2.4 Interdepartmental relationship in the organization
2.5 General Information
CHAPTER : 3 THEORETICAL BACKGROUND 3.1 Definition of Material Reconciliation 3.2 Need of Material Reconciliation 3.3 Essentials of Material Reconciliation 3.4 Procedure of Material Reconciliation 3.5 Uses of Material Reconciliation 3.6 Presentation of the data in table, graphs, diagrams 3.7 Interpretation of the data/information collected
CHAPTER 1 : INTRODUCTION 1.1 Object of the project
The main objective of carrying out this project is to know and gain practical knowledge about the organization‟s work culture. Also according to Pune University circular, every student has to undergo project training in an organization for the time span of a minimum of forty five days to gain practical knowledge with education.
The purpose of the project is to know the operation of the organization to do the thorough study and recommend the alternative solutions to the organization.
1.2 Selection of the study
Today optimum utilization of material is vital task for every business unit. Without proper utilization of material business cannot maintain its quality with its low price. Instead of concentrating on marketing aspects and core financial aspects of business, I think material is very basic and important area of business. Therefore I decided to focus on „Material Reconciliation‟ concept. Material reconciliation helps to management for Inventory control system. This helps in many tools such as ABC Analysis, XYZ analysis, VED Analysis, GOLF Analysis etc. Material reconciliation helps in controlling all type of material which is used in all type production process. It means that to convert raw material in finished goods.
1.3 Objectives of the study
The study was carried out keeping in view the following objectives:
To review the Standard method Material reconciliation. To study what is mean by material reconciliation. To study the procedure of Material reconciliation. To study Results report for material reconciliation. To compare performance given by Trimbak Rubber and Art Rubber as per reports
1.4 Research Methodology
Research in a common parlance refers to a search for knowledge. Research can be defined as a “Scientific & Systematic search to pertain information on a particular topic”. Research is considered to be the more formal, systematic and intensive process of carrying on a scientific method of analysis. Research methodology is a way to systematically solve the research problem. “The procedures by which researchers go through their work of describing, explaining and predicting phenomenon is called methodology.” Appropriate methodology is an essential characteristic of quality research studies, irrespective of the discipline to which they are related. The research is totally dependent on the data, which has to be collected through various methods. The following are the types of data: DATA COLLECTION Data Collection is an important step in methodology of any project and success of any project will be largely depend upon how much accurate you will be able to collect the data. Information & data collected for the purpose of the study is categorized in two parts: 1.Primary Data 2.Secondary Data PRIMARY DATA It is data, which we collect on our self from observations or asking questions o others. The primary data is collected from Finance Department of CEAT Ltd, Nashik. This data includes information on company profile, its products. Primary data is collected by the means of discussions, difficulty solving sessions.
SECONDARY DATA Secondary data is such a data which is already exits i.e. they refer to the data which have already been collected and analyzed by someone else. When the research utilizes secondary data then he has to look into various sources whose he can obtain them usually the published data are available in various publication technical and trade journal books, magazines and news paper and reports etc. The various sources of secondary data includes
1.Annual Report of Ceat Ltd. 2.Website of Ceat Ltd. 3.Different Books of Financial Management
1.5 Scope of the study
The organization wherein the study was conducted is one of the large organizations of Nasik City. The total turnover of the CEAT Ltd. is about 1400 crores and has a large share in the country‟s tyre exports, out of which the Nasik plant contributes a turnover of about 564 crores. Thus the scope of the study was also vast. The project was conducted under the efficient guidance of qualified and expert staff in their fields. Latest knowledge could be acquired in various fields of accounts such as Finance, Costing and Budgeting, Auditing. Knowledge about the information technology (ERP) i.e. Enterprise Resource Planning used in all fields of accounts. Fruitful experience of working at CEAT Ltd. and knowing about the management strategies & polices.
1.6 Limitations of the study
Basically being a Process industry, and continuous production schedules being operated it was not feasible to study 100% of the process in minute detail. As I was personally involved in Material reconciliation and physical verification there were some observations: It has a large and a wide scope in improving productivity and efficiency of employee. It is a continuous process. It helps to develop the human resources and cordial relations. Limitation: 1. Due to limitation of time period, achieving sufficient details was not possible. 2. Due to secrecy of organization detailed information was not available. 3. Proper inspection must be required for reducing the defects. 4. Skilled workers are must be required on large basis. 5. Sometimes there will be no proper utilization of raw material.
CHAPTER 2 : PROFILE OF THE ORGANIZATION 2.1 History of the Organization
Ceat was established in Turin Italy, in the year 1924. The founder was Dr. Virgin Tedeshchi. Ceat started effectively making cables for telephones and railways. After the First World War Ceat diversified into textiles and tyres. Ceat the four letter word in Italian actually stands for Cavi Electrici Affini Torino (Electrical Cable And Allied Products Of Turin) Ceat of Italy had gained recognition in post-war Europe as a tyre manufacturer of excellence. This reputation, plus 34 years experience and the complete commitment of the promoters to make India a base for tyres of quality – at par with the world‟s best, and towards contributing to the nation‟s basic industry infrastructure, forms Ceat‟s inheritance. On 10th March 1958 Ceat tyres of India ltd. was formally incorporated with a capital of Rs. 1.15 crores contributed in a 60: 40 ratio by Ceat of Turin, Italy and Investment Corporation of India. (A Tata group company) The Italian‟s also brought in the machinery and technical knows-how. On 22nd February 1960 the first tyre heaved out of the steaming mould in the Ceat factory at Bhandup. The production at the end of first year came to 45,246 tyres valued at Rs. 1.37 crores. This was an output by 200 workers. On 15th August 1973 the second manufacturing plant of ceat was started in Nasik. At present “Ceat” is amongst the forerunners in India‟s tyre industry. The production in 1960 was 45000 tyres and has multiplied over the years and today is close to 6 million tyres per annum. Ceat ltd. has a technical collaboration with Yokohama rubbers (company of Japan) with two full-fledged manufacturing plants. Today, the total production per annum is close to 6 million units, making Ceat one of the top 20 tyre companies in the world. Ceat‟s turnover is exceeding Rs. 3000 crores. In a span of five decades, Ceat has grown to offer the largest range of tyres in the Indian market. With tyres for every user segment, from scooter and trucks, to large off the road tyres, one out of every 35 Indian citizens has been a proud Ceat customer. While enjoying a position of privilege as a major supplier to OEMs, the service to the retail market includes over 90 Ceat shoppes. These exclusive passenger tyre retail
outlets, set up in every part of the country, offers a wide range of services in addition to selling tyres, with a service network of over 4,500 dealers, 30 regional offices, 93 Ceat shoppes and 100
C & F (carrying and forwarding agents.) Ceat is truly dedicated to the safety and comfort of its customers. The quality of products has also ensured a firm foothold in export markets such as USA, Germany and many Asian countries. Corporate History 1. A recollection of our past gives us pride, but it is the responsibility of the future that makes us wise. 2. CEAT International was first established in 1924 at Turino in Italy and manufactured cables for telephones and railways. 3. In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in collaboration with the TATA Group. 4. In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the company CEAT Ltd. The journey since has been smooth, ups and downs notwithstanding. Today, we are on a roll and looking long distance. Our current mileage: 1. Operations in Mumbai and Nasik plants 2. Exports to USA, Africa, America, Australia and other parts of Asia 3. Network of 34 regional offices, 7 Zones, over 3,500 dealers and more than 100 C&F agents 4. Dedicated customer service, with customer service managers in all four divisional offices, assisted by 50 service engineers. 5.Over 6 million Tyres produced every year.
Vision of Ceat Tyres Ltd.
"CEAT will at all times provide total customer satisfaction through products and services of highest quality and reliability."
Mission of Ceat Tyres Ltd.
"To nurture an exciting and challenging work environment with fairness and transparency.” Our commitment to quality ensures that you have a safe ride, always. So go on, defy destiny.
2.2 Organization chart
Mr. R. P. Goenka (CHAIRMAN)
Mr. H. R. Goenka (VICE-CHAIRMAN)
Mr. P. Choudhary (MANAGING DIRECTOR)
Mr. Hundal Singh (G. M. NASHIK)
Mr. Rahul Avasthi (V. P. MANUFACTURING)
Mr. Devlalkar Sir (FINANCE MANAGER)
Mr. Nikhil Deshpande (MANAGER COSTING)
2.3 Product & Services of the Organization
Ceat Ltd. has a very good presence in the tyre-manufacturing segment. The details of the available products: Category Truck tyre Industrial Tyres Earth Mover Tyres Light truck tyre Passenger tyres (Three-wheeler /Maruti / Jeeps ) Two-wheeler tyres (scooter / motor cycle) Tractor tyres Agricultural Tyres ADV tyres (Animal Driven Vehicles) Off Road Tyres i.e. earth movers tyres. With two full-fledged manufacturing plants ceat has a wide range of tyres for all user segments. The striking features of Ceat‟s performance are the success it has achieved not only in the domestic market but also in the international market. Despite the highly competitive nature of the international market, ceat has made significant progress in export.
More significantly ceat 's main market is in developed countries like USA, Germany and other European countries. Tyres are exported to over 40 countries worldwide and range from tyres for truck, buses and graders, to cars, light truck and industrial tyres. On home front, the company enjoys a privileged position as major suppliers to original equipment manufacturers (OEM).
2.4 Interdepartmental relationship in the organization
There are many departments in ceat ltd. and all these departments in coordination with each other are working together to achieve the end objectives of the organization. All these are functioning as a team and each department has an individual vital role to play.
In Ceat ltd. the marketing department forecasts the market demand of tyres as per the study, survey and research. These demands are than put forward to the production-planning department and in turn the production plans for a particular period are prepared. Than material requirement planning (MRP) is carried out. Than the materials requisitioned are arranged in stores department which in turn are sent to the production department on a regular basis.
The quality assurance department measures and controls the quality and the required tolerances of the product. Accounts and costing department arranges for funds and makes payments to the supplier of the material, wages, salary and other expenses. The costing department arrives at the unit cost of production and takes steps in reducing costs in all areas of operation.
Human relation department also plays an important role to maintain the employee relations at the shop floor. Similarly there are many sub departments which play a dominating role in achieving the objectives of the organization i.e. Maintenance department looks after the proper preventive and corrective maintenance of the machinery and keeps them in good working condition to achieve the budgeted production targets. Utility department provides basic utilities for production, EDP(Electronic Data Processing i.e. IT realated) department provides a data base for MIS to control activities and other monthly required data (payroll, ledger etc). The logistics department helps in distribution of the products to various regions of the market. This constitutes the inter relationships among the various departments.
2.5 General Information
CEAT expands capacity at Nashik Plant by over 1000 tones per month
India is one of the fastest growing economies, globally. Economy is booming, rains are favorable and overall sentiments in India are positive. Economists are talking about double digit GDP. Businesses are witnessing huge demands. One such industry that is witness to huge demands is the automobile industry, not only the passenger cars, but also trucks, LCVs and tractors. The overall automobile industry has witnessed a robust growth in India in the past one year. There has been a huge demand for LCV, truck and tractors due to favorable conditions. The demand in this category has shown high growth year on year.
CEAT envisaged these sentiments and geared itself to address the huge demand. It has already increased its production capacity at the Nashik Plant by over 1000 tonnes per month. The CEAT Nashik plant produces truck, LCV and agricultural tyres. The capacity of the plant has increased for the truck by 170,000 nos. p.a., LCV by 96,000 nos. p.a. and Tractor Rear categories by 50,000 nos. p.a. This expansion adds up to 1000 tonnes per month. CEAT sees a robust opportunity for increasing its market share in these segments. With this expansion the company aims to increase its overall market share by more than 2%.
CEAT has invested Rs 20 cr for the expansion. The company has achieved technological superiority by installing state-of-the-art machinery as a part of its production capacity expansion. Though CEAT is the highest exporter of truck and LCV tyres, through this expansion, the company is also looking at addressing the export demands and further increasing its market share in the international terrain. Maharashtra is the second largest State of India and it is also a very important region for CEAT. The state is well connected by rail, road and airways. This helps CEAT to boost its distribution cycle. Also, the Government of Maharashtra has been very
supportive. It has provided the company with various facilities that have prompted CEAT to increase their investment in Nashik.
CEAT To Expand Its Halol Facility CEAT, one of the leading tyre manufacturer in India and part of the Rs 16,000-crore RPG Group is on expansion path. As part of its expansion, it is investing an additional Rs 630-crore to enhance the existing capacity of the radial tyre unit in Halol, Gujarat. The fourth largest tyre manufacturing firm in the country by tonnage in the country is also starting the operations at the greenfield facility in Halol by October this year, where it has already pumped in Rs 620-crore. The Mumbai-based company, which is also the fourth largest tyre making company by tonnage in India, will start the operations at the greenfield facility in Halol, where it has already invested Rs 620 crore, by October 1.It is understood that the firm's board is meeting in the near future for the approval of enhancement of capacity of the Halol plant from the existing 130 tonnes a day to 300 tonnes a day. The new greenfield facility was originally planned to be operational by May this year. It later got postponed to the present launch date of October. What is more, a substantial part of production from this facility would be for exports, it is learnt. The additional capacity with an investment of Rs 630-crore is planned at a time when the Indian commercial vehicle players including Tata Motors, Ashok Leyland and Mahindra were lamenting for the shortage of tyre supply within the industry. Eyeing the huge potential for the truck radial tyres, the company might as well expand the Halol capacity fourtimes, which could take the company's total capacity to 600 tonnes a day. Planning a four fold capacity enhancement might be its long term goal, but plans are afoot to increase the capacity three fold to 450 tonnes a day in the next four years, with an investment of about Rs 1,500-crore, including the second phase of expansion. The facility can produce four million tyres a year in the first phase, a substantial portion of that would be radial tyres for heavy trucks, buses, light trucks and passenger cars. The plan is to ramp up further to 12 million tyres a day in the long run. Currently, around 25 - 40 percent of the total production from its Halol unit is meant for the export market.
About CEAT Ltd:
CEAT Tyres, the flagship company of RPG Enterprises, was established in 1958. Today, CEAT is one of India‟s leading tyre manufacturers and has a strong presence in both domestic & international markets. The company manufactures over 10 million tyres every year and enjoys a major market share in the light truck & truck tyre market. CEAT tyres, tubes and flaps are renowned for their superior quality and durability. CEAT offers the widest range of tyres to all user segments and manufacture world-class radials for all Indian vehicles including: Heavy-duty Trucks and Buses, Light Commercial Vehicles, Earthmovers, Forklifts, Tractors, Trailers, Cars, Motorcycles and Scooters, Auto-rickshaws.
Achievements & Awards
Sometimes being up on the victory stand is all that matters. Getting an award is the paton-the-back that is also a slight push forward. It means 'hey you've done well!' But it also means 'watch it now; you've expectations to live up to!' We do not believe in blowing our own horn. But we do believe that understating our success would mean undermining the efforts that went into achieving it. 1. CEAT wins awards for Employer Branding and Best HR Practices for 2010 2. CEAT receives Reader's Digest Trusted Brand Gold Award for 2009 3. The 2007-08 Raid de Himalayas 2 wheeler Rally was won on CEAT Tyres 4. CEAT was the no 1 in exports amongst all tyre companies in India..... Source ATMA Report 2007-08 5. CEAT Shoppe wins Best Innovation Award 2007-08 (* Franchisee Association of India) 6. From a 2 wheeler tyre to a Car Tyre to a Giant OTR Tyre, CEAT makes the entire Range of Tyres. 7. CEAT won the Employer Branding Award for "Excellence in Training 2007-08" ( * Awards by the Asia Pacific HR congress) 8. CEAT has adopted a village "Tirad Seth", near Nasik as part of its CSR activities. 9. ICQCC Distinguish award for Quality Circle in 2002 at Lucknow India
10. NCQC Distinguish award for Quality circle in 2004 at Mumbai 11. NCQC Distinguish award for Quality circle in 2006 at Kanpur India 12. CCQC Mumbai Chapter Distinguish Award for Quality Circle in 2007 13. Best case study award from CII in 2005 14. RPG Best TQ\M Team Award for CFT in 2005 and 2006 Recognized with RPG BTT Six Sigma Team Award in 2005-06 Winner of RPG Quality award in 2003, 2004 & 2006 Certificate of merit in RPGOE in 2005 100 percent vendors are ISO certified Rated amongst top four auto ancillaries National Exports Award (CAPEXIL) - 13 times Best Exports certificate of merit - 7 times in the last 20 years Achievements for us are like milestones. They don't tell us how far we have reached, they tell us how much there is to go.
CEAT Corporate Social Responsibility
We believe, that as a responsible organisation, we have a duty towards the positive growth and development of our society at large. It is our integral duty to preserve our surroundings for the future generations. Therefore, we undertake a number of initiatives every year to fulfill our Corporate Social Responsibility (CSR). Some of the key initiatives are as follows:
1.CEAT Partners with Nashik Police for a crime-free Nashik
As part of our CSR philosophy and building strong social relationships, CEAT entered into a unique partnership with Nashik Police. Under the guidance of Police Commissioner Mr.Vishnudeo Mishra to curtail the crime in Nasik City a Bit Marshal patrol is formed & deployed in various areas of the city. The bit marshals are now equipped with advanced equipment's / weapons, new uniforms, & bikes. With the help of CEAT LTD Nasik and Satpur Police head, the bit marshals have been provided with special commando uniforms. The bit marshals will patrol near crowded areas, jeweler's shops, schools Colleges, & other sensitive areas. Over 100 Bit Marshalls will have the CEAT logo on their uniforms . This once again reinforces the commitment of CEAT towards a larger social cause. Commissioner of Police Mr. VD Mishra had felicitated us during the inauguration ceremony which was attended by top 100 police brass
of Nashik and received a positive media coverage. He has also issued an appreciation letter as well as mentioned CEAT's good work in press release.
2. Bal Chetna Shibir
In June 2009, we organised a 'Bal Chetna Shibir' for children living in the slum areas in the vicinity of CEAT's Bhandup plant. This was conducted under the auspices of the Art of Living Foundation by one of our employees, who is an active volunteer at the Foundation. The aim of this 'Shibir' was to inculcate cultural values and foster self development and spiritual growth in children.
3. Red Book 'Red Book Complaints System' ensures effective and efficient resolution of all employee complaints. Volunteers have been identified from each shift and each department for the same. This initiative has received a favourable response from our employees/workmen.
4. Welfare Centre Initiatives Our CSR cell runs a welfare centre. The primary objective of the centre is to conduct vocational training and promote self-reliance. It organizes regular professional classes on tailoring, beauty therapy, mehendi making, etc. for women.
5. Initiatives for Cancer Patients The Company plays an active role in providing support to cancer patients. Apart from offering moral support, our CSR team also liaisons between the patient and the authorities at the Cancer Patients Aid Association.
It has been our privilege to support some of the best vehicle manufacturers in the country with our products. Well, shouldn't the best go with only the best?
7. Farm Tyres
8. OTR Tyres
Ceat flagship company of RPG enterprises.
An RPG company is among leaders in their business segments. RPG enterprises are India's 4th largest business house having turnover of 64 millions. Ram Prasad Goenka (RPG), founder of the group, presently the chairman emeritus, is a luminary in Indian business.
Harsh Goenka, eldest son of R. P. Goenka is the chairman of US $ 1.6 billion RPG enterprises; the group is actively engaged in tyre manufacturing, power transmission, information technology & communications, financial services, entertainment, rubber chemicals and related products, pharmaceuticals & retailing. Sanjiv Goenka; youngest son of R. P. Goenka is the vice-chairman of this group. The Goenka's believe to make RPG the most exciting place to work. The group outlines the possible spheres of Ceat‟s forward and backward linkages that could mean new opportunities to its employees: fresh interaction for its investors and pleasant Surprise for its consumers.
Other major companies in RPG group.
CESC limited HMV KEC international Asian Cables RPG Telecom & Paging Searle India Philips carbon black Harrison Malayalam Ceat financial services
RPG Vision. Since inception, the RPG group has grown rapidly through acquisition and the setting up of joint ventures. Thus, RPG group believes in becoming India‟s biggest group with a focus on market capitalization through,
Leadership in profitability and revenue growth in their chosen business.Being a customer centric organization.Being most exciting workplace. RPG ValuesPeople orientation, innovation and entreprenureship transparency and integrity anticipation; speed and flexibility passion for superior performance, RPG group is one of India's best-managed groups of companies with a diversified but integrated presence.
Corporate office: Ceat limited,Ceat mahal, 463, Annie Besant Road, Worli, Mumbai – 400025.
Works: 1. Ceat limited, Village road, Bhandup,Mumbai- 400 078.
2. Ceat limited, 82 MIDC, Satpur, Nasik – 422007.
joint ventures & sourcing units: South Asia tyres ltd. Aurangabad.
1. Rado tyres ltd. Chennai
2. Tyre corporation of India ltd. Calcutta.
3. Associated Ceat Pvt. Ltd. Srilanka
4. Kelani tyres, Srilanka
5. Ace rubber manufacturer, Hyderabad
6. Innovative tyres, Baroda.
7. Excel rubber, Hyderabad.
8. Trambak rubber industries ltd. Sinnar.
9. Art rubber industries ltd. Nasik
10. P.J rubber, Cochin
11. Mysore polymers, Mysore
The Strategic Alliance in SriLanka-The strategic alliance between Associated Ceat private ltd. (ACPL) & overseas joint venture in Srilanka, Kalani tyre ltd. (KTL) has been effected. The commencement date of the alliance was effective 1st Nov 1998 .the turn over of this joint venture for the year 98-99 is SriLankan Rs.1293 million & in 1999-2000 turnover is SriLankan Rs.1357 million. The company KTL represents the 55 % to 60% of the market share. The profit before tax for 98-99 was SL.Rs.58.68 million & which increased to Rs.75 million in 99-00.
For the man who counts signals to reach home safely. For the woman who drops her child to school. For the vendor who has to reach the market in time. For the young rider who wants to race the wind... we make quality our responsibility. And we take our responsibility seriously.
We make sure our processes and products are approved by the appropriate certifying agencies. We have been the first tyre company in India to get the ISO/TS 16949:2002 certification, which is a combination of ISO 9000 and QS 9000. We are mighty kicked about this one! Because it's not just a certification, it's a quality management system that promotes continual improvement. It allows us to keep our supply chain trim by preventing defects and reducing waste. Not only that, it measures the ultimate challenge for any manufacturer- customer satisfaction. Some of the other things it ensures: 1.Export to almost all parts of the world 2.Fundamental quality management system requirements 3.No multiple certification audits 4.The PDCA (Plan, Do, Check and Act) cycle of process approach
Tyre Manufacturing Process
1. Mixing the materials
Various grades of natural and synthetic rubber are combined with carbon black, sculpture and chemical products in an internal mixer to meet specific compound requirements. The resulting blend is called the "master batch", which is formed into rubber sheets, and cooled. Some rubber is used for additional processing while the majority is prepared for the extruding stage.
2. Extruding the tread Heat is applied to the rubber to make it more elastic and then it is put through extruders machines where the tread and sidewalls, which require two different rubber compounds, are formed into the required shapes. The extruders produce a continuous sheet of tread rubber, which is then cooled and cut to specific tyre lengths.
3. Weaving the plies Spinning cords such as rayon, nylon, steel and polyester undergo a process called “calendering”, where they are woven into sheets and coated with rubber on both sides. Once this is finished, the sheets are then cut at the proper angle into specific widths and lengths and eventually used for casing and cap plies, while steel cords are used for the belts.
4. Preparing the bead core The bead core is formed by aligning, and then coating plated steel wires with rubber. After, it is wound on a coil a certain number of times to form bead rings, which provide a specific diameter and strength for a particular tyre.
5. Building process
The building process involves two stages. Stage 1: Beginning with the woven sheets, the inner liner, body plies and sidewalls are placed on the building drum. The correctly-positioned beads rings are then attached, which results in the automatic wrapping of the ply edges around the bead core, and the simultaneously movement of the sidewalls into position. Stage 2: The tyre is shaped by inflating the rubber and applying sidetread rubber, two steel belts and a cap ply to achieve a "green" tyre.
6. Vulcanization One of the key steps in the manufacture is called Vulcanisation, a process invented by Charles Goodyear in 1839. The “green” tyre is placed in a curing press for a certain period of time (10-15 minutes) at a specific pressure and temperature. Once heat and pressure has been applied to the tyre, it is then removed from the mould having achieved its final size, shape and tread pattern.
Excess rubber from the curing process is removed, and the tyre is trimmed to order.e.ut to specific tyre lengths.
8. Final inspection Each tyre is visually and electronically inspected for balance, quality and uniformity. This final check ensures consistent and reliable performance.
CHAPTER : 3 THEORETICAL BACKGROUND
3.1 Definition of Material Reconciliation
Simple definition of material reconciliation is “the difference between actual consumption & theoretical consumption also” Material Reconciliation = Theoretical bal –Actual closing stock (Theoretical BAL =opening stock +net sent – Total Dispatch – Adjustment, Actual closing stock= raw material (actual phy.stock) + from flag compound slug ) The main aim of M.R. is to control on raw material which is used in finished product with desired output with standard terms & condition.
Martial reconciliation mainly deals with the control on raw material .Material Reconciliation is a continuous process in every manufacturing industries as per there need of outsource.
Basic Motto of Material Reconciliation Basic motto behind the Material reconciliation is to optimum utilization of raw material which cause increased in profitability & efficiency .raw material which is used in the process of production & occupier major & minor part in the product. Material is the first and most important element of cost In most of the manufacturing organization materials form the single largest component of cost The term material simply means any commodity or substance which is processed in a factory in order to be converted into finished product .Material may be classified as follows;
Raw materials are the basic materials supplied in crude from to be used for production e.g. jute cotton ,steel ,timber ,rubber ,coal ,etc ,
Components are not raw in nature rather are finished parts made out of raw materials which are assembled to make the finished product e.g. tyres and tubes in car manufacturing industries ,stabilizers in A.C. and fridge manufacturing. monitors in computer etc. Tools are appliances used in the manufacturing operations e.g. hammers ,screw –drivers .drills ,milling cutters etc. Spare parts are used for the maintenance of plant ,machinery and buildings and for smooth running of production schedule. Consumable Stores are the items used for smooth running of the machines e.g .lubricants oil, cotton waste ,rage ,brooms etc. The substance from which the product is made know as material It may be in raw or a manufactured state .It can be direct as well as indirect .
Materials include both direct and indirect materials Direct and indirect material are both treated as stores items ,whereas stocks of finished goods is not treated as a stores item. Direct and indirect materials purchased for stock purpose to be issued to different jobs, work orders or department as and when required are known as stores .On the other hand finished goods are treated as stock we may also refer to the commonly used term inventory and finished goods Thus stock of materials but also stores and spares work in progress and finished goods .Thus stock of material is only a part of inventory held by a manufacturing unit .
Material which form part of a finished product are known as direct material in other words direct material can be conveniently and accurately allocated to a particular unit of cost .For example leather used in the making of pair of shoes and yarn required for a meters of cloth ,and rubber in tyre manufacturing industries.
There are two type of raw material 1)Direct material ,2) Indirect material
1) Direct material – All material which becomes an integral part of finished product and which can conveniently assigned to specific physical units is terms Direct material direct material is also described as process material prime cost material production material store material constructional material D.M are those material which occupies major portion in the product & also make vital impact on the cost of production this material directly visible and decides the structured of product i.e. cloth in shirt ,wood in table ,as we are studding the tyre of manufacturing industries example of direct material of the same is rubber in tyre. 2) Indirect material – All material which is used for purpose ancillary to the business and which cannot be conveniently assigned to material consumable store, oil & waste printing & stationery material etc are few example of Indirect material its occupies smaller portion in the product which do not directly attention of viewer i.e. cap ,core in tube
Material include physical commodities used to manufacture the final end product it is the starting point from which the first operations start.
Out of all the factors of production ,material because of its basic nature is the most flexible and controllable input Material has two unique features first it is inventorial and does not get waste and exhaust with the passage .of time as labour is wasted with the passage of time whether in use or not Second ,material can be purchased in varying quantities according to the requirements of the firm whereas other elements of cost like labour and other services cannot be easily varied once they are established .That is why cost and management experts put in lots of efforts to control material cost.
Material control Material control is system which ensures that right quality of material is available in the right quantity at the right time and right place with the right amount of investment .It can be defined as a comprehensive framework for the accounting and control of material cost designed
with the object of maintaining material supplies at a level so as to ensure uninterrupted production but at the same time minimizing investment of funds .In simple words material control is a systematic control over the purchasing ,storing and using of materials so as to have the minimum possible cost of materials because materials constitute such a significant part of product cost and since this cost is controllable , proper planning ,purchasing handling and accenting are of great impotence . Material control is accomplished through function organization ,assignment of
responsibility , and documentary evidence obtained in various stages of operation from the approval of sales and control involves recording on printed forms all steps and movements which are ready for sale and shipment .Material control involes recording on printed forms all steps and movement which occur in the acquisition and utilization of materials .Effective control also requires the systematic preparation of periodic summaries and repots.
Dimensions of Material control Material control has two dimensions 1)quantity or unit control 2)rupee or financial control Production executive and storekeeper are primarily interested in quantity control because their interest is to see that there should be no stock out problem on the other hand ,financial executives are interested that too much money should not be invested in materials and every rupee spent in materials should be efficiently and effectively utilized .keeping in view unit control and financial control ,material control should meet these two conflicting objective 1.the maintenance of sufficient quantity of every item of material for efficient operations and
2. Maintenance of an inventory that is not detrimental financially. Aspects of material control 1. Accounting Aspect – This aspect of material control is concerned with maintaining documentary evidence of movement of materials at every stage right from the time sale and production budgets are approved to the point when materials are purchased and actually used in production operations.
2. Operational Aspect – This aspect of materials control is concerned with the maintenance of material supplies at a level so as to ensure that material is available for use in production and production services as and when required by minimizing investment in material.
3.2 Need of Material Reconciliation
1. Availability of materials- There should be a continuous availability of all type material in the factory so that in the factory so that the production may not be held up for want of any martial minimum quantity of each material is fixed to permit production to move on schedule.
2. No excessive investment in materials- There should be no excessive investment in stocks Investment in material must not tie up funds that could be better used in other activates overstocking should be avoided keeping in view the disadvantages it carries For this purpose a maximum quantity is assigned to each item of material above which stock should not be exceed. 3.Reasonable price – While purchasing materials it is seen that it is purchased at a reasonably low price Quality is not to be scarified at the cost of the lower price The material purchased should be of that quality alone which is needed. 4. Minimum wastage –There should be minimum possible wastage of material while these are being stored in the warehouse by storekeeper or used in the factory by the workers .Wastage should be allowed up to a certain level known as normal level of wastage and it should not exceed that level. Leakage or theft of materials must be avoided to keep the cost of production under control. Storekeeper and workers should be trained to handle the materials in a scientific way to avoid the wastage .The Storekeeper is to keep the stores neat and tidy to avoid the wastage due to rust, dust or dirt. 5. No risk of spoilage and obsolescence – In order to avoid spoilage and obsolescence, a maximum quantity of each material is determined and a proper method of issue of materials is followed .
6. Ready information about availability of materials – The Storekeeper can supply this information because he keeps an up –to-date record of every item of stocks under a proper system of material control. 7. Misappropriation of material – Material can be easily misappropriated by employees because generally misappropriation of cash is considered to be more serious than misappropriation in kind Therefore this requires an internal check on material which is part of material control. 8. Right amount of payment to suppliers – Invoices received from the suppliers should be approved for payment only if the items of materials ordered have been received and properly checked to avoid excess payment to the suppliers.
3.3 Essentials of Material Reconciliation
1. There should be proper co-operation and co-ordination among the department involved in purchasing, receiving and inspection storage, sales, production and accounting so that there may be no inadequate availability of materials which may disrupt production and lose sales At the same time purpose of co-ordination is that there should be no excessive investment in materials leading to unnecessary carrying costs and obsolescence risks. 2. Purchases of materials should be centralized i.e. one purchasing department should be authorized to make all purchases of materials to avoid reckless buying by all departments and to ensure that all purchases are made at the most reasonable prices . 3. There should be proper scheduling of materials. 4. A good method of classification and codification of materials should be followed. 5. There should be proper inspection of materials when they are received by the receiving department 6. Standard forms for requisitions, orders, issue, and trensfer of material from one job to the other and transfer of material from the job to the stores should be used. 7. The storage of materials should be well –planned to avoid losses from theft, carelessness, damage, deterioration, evaporation and pilferage. 8. A good method of issue of materials to various jobs, orders or processes should be followed so that there is delivery of right type of materials to the jobs, orders or process in the right quantity at the time they are needed. 9. Perpetual inventory system of materials should be operated to facilitate regular checking and avoiding closing down factory for stock –taking with this system it is possible to determine at any time the quantity and value of each type of materials in stock. 10. A system of internal check should be introduced to ensure that all transactions involving materials are checked by properly authorized and independent persons. 11.Minimum ,maximum and re-ordering levels for each type of material should be fixed to ensure that there is no shortage of materials and that is no over –stocking .
12. Ordering quantity for each type of material should also be fixed to reduce the ordering cost and carrying cost of materials. 13. A careful choice should be made of the method of valuating the material issues because it affects the cost of the jobs or processes and the value of the closing stock of materials in the stores. 14. Adequate records to control materials during production should be maintained to ensure that there is minimum possible wastage. 15. Information about availability of materials should be made continuously available to the management so that planning of production may be done keeping in view the inventory balances in stores .Information about obsolete and defective stock should also be given to the management from time to time so that steps may be taken for the disposal of such stock.
Advantages of material control: A good system of material control1. Eliminates waste in the use of materials; 2. Reduce the risk of loss from fraud and theft; 3. Help in keeping perpetual inventory and other records to facilitate the preparation of accurate 4. Material reports to management; 5. Reduce the capital tied up in inventories; 6. Reduces the cost of storage.
3.4 Procedure of Material Reconciliation
Basic information for activities of controlling raw material and Finished goods at sourcing units
Nashik plant is responsible for controlling the preparation of material reconciliation for the following outsourcing units. 1. 2. 3. Art Rubber industries Camal Tread Co. Pvt. Ltd. Trimbak Rubber
There are transfers for other outsourcing units like Innovative tyres, Excel Rubber Pvt. Ltd., Bhagavati Rubber Products Indust. from Nashik Plant. There are also transfers to Bhandup plant from Nashik Plant.
But Nashik plant is responsible only to control and reconcile material at following outsourcing units.
1. Art Rubber Industries: Unit is located at Ambad. Responsible for preparation of tubes. The goods are cleared under F4 (Means all FG are directly returned to the CEAT Nashik plant). The unit is currently shut down because of strike since 20th February 2008. 2. Camal Tread Co. Pvt., Ltd. : Unit located at Gonde (about 25 km from Nashik). Responsible for preparation of Flaps. Goods are cleared under F4 (All FG is returned to Nashik Plant and no dispatch from sourcing unit). 3. Trimbak Rubber: Unit located at Sinnar (Musalgaon 35 KM from Nashik). Responsible for preparation of Flaps and tubes. Tubes are cleared under F2 (FG cleared directly from sourcing unit). Flaps are cleared under F4 (Returned directly to the plant)
Raw material including packing material for the sourcing unit is provided by Nashik Plant or there may be direct supply from the vendors to the sourcing units (Billing for the same is done at Nashik Plant only)
Activities of the sourcing units are monitored and checked by the Sourcing Cell (Bhandup Plant). Sourcing Cell is the authority giving instruction to the sourcing units about the quantity to be manufactured, production schedule, and compounds to be used to the sourcing units. Nashik plant is responsible only for correct recording and reconciliation of the use of raw material.
One representative of CEAT is present at the sourcing units to ensure the quality and quantity of the raw material and FG at the sourcing unit. Mr. Pawar for Art Rubber and Camal and Mr. Patil is for Trimbak Rubber. These people check the physical stock at the sourcing units every month.
Material Reconciliation statement is prepared for every outsourcing units at the end of every quarter by the Costing and MIS department at the Nashik Plant.
Procedure: First quantity wise data is considered. STEP - I Opening stock of raw material at the sourcing unit is taken from last report. Material sent to the sourcing unit (month wise) is taken. The same information is available from raw material stores. The report is directly taken for the system. Addition of opening stock and material sent is made.
STEP - II Further, any material returned is deducted from the Step I.
STEP - III Then Fly loss (0.4% for specified materials other than natural rubber and 0.1% for natural rubber) is deducted from the step II to derive at net sent goods.
STEP - IV Then actual dispatches from the sourcing units are taken from the invoices given by the sourcing units Tubes and flaps are nothing but Rubber compounds. From the quantity of finished goods the quantity of rubber Compounds prepared by the sourcing units is dervied. HO gives specification (Called as “Spects”) for the rubber compounds. These are nothing but some standardized formulae for use of raw materials for manufacture of particular rubber compounds. These are quantity-based specification. (Percentage of raw materials required is given)
STEP - V On the basis of specifications given quantity of raw material used is derived.
STEP - VI Raw material used by the sourcing unit (derived by Step V) is deducted from the net Goods sent (derived from Step III) to get the theoretical Stock in Hand.
STEP - VII Reports of actual physical stock is taken from the representatives and compared with theoretical Stock in hand (derived from step VI). The difference between Theoretical Stock and actual stock is taken.
STEP - VIII There are some types of raw materials, which are used as a substitute for each other and negatives of one are allowed to be set off against positive of the other. The quantity of the same difference (Step VII) is multiplied by the standard rate of raw material.
If the total of difference is negative, debit note on the Sourcing unit is raised. No action if the there is positive Difference.
Post SAP: Access for SAP is also given at the sourcing units‟ end. Ideally there should be auto reconciliation of material. As per the basic information from the Costing & MIS department sourcing units are not agreeing for system generated Reconciliation statements.
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