Industrial Project - Kutch

“Austin Engineering Co. Ltd.
An
Industrial Report at
Austin Engineering Company Ltd.
An ISO / TS 16949 : 2009 Certified Company
(Manufacturing all types of anti friction Bearing)
Registered Office & Work

AUSTIN ENGINEERING COMPANY LTD
Village: Patla
Taluka: Bhesan, Via: Ranpur (Sorath)
Dist.: Junagadh 362030
Submitted To:
Department of Commerce & Management
K.S.K.V, Kachchh University
Bhuj 370 001
Submitted By:
Trambadiya chirag. K.
M.B.A (Regular)
1
“Austin Engineering Co. Ltd.”
PREFACE
The essential thing is in education

Is not the doctrine taught but
The arousing of the
Mind and heart & discipline of will
Learned professors give the knowledge & guidance about theoretical subject
to us. To know the various angles of business, practical knowledge is necessary. It
gives an opportunity to increase our knowledge & standard & also develop our
skill.
Today scenario is very change due to rapid liberalization, privatization and

globalization there is an extreme need of skilled and trained managerial personnel.
Industrial training makes a student enough aware that how where, when & up to
what extent the practical knowledge can be used to solve the problem in practice
etc.
2
ACKNOWLEDGEMENT
Through the Acknowledgement, I express my sincere gratitude towards
professors who help in the preparation of this report.
I am student of M.B.A, on the completion of my industrial training at
AUSTIN ENGINEERING CO.LTDI would like to present this report of mine.
I am thankful to Austin Engineering company Ltd., Junagadh who gave me
the permission of training at their company and all staff members & Mr. Amit
Joshi for their friendly & frank behavior & co-operation for their co-operation and
also to all those industrious who helped directly or indirectly in my training
programmed
. I cannot forgive to all M.B.A staff of Kachchh University because they
help each every stage of my life so my sincere thank to them.
“A person would never swim unless he gets in to water likewise for
knowing the market we have to get into in the practical world.”
Date: Yours faithfully
Place: (Trambadiya chirag K.)
3
GENERAL INDEX
Sr. No Particulars Page No
1 Industry Profile 5
2 Company Profile 7-17
3 Production Department 18-34
4 H.R.M Department 35-51
5 Marketing department 52-66
6 Finance Department 67-88
7 Management Information system 89
8 SWOT Analysis 90
9 Findings & Recommendation 92
10 Conclusion 93
11 Bibliography 94
4
INDUSTRY PROFILE
The Indian Bearing Industry is estimated at 30 billion rupees. There are
various types of bearings such as Ball Bearing, Taper Bearing, and Needle
Bearing. The industry has established a highly diversified product range of
bearings having high volume of demand. 70% of the total demand is being met by
domestic industries and the rest is being met from import, essentially for industrial
application and special purpose.
Bearing industry in India can be divided into three segments viz.
 Organized sector
 Unorganized sector
 Imports
The organized sector primarily caters to the OEM segment which is pre-
dominantly automotive, railway and other industrial users. The replacement market
is mainly dominated by the unorganized sector. 55% of the total sales of bearings
belong to the organized sector and about 30% is being made from import.
Till days, the industry is dominated by major players which are in the
organized sector. However, the shares of the said major players have been
declining by the entry of small players and imports into the industry. Most of the
big players are having either technical of financial collaboration with leading auto
manufacturers.
The Growth in demand for bearings depends in two key user’s segments i.e.
automobile and industrial sector growth. The automobile industry is the largest
growth driver for OEM market as it accounts for almost 45% of total bearing
market. Engineering sector which account about 28% of total share holds the
5
second growth driver. The fact of bearing industry is largely dependent on

production of vehicles and other transport systems.
Big players in Indian ball and roller bearing have been already exporting a
part of their production to develop countries like US, Europe etc. Domestic players
are already sensing the out sourcing opportunity and have initiated the process of
manufacturing a range of bearing for meeting their requirements of global
customers. The exports especially of auto bearings are likely to increase in future
with the entry of auto giants in India.
6
7
INDEX
1 Company Profile 9
2 Name & Registered office Address 10
3 Milestones 11
4 Organization Structure 13
5 Promoter’s Body 15
6 Contribution of the Unit 17
8
COMPANY PROFILE
“Austin Engineering Company Ltd” was established in 1973 by five
technocrats with initial investment of Rs 3500 US dollars in Junagadh, G.I.D.C.
area with the name of “ACCURATE ENGINEERING”.
They see better future of the ball bearing industry in India so to produce
more quantity of ball bearing & to cope up with demand of the product & to
expand unit, it converted into Private Company in 1978.
In those days, Ball bearing industry is developed very fast rate therefore to
sustain & develop the unit, it converted into public limited by issuing equity share
under the name of “Austin Engineering Company Ltd” and purchase the trade
mark '”aec” in the year 1994. AECL has established second unit, on 15 th February,
1987, which is located at Patla a village nearly 25 km away from Junagadh.
The Austin Engineering Company Ltd. is one of the leading manufacturers

of antifriction rolling bearings in India. This co. is in this field since last 37 years.
The co has developed around 4500 different sizes of bearings. Company has two
manufacturing units near Junagadh city of the Gujarat state in India viz:
 Austin Engineering Co, Ltd Patla, Junagadh (''aec”)

 Max Precision Bearings Pvt. Ltd. -Shapur Dist, Junagadh (“MAX”)
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NAME & REGISTERED OFFICE ADDRESS

NAME :- “AUSTINE ENGINEERING CO. LTD.”
ADD :- “AUSTINE ENGINEERING CO. LTD.”
Patla Taluka, Bhesan,
Via – Ranpur (Sorath)
Post: Hadmatiya – 362030
District: Junagadh (Gujarat)
India.
Phone no: - 0285 - 2680570
Fax no. :- 0285 – 2661505
E mail :- austinad1@sancharnet.com
Website :- www.aec-bearing.com
Junagadh office : - 101, GIDC Estate,
Vadal Road,
Junagadh - 362030.
Range :- Manufacturing all types of Antifriction Bearing
Capacity :- 10 mm I.D to 1800 mm O.D
10
MILESTONES
1973 :- Partnership firm formed by five technocrats started
manufacturing needle roller cage assemblies with the
manpower of 10 & capital invest of 3500 us dollars.
1974 :- Started manufacturing cylindrical roller bearing & deep groove

ball bearing up to 50 mm.
1975 :- Started manufacturing single row spherical roller bearing for

steering application TATA trucks.
1978 :- Partnership firm converted in private company limited started

manufacturing tapered roller bearing up to 100mm.
1980 :- Manufacturing capacity of all aforesaid bearing increased up to

150mm.
1985 :- Converted into public limited company and shares stocks

offered to public.
1990 :- Manufacturing increased up to 600 mm. Started Manufacturing
Large double row tapered & spherical roller bearing.
1995 :- Manufacturing capacity increased up to 800 mm.
1996 :- Started manufacturing flush ground single row bearings for

U. S. A & European markets.
1998 :- Started manufacturing four row tapered roller & multi row
cylindrical roller bearing for neck application into steel plants.
11
1999 :- Awards ISO 9001 certification from TUV Rhineland
2001 :- commenced supplies of bearing including call mill bearing to

thermal power plants.
2004 :- Established a subsidiary in the U.S.A
2006 :- Awarded ISO /TS 16949:2002 BY Rhineland.
12
ORGANIZATIONAL STRUCTURE
In any business, Organization structure plays an important role.
Organization structure is an indispensable, means for good business performance,
so it requires the organization relationship among different department and
individual working, consequently, among accomplishment of desired goals. That’s
why expert said “IF MANAGER IS THE BRAIN OF THE BUSINESS, THEN
ORGANISATION IS THE PHYSICAL STRUCTURE OF THE BUSINESS”
There are six types of organization which are as follows:
TYPES OF ORGANIZATION STRUCTURE
Line Functional Committee Matrix Line and

Organization Organization Organization Organization Staff
Organization
In Austin Engineering Company Ltd follows Line & Staff organization

because authority & responsibility flows from top to bottom & also staff helps to
the main line manager in their work. It gives all information about hoe actually
work is done.
13
14
PROMOTER’S BODY
: Board of Directors:
Mr. N.C .VADGAMA : Chairman & Executive Director
Mr. S.M. THANKI : Managing Director
Mr. R.R. BAMBHANIA : Joint Managing Director
Mr. J.R. BHOGAYTA : Executive Director
Mr. S.V. VAISHNAV : Non Executive Director
Dr. B.R.SUREJA : Non Executive Director
Mr. K. J. MEHTA : Non Executive Director
Mr. D.B. NAKUM : Non Executive Director
AUDITORS:
DHIRUBHAI DAND & CO.
Chartered Accountants
Gokul Chambers
Junagadh 362 001
COST AUDITORS:
S.B.PARIKH & CO.
Cost Accounts,
Vadodara
BANKERS:
Bank of Baroda
Azad Chowk Branch, Jnd
15
REGISTERED & TRANSFER AGENT:-

SHAREPRO SERVICE
SATAM ESTATE, 3rd FLOOR
CARDINAL GRACIOUS ROAD
ANDHRI (EAST)
MUMBAI 400 099
JUNAGADH OFFICE: -
101, G.I.D.C. ESTATE
VADAL ROAD
JUNAGADH 362 003
Website:
www.aec-bearings.com
E-mail:
Info@aecbearings.com
16
CONTRIBUTION OF THE UNIT

We know that company is manufacturing wide range of bearing .It produce
all types of ball bearing which is necessary for all types of industry. Company is
manufacturing 4,500 types of bearing which covers spherical roller, flexible roller,
cylindrical roller etc.
The AUSTIN ENGINEERING CO. is one of the leading manufacturers of

Ball and Roller Bearing in India. There are twelve top most Companies of bearing
in India. This company is going nicely at the 4th rank.
Austin offers a wide range of Bearing in Asia and i.e. 4,500types of

Bearing. The different categories of buyers include Automobiles, Defense, State
Road Transport Corporation, Steel Plant, Thermal Plant, Cement Plant, Sugar and
Paper Industries, Fan and Pump Industries and Material Handling Equipment.
17
18
INDEX
No Particulars Page no
1 Introduction 20
2 Product Range 21
3 Plant layout 22
4 Production Planning & Controlling 24
5 Raw material procurement 25
6 Production Process 26
7 Material handling system 31
8 Quality Control 33
9 Management of Industrial safety 34
19
INTRODUCTION
In all industrial units, production is the basic activity all the other activities
revolved around this activity. The production activity is nothing but the systematic
conversion of one form of materials into another either chemically or
mechanically. It enhances the utility of the products or services. E.g. a piece of
wood has no doubt, some utility. However, when it is converted in to a chair with
some mechanical processing, the utility of the material i.e. a piece of wood would
enhance substantially.
Production is the process by which goods & services are created.

-E. S. Buffa.
Now a day, therefore both goods & services fall in to the scope of
production management. It was formally considered as manufacturing mgt only.
But now after inclusion of services in to its scope, it is broadly known as
"Operation management".
Operations by formal definition are a process of changing inputs in to

outputs, with the creation or adding some value to some entity. Production
management is a decision making managerial function. The decisions are made
regarding the production processes required for converting the raw-materials into
finish goods & the production or output should be according to specifications, in
the specified quantities, as per the schedule & at minimum cost.
Thus, production department is the heart of whole the organization.
20
PRODUCT RANGE
There are varieties of bearings that are right now in existence. They can be
classified according to the size and use of it. In the world market, 20,000 types of
bearings are traded and used. Specifically AEC ltd. produces around 4,500
different types of bearings, which can be classified into two main categories.
 Ball Bearing,
 Roller Bearing.
Roller bearing can be classified into four types.

 Spherical roller bearing (SRB)
 Taper roller bearing (TRB)
 Cylindrical roller bearing (CRB)
 Needle roller bearing (NRB)
 Flexible roller bearing (FRB)
21
PLANT LAYOUT
22
Plant layout means the arrangement of departments & equipment’s with in a

factory. It is concerned with the orderly arrangement of machines, work areas &
service areas so as to obtain the maximum output at the lowest possible cost. It
involves maximum & effective utilization of resources available in a factory. After
the selection of factory site the factory building is constructed at the selected site.
TYPES OF ORGANIZATION STRUCTURE :
Process Product Hybrid Fixed

Position
The “Austin Engineering Co. Ltd.” is following process layout. Here in

this kind of layout the operation manager must organize resources around the
process. Here the centers are located in such a way that they bring flexible flow
operation.
In “Austin Engineering Co. Ltd.” this is best suitable layout because it has
to serve many different customers. More over demand level is somewhat
unpredictable for management to set aside human & capital resources exclusively
for a particular product line or type of customer.
In “Austin Engineering Co. Ltd.” the layout of the factory as a whole is
factory layout while the arrangement of various departments within factory is plant
layout.
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24
PRODUCTION PLANNING & CONTROL SYSTEM
Production planning is an essential prerequisite to production control.

Certain important decisions related to the resources required in manufacturing
operation, selection of resources to produce desired goods at appropriate time and
at least possible cost. Production control constantly keeps a watchful eye on the
production flow & use of resources along with the location of any deviation from
the preset action & to arrange for the prompt adjustment so that productivity may
run according to the original or revised schedules.
Production control co-ordinates all the production operations. It collects
relevant information about various inputs and outputs. It directs & checks the
course & progress of the work & closes the records on the completion of the work
or order.
In the AEC ltd they are following the production planning and control
system. They are performing PPAP - Production Part Approval Process that
determines the requirements of customers & checks the potentiality of the process
to produce the product as per the requirements. This process assures the total
consumer satisfaction. The responsibility is totally on the HOD of quality
assurance.
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TYPES OF RAW MATERIAL AND PROCUREMENT
The hardness of the bearings largely depends on the quality of the steel. The
best quality steel is the basic requirement of long life of bearings & that’s why
company is importing steel from USA from N. N. Ball & Roller Inc. TN 37650
USA. Other raw materials rather than these steel balls are purchase from various
other areas within India such as Mahindra & Mahindra, Indian steel Authority of
India. The stock of raw material is kept in bulk & fitness & hardness tests are made
before use. Following are the basic raw materials use for manufacturing bearings.
 Bearing Steel (SFE52100 Grade)
 Steel Balls
 Steel Rollers
 Steel Wire
 Brass Cages
 Reverts
 Steel Bars & Turber
 Oil, Fuel, Water & Electricity
 CRCA Sheet( use in cages)
26
PRODUCTION PROCESS IN AEC
Raw material purchase
Testing of raw material
Cutting & Turing of roller
Assigning Hardness to races
Grinding of Races
Facing & lapping process
Super Finishing
Pressing
Inspection & Grading
Assembling, Cleaning & Branding
27
Storage & Dispatch
1) Collection of Raw Material
Accumulation of raw material is the first and for most stage in production. In
raw material of “Austin Engineering Co. Ltd.” we can include following.
 Steel bars & tuber
 Steel wire
 Steel balls
 CRCA Sheets
 Rollers
 Tapers etc.,
For ensuring the smooth production without break, enough stock of different
raw material should be kept ensure starting from the steel bar to oil.
2) Testing of Raw Material:
The second stage of manufacturing process of “Austin Engineering Co.

Ltd.” is the testing of raw materials, which have been purchased from the different
suppliers. They are having total 68 machines as a measuring & testing instruments.
But here the raw materials are tested whether there is any defect in the material or
not quality of raw material is checked here & if there is any defect it is rejected at
this stage only to avoid future accidents. Many workers are engaged in testing the
raw materials with the use of various machines & hand meters.
3) Cutting & Turning of Rollers:
28
For producing races of the bearing the steel should be cut into pieces. These
pieces are to be made with the help of special machine i.e. “Double Disk
Machine”.
4) Assigning Hardness to Races:
Assigning hardness to races goes through four steps which are as follows
 Heat Treatment :
In Heat treatment, Material should be given heat treatment through electronic
furnace at 845 degree to 855 degree temperature. If heat treatment is not given
than it may possible that bearing would got breakage or crack in future. Here
“Temperature Control Meter” is used to manage temperature. A minor variation
will give dangerous results. In fact at the time of turning of races, rolls & rollers,
they are very soft, for giving them hardness the heat treatment is necessary.
 Oiling :
After giving heat treatment oiling must be done for smooth running of bearings &
for anticipation of friction. It is necessary for giving cool treatment.
 Cool Treatment:
For giving cool treatment the races are required to be deeped in the oil, which
gives proper hardness to it. Company is using quenching oil for this purpose.
 Hardness Test :
The hardness is assigned to the races. Now it is checked through hardness tester
machine. The hardness range is 59 to 65 HRC.
 Softening :
As the hardness test is made, with the help of “Continuous Tempering Machine”
adequate & required softness is assigned to the races.
5) Grinding of Races:
At this stage hardness is already assigned to the races & rollers. Due to this
process races are turned in to rough black materials. This operation is performed
for the following reasons.
 Giving them a particular shape, if there is any deviation.
29
 It assigns brightness to outer & inner.

 If is necessary to decrease the chances of crack in future.
Here the races & rollers are kept in to a particular machine, which is
imported from Germany. Races are passes through one kind of oil i.e. “Cutting
Oil” A constant flow of this oil is there in the machine. In this process, water is
also used. Constant rotation of water in this flow is there. This is known as
“Collant Flow”.
6) Facing & Lapping Process:
Here races are twisted round in the proper manner. This process is done
manually. If there is any mistake found by skilled workers then finishing is given
to minimize the chances of interior quality production. Here in “Austin
Engineering Co. Ltd.” there is a particular machine shop for facing the races &
rollers. It is necessary to find out any defect of formal operations.
7) Super Finishing:
Now the final material are given super finishing process in which the races
& rollers passes through mto / kerosene rotation through machine.
8) Pressing:
In this department workers press the bearings with help of different machines.
The department is having 3 or 4 machines for this process.
9) Inspection & Grading:
Now all the components of bearing are produce. The inspection department
makes final inspection. So that quality of the bearings can be assured. For that
Magnetic creak detection is done.
10) Assembling, Clearing & Branding :
Now final inspection & grading is made to all the components of bearings.
The next step is to assemble them in a proper way.
 Fixing the roller in cages.
 Fixing the cage in between inner & outer races.
30
By this way finally bearings has been produced. This stage is totally
performed manually through skilled workers only. After assembling properly the
bearings are sent for clearing and final oiling is needed. Finally bearings are sent to
the packing department. Packing is made according to the customer specification.
If the product is made for export then wooden packing is made otherwise box
packing is made. At last trade mark of the company AEC designed on the packing.
Size and quality of the bearing are also written on it.
11) Storage and Dispatch:
The finished products are stored in to the go down. The storage is done in
different package, plastic package or wooden package as per specification.
Dispatching is made as per the order of marketing department. “Bonded
Store Room” take the decisions regarding dispatch. As per the ISO and TS they
check once or twice in a year that the material stored is displaceable in future or
not. Bonded storeroom department inform the excise department about such audit
made by them.
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MATERIAL HANDLING SYSTEM
According to American Material Handling Society, “Material Handling is

the art and science involving the movement, packing & storing of substances in
any form” in any manufacturing firm after obtaining raw material from suppliers &
stored in to store room. They are issued to production department & are moved
inside the plant for further processing & convert it into a finished product. Material
handling involves the movement of materials from one place to another for the
purpose of processing. It is moved either manually or mechanically with the help
of different types of material handling equipments.
“Austin Engineering Co. Ltd.” is following particular procedure for
material handling which is as follows.
Material Handling Process:
This procedure for material handling can be used at every stage where
material is handled products are stored, packaged, preserved & delivered. The
“Austin Engineering Co. Ltd.” is following FIFO method for material handling.
The BSR supervisor, HOD quality assurance, shift engineers, assembly in charge
etc. are responsible authorities in this process.
 Handling:
Handling should be done in such a way that prevents damages &

deterioration. For all the light items, workers are assigned & manually this is done.
They may take help of trolley.
32
 Storage & Material Handling:
All the raw materials, which are received, shall be stored in stores before
issuing them to the production department. Follow the procedure of receipt storage
& issue of material. In process material movement & storage procedure should be
followed. Store all the finished bearings at Bonded Store Room.
 Packing & Material Handling :
All the finished bearings & components should be packed as per the
specification given in the packing work instruction. This is responsibility of
assembly supervisor. In RMS materials, which are to be packed, are inspected as
per plan.
 Preservation & Material Handling :
Rust preventive oil is applied to avoid rust formation in bearings. Then after
it is wrapped sealed in pouch & put it in carton. Specified shelf life material shall
be done on FIFO basis. Material beyond the specified limit should be use after
approval of HOD.
 Delivery & Material Handling :
AEC transports material or product to the customer’s premises through

approved transporter. Approve transporter includes all the supplier of the
company details of dispatch have been kept with the marketing department.
33
QUALITY CONTROL
Moreover the Company is an ISO 9001-2000 Company. It is also good at the
social responsibility. The general statement of Austin is as under:
We are committed to satisfy customer needs and expectations continuously by
 Developing and providing quality products.
 Measuring, Monitoring and improving process performance.
 Continuously improve work culture by providing adequate
training & develop good interpersonal relation.
Here, “Austin Engineering Company Ltd.” has given special attention on the
quality of the product. It is also an ISO 9001:2000 awarded company because of its
quality. Moreover, they have developed a QUALITY POLICY for better quality
control. The company is also having certain testing instruments for testing the
product at different levels. The product process includes five inspection stages
which show the company’s efforts to maintain its quality.
Different instruments are necessary for measuring accuracy of the product,
which are given below
Testing instruments:-
 Spectrometer
 Magna field crack detection
 Surface roughness tester
 Roundness tester
 Electronic comparator
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 Air gauge comparator
MANAGEMENT OF INDUSTRIAL SAFETY
In this 20th century when liberalization, privatization & globalization is at the

pick in India, the importance of human needs has been increasing rapidly. A
widespread recognition to improve working condition as well as living conditions
of the workers has been now engaged in the productive process. Certain safety
rules within the industry can also be discovered & established with the help of trial
& error method.
The main driving force behind the industrial safety movement is the fact that
accidents are expensive & preventing them can have substantial savings. The key
to a successful safety program in any in any plant whether large or small is
leadership by management. The workers should assure that the safety & security of
those with whom they work are constantly maintained properly & also they should
adopt & practice safe habits in their routine operations.
Generally AEC is not producing any life threatening products, which can
damage the life of workers performing a particular operation. No doubt they are
giving free insurance to the workers working with grinding machines. More over
fire fighting instruments are also provided at the factory site. In case of any
accident free medical services are provided to the workers.
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36
INDEX
Sr.No Particulars Page No
1 Introduction 37
2 Human Resources Planning 38
3 Recruitment, Selection & Induction 39
4 Training & Development 42
5 Time Keeping System 43
6 Wage & salary Administration 44
7 Performance Appraisal 45
8 Trade Union & industrial Relation 46
9 Dispute Management 47
10 Welfare Policy 49
11 Social Responsibility 51
37
INTRODUCTION
Employees hold a key place in business. No business enterprise can exist
and function without employees. The success of business enterprise depends to a
large extent on the quality of its human resources.
To achieve the organizational objectives, it is necessary to coordinate the
resources of the organization, i.e., four important resources, which are, man,
money, material and machinery. Among all these, man is of extreme importance
because it is like the driver of a vehicle. A vehicle is of no use until it is driven by
someone. Just like this, machines, materials, and money are of no use until they are
coordinated by man. It is also of paramount importance in the success of any
organization because most of the problems in the organizational settings are of
human and social rather than physical, technical or economic.
The management must therefore be aware not only of the organizational
needs but also of employee needs. The management of “men” is very important
and challenging job, important because it is a job, not of managing “men” but of
administering a social system. The management of men is a challenging task
because of the dynamic nature of people.
.
38
HUMAN RESOURCE PLANNING

In an organization future demand of manpower is forecasted in the HR
planning. The word itself says that proper planning of human resource that is
available. The future demand for & supply of the right type of people at the right
place & in the right number is possible only through HR planning. It includes the
estimation of how many qualifies people are necessary to carry out the assigned
activities, how many people will be available & what, if anything, must be done to
ensure that
Assigning current Manpower Requirement
Forecasting Future Needs
Projecting Supply of Future H.R
Compare Forecast with Supply
Framing H.R Policies
Evaluating H.R. Program
39
CLASSIFICATION OF EMPLOYEES
Sr. No Description Employees
01 Office & Administration 131

02 Quality Assurance 70
03 Direct manufacturing 200
04 Indirect Manufacturing 199
05 Engineers 35
06 Supervisors 20
Total 655
40
RECRUITMENT, SELECTION & INDUCTION
 Recruitment
After HR planning the next logical step is to hire right number of people of
the right type to fill jobs. Hiring involves two broad groups of activity,
Recruitment & Selection. Employees are the lifeblood of any organization. We can
even imagine any organization without manpower .For that recruitment is
necessary
They key requirement policies are:
 Use of internal sources of recruitment of bottom level management .On the
basis of performance along with experience, operative level persons is
promoted to upper levels.
 The friends, relatives & children of the employees for jobs are appointed in
lower or middle levels.
 Merit system with enough experience is preferred at the official level
recruitment ignoring recommendation & relation.
In AEC Ltd company believes in internal recruitment process because it is

less costly. More over organization has better knowledge about the internal
candidate & it will encourage employees & provide them motivation to work
more efficiently to the organization. Nevertheless, sometime company is unable to
find certain extra qualified workers within the organization so it has go for
external recruitment. AECL gives advertisement in the newspaper like Indian
Express, Times of India & local news paper.
 Selection
Selection is the process of picking individual out of the pool of the
applicants with requisite qualification & competences to fill jobs in the
organization. It is concerning with securing relevant information about an
applicant. The most qualified person to perform a particular job is selected here
41
In AECL company prefers both methods of selection (Participative selection

& Employees leasing) as per the prevailing circumstances. It believes in a careful
selection, which helps an organization to avoid unnecessary cost.
 Induction
Induction is nothing but crate familiarity with the organization. After
selection generally employee has put on a probation period, which is ranging from
six month to one year, after that his employment may be conformed, during this
period his work has been found to be satisfactory
In AECL, also induction procedure has followed. Here worker needs a short
& simple induction by someone who speaks his own language.
42
TRAINING & DEVELOPMENT

In this highly automotive era, it becomes difficult for the organisation to
maintain their work force for a long time. Workers must train to operate
machines ,reduce scrap and avoid accidents. Not only workers need trsinning but
supervisers, managers& executives also need training to enable them to grow and
acquire maturity of thought & action.
 On the job To the workers
 Off the job To the Supervisors
In AECL,Employees are given the freedom to continuously improve their

skills.They most probably select trained & experined employees only but in case
of fresh candidates, the senior officer provides training on the job. In case of
middle level employees are providing apperntice training and at the top
level,seminars and conference are to be held for better results. Sometimes group
disscussion is also arranged for particular problem.
43
TIME KEEPING SYSTEM

Time keeping system means how many shifts are there in one day in a
particular company. Time keeping system is much more important in controlling
the organization.
The purpose of time system is to established control and facilitated
employees discipline. Now a day’s company is using time keeping system so that
the arrival and departure can make easily.
In “Austin Engineering Company Limited”, there are 655 workers. For a
time keeping, there is a card system. Every employee has given a card having none
of the person’s photo and serial number on that card, timing is also written. Time
keeping officer notes the coming and going time out of the company.
This company is working throughout 24 hours a day. The working hours are
divided in to 3 shifts. Every worker is work to 8 hours in the day. Overtime system
is available in this company
Company’s plant runs in 3 shifts, timings of which are as under:
Time keeping system:
Sr. No. Shift Time Working Recess time

hours
1 1st 06.00am to 02.00pm 8 12.00pm to 12.30pm
2 2nd 02.00pm to 10.00pm 8 06.00pm to 06.30pm
3 3rd 10.00pm to 06.00am 8 03.00am to 03.30pm
4 General 08.00am to 04.30pm 8 12.00pm to 12.00pm
44
WAGE & SALARY ADMINISTRATION

"Every company has want to maintained the wage & salary structure" But
Austin Engineering Company has also paid to wage & salary of each & every
employee & workers in to as per as the rules and regulation of Indian Government.
In AECL, salary is fixed. In "AEC" 655 workers and so many employees
are working. "AEC" paid the wages at a every month on 7th or 8th date. A ready
slip is given to employee who contains the data regarding salary. It contains total
wages, income tax amount, PPI scheme, Provident fund Scheme are deducted. If
any worker has taken installment and it is also deducted from it this slip shows net
amount of payable salary. And this amount paid immediately paid down to workers
in cash.
Benefit of Wages & salary Administration.
 It will be increased of employee’s motivation & moral because wage
program can be explained and based upon facts.
 It attracts qualified employees ensuring adequate payments for all the jobs.
45
PERFORMANCE APPRISAL
Performance apprisal is the processof eveluating an employee’s performance
of a job in terms of its rquirements. After selection, placements,training etc process
are completed the performance of the employee is evaluated.
In AECL ,Modern method of performance apprisal i.e Management by

Objectives has follwed. Performance is apprised by efficiency, which is calculated
yearly.It provides best information in case of promotion ,transfer etc. In this
company certain special forms are given to the employees & apprisal is done on
the basis of the above three criteria such as
 Production
 Attendance
 Attitude
46
TRADE UNIONS & INDUSTRIAL RELATION

Trade Unions are not confined to mere striking and negotiating on the behalf
of workers. Their role is very much wider. Unions, for example may make their
presence felt in Recruitment and Selection. They may also decide who is to be
hired and under what condition. Unions can also play on important who is to be
promoted, given a new assignment, sent for training, terminated or laid off. Trade
Unions are voluntary organization of workers or employees formed to promote and
protect their interests.
Thus a trade union must be:
 A combination of workers and employees

 Complimentary procedure related to trade union is completed
 Those who become member of the union, he should pay membership fees
 Main aim is to maintain healthy relation between workers & management
In AECL all the workers are not satisfied with the management and thus
there formed Trade union under name of Austin Engineering Co. Ltd. Any dispute
or grievance on the part of employees is managed by mutual understanding.
AECL has maintained very good industrial relation between management

and workers. However if any problem arises at that time manager of the company
solves it. The workers are highly satisfied with the facilities provided to them by
the company.
47
DISPUTE MANAGEMENT
According to industrial disputes act, 1947 industrial dispute means any

dispute or difference between employers & employees or between employers &
work man or between work man & work man, which is connected with the
employment or non employment or terms of employment or with the condition of
labor of any person. In AECL, Two methods are mainly used to manage the
dispute, which are as under.
a) Collective Bargaining
Collective bargaining is the most effective method of resolving the disputes.
Here representative of a labor union meet management representative to determine
employee's wages & benefits, to create or revise work rules & to resolve disputes
or violations of the labor contract. The best plus point of this method is it benefits
both employees as well as employers. The basic interest of management has
protected and at the same time, rights of the employees has protected too.
In this company, there are two main criteria in which employees'

participation is inevitable i.e. salary & wage and bonus. Here there is a committee
of five employees who are the representative of all the employees working in AEC
ltd. they sign the agreement between employers & employees. All the other
employees of unit do ratification of the agreement. The signature of newcomer has
also taken on this agreement & finally it transfers in to one type of contract.
With the help of collective bargaining & agreement company decided to

give 20 % bonus to the employees every year on Diwali. The attitude of
management towards employees is really kind & supportive. They are always
ready to hear the complaints & suggestions from the employee side.
48
b) Grievance Handling Procedure:

A grievance may be understood as an employee's dissatisfaction or feeling
of personal injustice relating to his or her employment relationship. Generally,
violation of any law, rule, and safety standards may give rise to grievance in the
mind of employees. Grievance handling is a code of discipline adopted by 26th
section of Indian labor act 1959 recommended by national commission of labor.
“Grievance is a written complaint filed by employee claiming unfair

treatment”
In AEC ltd the shareholders/investors Grievance Committee was constituted

to look into the redress of shareholders/investors grievances, if any, like transfer or
transmission or demit of shares, loss of shares certificate, non-receipt of Annual
Report, Dividends etc. The committee oversees the performance of the Registrar.
49
WELFARE POLICY
Welfare means faring or doing well. It is a comprehensive term & refers to
the physical, mental, moral & emotional well being of an individual. A welfare
facility tends to make the worker happy, cheerful & confidant looking. Therefore,
the welfare policy of the company must be attractive & satisfactory. AEC ltd also
adopted a strong welfare policy for the employees working under the company,
which are as follows.
In AEC ltd I have observed a very good & healthy environment at the work
place. Cleanliness at the workplace is highly appreciable. The housekeeping of
factory i.e. compound wall, lawns, gardens, etc are up to the mark. Employees can
take their lunch in a natural environment. One particular notice is providing at each
machine so in case of absent of one authorize person any one can handle machine
properly & safely.
Conveniences:
 Urinals & lavatories, washbasin, bathrooms, provision for spittoons, waste
disposal...
 Provision of drinking water, water coolers...
 Canteen services, full meal...
Worker's health services:
In case of emergency, aid has provided medical examination of workers &
health education is provided to the workers.
Economic facility
 Medical facility
The AEC ltd has its own clinic with the staff of doctors, which provides
services to the employees & their families
Bonus
Bonus has provided to each & every employees of the company at 20 %
once in a year.
Loan:
Loan up to Rs.20000 has granted to the workers, which are interest free, & it
has deducted from salary in installments over a period.
50
Provident fund scheme:

The employee's provident fund & family pension act 1952 mention that it is
applicable to those companies where more than 20 workers are working.
In AEC ltd 24 % is providing as a provident fund to its employees. In which
12 % has deducted from the salary while the company provides other 12 %. One
another scheme i.e. "family provident fund" is also there. If any employee dies
during the working hours, his family members can get 8.33 % of employee's salary
after his death. Furthermore, any employee can get loan from provident fund with
payment of interest. The amount of loan has deducted from the salary of employee
in installment.
Transport facility:
The AEC ltd is located at Patla, which is 25 km away from proper Junagadh.
Most of the employees of the company belong to Junagadh. Therefore, company
provides bus facility
Other facility
Company gives holiday to the entire employee once in a week i.e. on Friday. A
free telephone facility to higher-level employees has also provided. Following
other facilities are also provided by the company to their employees.
 Sickness benefits
 Medical benefits
 Maternity benefits
 Disability benefits
 Funeral benefits.
51
SOCIAL RESPONSIBILITY
As each & every company has certain responsibility towards the society.
Because company gets input from the society and gives output to the society only.
Therefore, they have to think about society as a whole.
Towards society:
 They could not polluted the water of the residential area around the plant
 Health & safety of the society people of that area must be taken into account
by the company.
 In March 2005 they have manage a free checkup camp for “Vyasan Mukti”
at Bhutnath Temple not only for Austin employees but also for other people
too. The seminar was of 2 days that helps people how to get freedom from
their addiction.
 More over company provides a kind response to the trainees like me. They
are so supporting to the students coming to them for getting the experience if
real world.
52
53
INDEX
1 Introduction 54
2 Product Mix 55
3 Product life Cycle 57
4 Branding,Packing& Positioning 58
5 Market Segementation 60
6 Pricing policy 61
7 Promotion Mix 62
8 Channle Management 64
9 Intenational Marketing 65
10 Competition land Scape 66
54
INTODUCTION
Globalization, Technological advances & deregulation spell endless
opportunities in the market. Marketing means meeting needs profitably. One
saying is there, “The future isn't ahead of us it had already happened.”
Marketing deals with future. To convert societal needs in to profitable
opportunities is marketing. For that forecasting of the needs is at the base.
Marketing deals with customer. Customer satisfaction is must for successful
marketing. Marketing has typically seen as the task of creating, promoting &
developing goods & services to consumer & businesses.
According to W.J. Stanton, Market is the place where manufacturer / seller
and buyers come to exchange their goods and money respectively. In that sense,
market bridges the gap between production and consumption, or more precisely it
fills the gap between the place of production and the place of consumption.
However, the term marketing is very vast in its scope. It involves a series of
functions that can satisfy consumer needs and deliver standard of living.
In the words of Kotler, “Marketing involves a set of human activities,
directed at facilitating exchange products and services with some value.”
A firm cannot survive in the market with the tradition concept of sales.
Today’s market is customer oriented and customer is king. A firm cannot get
succeeded if it is unable to meet the expectation of the consumers. In light of this
philosophy, we will analyze the marketing practice and strategy philosophy; we
will analyze the marketing practice and strategy of AECL.
55
PRODUCT MIX
Product mix can be described as the entire range of products of a company
for sale. Product mix need not consist of related products the products mix of a
company has four main characteristics
 Width
 Depth
 Consistency
 Length
“Austin Engineering Co. Ltd.” the entire product mix consists of 4500
items which can be segregated in to two main aspects based on their uses.
 Automobile bearings
 Industrial bearings
Product Mix
A decision concerning product mix is the major aspect in marketing
management. Product mix is the set of all products and items that a particular seller
offers for sales. Product mix is also known as product assortment it includes
following four items i.e. Length, width, depth and consistency.
 Product Mix Length:
The length of a product mix refers to the total number of items in the mix the
“Austin Engineering Co. Ltd.” is producing near about 4500 types of bearings
products.
 Product Mix Width:
The width of a product mix refers to how many different lines the company
carriers here in “Austin Engineering Co. Ltd.” number or product line are only
one because it produces only one bearings of different types. The product line is
56
one i.e. ball bearing so width of the product mix of “Austin Engineering Co.
Ltd.” is one
 Product Mix Depth :
The depth of product mix refers to how many varieties were offered of each
product in the line. “Austin Engineering Co. Ltd.” has organization one product
line which offers five types of product.
 Needle Roller Bearing.
 Spherical Roller Bearing
 Cylindrical Roller Bearing
 Tapper Roller Bearing.
 Flexible Roller Bearing
 Product Mix Consistency:
The consistency of the product mix refers to how closely various product
lines are related to each other in the end use. In “Austin Engineering Co. Ltd.”
the product is industrial nature so consistency is there.
57
PRODUCT LIFE CYCLE

Today is not like yesterday & tomorrow will be different
From today so continuing today’s strategy is risky
So is turning to a new strategy
Each & every product is having their life cycle. At each step of life cycle
they are having different strategic. Means marketing mix differs at each stage of
life cycle. To stay in this competitive era few changes in price, packaging,
strategy.... etc is acceptable for that you have to do yours as well as competitor's
swot analysis, product life cycle is a fool to analyze the strength & weakness is as
well as opportunities & threats of competitor’s product. In fact, product life cycle
gives the sells revenue and profit margins history of product over a period.
The product of AEC ltd is now at growth stage. It is an industrial product
and is having a continuous demand.
58
BRANDING, PACKAGING& POSITIONING

 Branding
A brand is name, sign, symbol or a combination of them, which is intended

to identify the goods or services of one seller from those of competitors. Branding
is a strategy to make individual product distinctive.
Branding can add value to a product and is therefore an intrinsic aspect of
product strategy.
A brand is essentially a seller's promise to consistently deliver a specific set
of features, benefits & services to the buyers. The seller has granted exclusive
rights to the use of the brand name. The best brand conveys the warranty of
quality. AEC ltd has chosen the brand name " aec” that is recognized by
government. The brand name of the company is international brand. The symbol of
company's trademark brand is,
Thus, the trademark is the essential legal term, which protects the rights of
manufactures to use the brand name.
 Packaging
59
The AEC ltd is very conscious about packing & labeling functions. As
company is producing different type of bearings, it needs different packaging
materials too. Company is having a separate division for packing & labeling.
Labeling is the next step to packing. Labeling implies putting identification marks
as labels on the packing. A label provides useful information about product, brand
name, address of producer & dealer, weight & measurement of the product, date of
packing & expiry, maximum retail price, ...etc.
For proper packing first, all the bearings from different manufacturing
department are keeping to gather & wash it properly. Then oiling process is
performed to prevent friction at last they are packed in an attractive paper boxes.
The colors of these boxes are kept as per the customer specification. All this
process is performed in a separate air-conditioned room which is called assembling
department.
 Positioning
A product can only enjoy a strong position in the market by fulfilling customer
needs to their best.
As we analyze AEC ltd, it had established such a product policy that
produces best product with higher efficiency & greater profitability. However,
company is having stable sales in the market still its product has capture a strong
position in the bearing market as a whole. The main reason behind it, is that the
company is providing strong and durable bearing at a reasonable price & as per
customer specification. Company is not just concentrating on bulk orders; it
satisfies the need of small purchasers too. Company provides wide range of
products. Therefore, customer is having a full confidence & trust on company's
goodwill.
60
MARKET SEGMENTATION
Market consists of buyers, and buyers differ in one or more respects. They
may differ in their wants, purchasing power, geographical locations, buying
attitudes and buying practices. Any of the variables can be used to segment a
market.
It is a process of dividing the total market for goods and services into small
groups, such that the members of each group are similar with respect to factors that
influence demand. It is a strategy of ‘divide and conquer’ i.e. dicing market in
order to conquer them. Its philosophy is something for everybody within
practicable limits. It enables the market to give better attention to the selection of
the customer and offer an appropriate marketing mix for each segment for a group
of buyers having homogeneous demand.
In Austin, they have selected target market to satisfy the wants of customers. They
have divided the target market in different division.
 Indian defense department
 Steel plants and steel rolling mills
 Textile machinery manufactures
 Power plants
 Automotive industries
 Indian railways
 Process industries
 State toad transport undertakings throughout India
 Overseas customer in the USA, the UK. EU nations etc.
 Replacement market/after market
61
PRICING POLICY
Price refers to the value of the product in terms of money. Price is equally
important to both consumer as well as sellers. Pricing decision is a very critical
decision. Company reserves the pricing issue by selecting the best pricing policy or
method. For getting secure profit, sound-pricing policy is needed. AEC Ltd. fixes
its prices at prevailing market rates.
Method of pricing policy:
 Cost plus Pricing Method
 Going Rate Pricing Method
 Target Return Pricing Method
 Demand & Supply Approach
As we all know that AEC Ltd. is one of the top level cos. in India for
bearing's production. The company is following cost plus pricing method for
deciding the price of the products. This method is based on production cost per unit
i.e. going to be priced in open market and also add selling expenses and other
additional margin of profit. For determining sales price, four basic items are
needed i.e. cost of production, selling expenses, interest and depreciation and profit
margin.
This method decides price that is nearer to the existing market price.
Sometimes company also fixes prices according to demand and supply approach.
The demand of company's bearing in the market is very high because they provide
specialized products and government restrictions are also less in comparison to
others
62
PROMOTION MIX
There are following four elements of promotion mix, which are equally
important to analyze before deciding promotion mix of any product. All these
elements should be properly analyzed. It should decide up on for getting an
effective promotion mix. It includes decisions relating to advertising, budget, and
timing of sales promotion efforts training & development of the employees,
publicity campaign timing etc.
Element of promotion Mix
 Advertisement:
Austin Company is the leading manufacturing company of bearing and as it

has selected OEM as a market segment therefore company need not to require
advertising its product foe selling in market. But just for information they used as
advertisement so, Austin company always prefer “press” as a media on the basis
of nature of products.
 Publicity:
63
According in Austin always accept any sponsorship of cultural programs

imagination of sports like cricket tournament etc.to get publicity.Accoding to them
good & favorable publicity can provide you lots of benefits.
 Sales promotion:
According to sales department, they use sales promotion, as it is one of the

effective marketing efforts, which stimulates the consumer purchasing and dealer’s
coupon public display etc.
Austin Company gives sales promotion at consumer level and dealer level.
 Personal selling
According to the marketing manager, salesman must know technical

knowledge of product, communication skill, grater personality knowledge
regarding customer and many other things are the good quality of good salesman.
In Austin company salesman is recruited through advertising. Salesman are
rewarded by salary through they are not paid commission.
64
CHANNEL MANAGEMENT
Company should adopt current trend to distribute its product. The channel
management must be effective enough to run smoothly in the market for the
product. Channel management is related with the way through which goods &
services flow or move from producer to consumer. It includes decisions regarding
how to make available the finished product to the final consumer from
manufacturer.
To provide the product to the customer with the least number of transactions,
distribution channel is must. Every producer wants that his product is reach to the
customer in a most smooth & speedy way. For that distribution channel plays a
vital role. There are two types of channels, which is as below.
 Direct Channel :
Direct channel distributes the goods & services from factory to consumer
directly. To stay in to competition this company uses direct channel for quick
delivery. Company has made direct contract with AISTRU (All India state
transportation road undertake), Indian defense, Voltas, Godrej, etc.
 Indirect Channel :
In indirect channel, Company uses middleman for the distribution of
product. Intermediary is a connecting link between manufacturer and consumer.
As AEC ltd is having both type of consumer i.e. industrial buyers & general
buyers, it has adopted combination of both direct & indirect channel. For industrial
buyers they uses direct channel & for general buyers they uses indirect channel of
65
distribution.
INTERNATIONAL MARKETING
Because of globalization, the international marketing has now become
important for any business. International marketing makes the product of the
company world class and this affects the goodwill of the company positively. It is
also important from the view point of government because international marketing
attracts the foreign customers and earns valuable foreign exchange.
Austin has given importance to international marketing by which they have

created and are maintaining the customers worldwide. They have established
branches for marketing in Italy and U.S.A. The countries in which they are having
export customers are:
 Italy
 U.S.A.
 U.A.E.
 Sri Lanka
 New Zealand
By international marketing, the company faces international competition
and so the product is more qualitative as compared to other domestic producers.
The company exports 50 % of its total production, which earns valuable foreign
exchange.
66
COMPETITION LAND SCAPE

In this global & technical era, we should hardly find any sector without
competitors. Competition is at the center of any organization’s growth. It is
competition only, which encourages the owner to improve their product more than
the competitors.
There is a well-known term “Core Competency” means to do or to perform
better then the competitors not only in terms of product but also in its packaging,
marketing; etc., also. The “Austin Engineering Co. Ltd.” believes in this concept. It
provides always better than their competitors.
“Austin Engineering Co. Ltd.” is the only company that provides wide range
product even in less quantity with variety. All the other companies accept order in
bulk but “Austin Engineering Co. Ltd.” also concentrates on small purchases too.
So, it has no any direct competitors. Nevertheless, the lists of major competitors
are as under. Among which China market is one of the major influence of this
company.
 NBC
 TIMKEN
 CHINA MARKET
67
 FAG
68
INDEX

1 Introduction 69
69
2 Sources of capital 70
3 Capitalization 71
4 Capital Budgeting 73
5 Capital Structure 74
6 Leverage Analysis 76
7 Working Capital Management 78
8 Financial Appraisal Ratio 81
9 Dividend Policy 85
10 Profitability analysis 86
INTRODUCTION
70
As human body is impossible to survive without oxygen, an organization

needs proper finance to survive in this competitive business era. Finance is the
base for building an effective & incompatible organization. Without base, we
cannot build a building similarly without finance we cannot imagine future of any
business organization.
Financial management is concern with the efficient use of an important
economic resource namely, capital funds.
From above definition, we can understand that financial management
involves, rising of funds & their effective utilization keeping in view the overall
objectives of the firm. This requires great caution & wisdom on the part of
management.
Austin Engineering Company Limited has a separate department for
financial management. It uses various financial techniques & devices for
administrating the financial affairs of the firm in the most effective & efficient
way. Therefore we can say that financial management is the entire gamut of
managerial efforts devoted to the management of finances both its sources and uses
of the firm. Detail information about financial department of AEC ltd is mentioned
in this section.
SOURCES OF FINANCE
71
Financial management involves the three important areas:

 Investment Decision
 Financing Decision
 Dividend Policy
Among them, the investment decision is the first step to be taken up by the
owners. This involves the decisions regarding the procurement of funds. So it is
necessary to study the different sources of finance available. This decides the cost
of capital. So the sources you select to procure the funds should be such that they
would minimize the cost of capital. The terms and conditions of different
institutions should be studied and compared while taking the decision about
borrowed capital. The balance between owned and borrowed capital should also be
kept in mind at that time.
At the initial stage of business firm, generally capital is brought by the
owner and some outside institutions, banks etc. But when the business starts
growing, the reinvestment of profits becomes also an important source of capital.
Here, Austin is a public limited company. So it is having share capital as a
major source of finance. Some borrowed capital is also brought in the company.
Moreover, now the retained earnings have also become an important source of
finance for the company. The sources of finance are as under:
 Equity Share Capital
 Bank of Baroda
 ICICI Bank
 Retained earnings
CAPITALISATION
72
The word capitalization comes from the word “capital”. Capitalization

simply means valuation of the capital and will include owner’s funds, surplus
earnings. The valuation of the capital depends upon the earnings of the company.
The total capital that is invested in the asset of the company should be justified by
its expected earnings. A company is expected to earn at least that much, while
similar to other in the same industry are earning. Thus the rate of earning of the
company should be similar to the other companies in the industry. There are three
possible situations.
1) Fair Capitalization
2) Over Capitalization
3) Under Capitalization.
 Fair Capitalization:
The company’s capitalization is found fair earning of the unit is same

to the capital employed i.e. Earning = Capital Employed.
 Under Capitalization:
The company’s capitalization is found under when the earning of the

unit is greater than capital employed i.e. Earning > Capital Employed.
 Over Capitalization:
Company can be said to be over capitalized when the company‘s

earnings are less than capital employed i.e. Earning < Capital
Employed.
 Book Value of the share
73
= Equity share capital + Reserve and Surplus

Total number of equity shares
 Real value of share
= Net profit
Number of equity shares
 Earnings per share of AECL
= Net profit
No. of shares
Calculation of book value:-

34,778,000 + 367,104,781
= --------------------------------------
34, 778, 00
= 115.56
Calculation of real value of share:
74,567,062
= --------------------
34, 778, 00
= 21.44
CAPITAL BUDGETING
74
Capital budgeting is a tool for managing fixed assets of the company.

Capital budgeting the most important & most crucial decision on the part of firm.
Because they are related to the fix asset of the company that directly affects the
profitability of the firm. It is the responsibility of firm to invest in most effective
long term activities which in turn gives expected cash flow in future. Capital
budgeting is related with fix asset, but obvious it is long-term decision & more
risky. Every business organization should believe in one thing i.e. Higher the risk,
higher the return.
In AEC ltd Company using "Payback Period Method" for evaluating the
investment proposals come to them.
Original Investment
Payback Period = ————————
Annual Cash Flow
Review of latest capital project:
The AEC ltd has occupy an important place in the present bearing industry
due to one reason it does not produce in bulk only but it produces wide range of
products according to customer demand. At present not even, a single company
produces such a wide range of products as Austin has. For that company has
adopted German Technology & machineries are also imported from Germany.
Recently company has purchased a new CNG machine for grinding process
of racks & roads. This is the latest machine of German Technology, which
produces bearing more in quantity & better in quality. As company works in this
project, it would not prefer to enter in any other project right now.
CAPITAL STRUCTURE
75
The work of manager does not get over by merely arranging for finance.
Their task is to select best mixture of various sources of funds, which makes a
particular structure that is known as capital structure. An improper capital structure
leads to failure of an organization. Without a balanced capital structure, various
kinds of management techniques are useless. It affects the financial liquidity, rate
of dividend & capacity of raising finance in future of any company.
Financial structure is a very broad term in comparison of capital structure

because it consists of both long term as well as short-term funds but capital
structure is the narrow term as it consist of only long term funds. It is one kind of
permanent financing. Thus, we can say that company's capital structure is only a
part of financial structure.
 Capital Structure of AEC Ltd.
Particular Amt
Authorized capital 34,778,000
34,77,800 equality shares (Rs. 10)
Reserve & surplus 367,104,781
Loan Fund:
Secured loan 93,064,494
Debt Equity Ratio:

Total long-term debt
Debt equity ratio = ------------------------
Shareholder’s funds
135,446,117
76
2008 -2009 = -------------

339,311,333
= 0.39
93,064,494
2009-2010 = -------------
401,882,781
= 0.23
Proprietary Ratio:
Shareholder’s Fund
Proprietary ratio = -----------------------
Total Assets
339,311,333
2008-09 = --------------
698,055,831
= 0.486
401,882,781
2009-10 = --------------
678,351,780
= 0.59
77
LEVERAGE ANALYSIS
The term leverage refers to the ability of the firm in employing long term
funds having a fixed cost to enhance returns to the owners. There are three types of
leverage which an explained below.
 Financial Leverage:
In simple words, we can say that financial leverage means percentage return
on equity percentage return on capitalization.
EBIT
DFL = ----------
EBT
Degree of Financial Leverage in AEC ltd
Particulars 2008-09 2009-10

EBT 117,657,787 64,980,698
+INTEREST 19,277,295 10,277,336
EBIT 136,935,082 75,258,034
136,935,082 75,258,034
2008-2009 = ------------------ 2009-2010 = ------------------
117,657,787 64,980,698
= 1.16 = 1.158
78
Operating Leverage:
The operating leverage may be defined as the ability to use the fixed
operating cost to magnify the effect of change in sales on its operating profit.
Operating leverage refers to the operation of activities of firm. In short operating
leverage occurs where a firm has fixed operating cost.
Contribution OR Contribution
DOL = ------------------- ----------------
Operating profit EBIT
% Change in EBIT
DOL = -----------------------
% Change in sales
EBIT in 09-10 -EBIT in 08-09

= -------------------------------------
Sales in 09-10 - Sales in 08-09
75,258,034 -136,935,082
= ----------------------------
688,623,368 – 843,295,105
= - 61,677,048
------------------
- 154,671,737
= 0.39
79
WORKING CAPITAL MANAGEMENT

Working capital is what makes a company work. It is just not possible to
carry on the business with only fixed assets. Working capital is must. In adequacy
of working capital chocks any business to death. Working capital is also called as
"circulating capital" it is that pail of capital, which is require to purchase current
assets i.e. to meet regular & recurring needs of a business firm like rent,
advertising, power & so on.
A sound working capital management policy is one which ensures "Higher

profitability & proper liquidity." The goal of working capital management is to
ensure that the firm is able to continue its operations and that it has sufficient cash
flow to satisfy both "Maturing short term debt & upcoming operational expenses"
In AEC ltd the position of current assets & current liabilities is as follow.
Particular 2008-09 2009-10

Current assets
Inventories 285,516,305 254,321,914
Sundry debtors 164,825,535 151,569,700
Cash & bank balance 19,178,538 64,391,467

Loans & Advances 64,582,047 54,261,808
534,102,425 524,544,889
Current liability
Liabilities 169,730,997 132,349,343
Provision 45,724,425 43,789,818
80
Net working capital = Current assets - Current liabilities
2008 - 09 = 534,102,425 – 215,455,422
= 318,647,003
2009 - 10 = 524,544,889 – 176,139,161
= 348,405,728
 Operating Cycle :
Operating cycle means days require converting raw material in to finish

goods. The managers have to maintain easily convertible finance. Each current
asset is swiftly transformed into other asset forms. For instance, cash is used for
acquiring raw material which is transfer to finish goods, which are sold &
converted in to account receivable and finally in to cash. Operating cycle in AEC
ltd is as under
In any manufacturing company like AEC ltd, the operating cycle considers
length of time necessary to complete the above events of operating cycle. In this
company raw material is converted in to finished goods within 60 days.
 Receivable Management:
Receivable means the amount to be receivable when goods are sold on
credit. This amount is known as "Trade Debtors" or "Account Receivables."
Though receivables are assets, it involves risk of receiving money in future. In
this highly competitive globalize market, no firm can exist without credit sales
which blocks the money that may receive in future. Until that time manager has to
81
arrange for funds by incurring debt or issuing equity shares, which include
opportunity cost. Therefore, credit sales have become the life blood of modem day
business.
So its management requires a great caution. Management of receivable

forms an important part of current assets. In country like the one India 1/3 of
current assets comprises of receivables & an improper management of it may
harem the profitability. AEC ltd provides a credit facility for a period of 45 to 60
days to retailers & buyers while for new customer it is of 30 days.
Debtors x Days in year

Average Collective Ratio = ---------------------------
Sales
164,825,535 x 365
2008-09 = ---------------------
843,295,105
= 71 Days
151,569,700 x 365
2009 -10 = ---------------------
688,623,368
= 80 Days
82
FINANCIAL APPRAISAL RATIOS

Current Ratio:-
Current Assets
Current Ratio = ---------------------
Current Liabilities
534,102,047
2008-09 = -----------------
215,102,422
= 2.48 Times
524,544,889
2009-10 = -----------------
176,139,161
= 2.97 Times
Quick Ratio:-
Liquid Assets
Quick Ratio = ---------------------
Liquid Liabilities
83
248,586,120
2008-09 = -----------------
215,455,422
= 1.15 Times
270,222,975
2009-10 = -----------------
176,139,161
= 1.53Times
Current Assets to Fixed Assets Ratio:-

Current Assets
Current Assets to fix asset Ratio = ------------------
Fixed Assets
534,102,047
2008-09 = -----------------
344,313,546
= 1.55 Times
524,544,889
2009-10 = ----------------
351,811,992
84
= 1.49Times
Working Capital to Turn Over Ratio:-
Net Sales
Working to Turn Over Ratio = --------------------
Working Capital
816,295,105
2008-09 = --------------
534,102,425
= 1.52Times
669,249,073
2009-10 = --------------
524,544,889
= 1.27 Times
85
Earning For Share:
Earnings per Share = Profit after Tax – Preference Dividend
No. of equity Shares
2008 - 09 = 52,647,097 – nil
35, 11,250
= 14.99 Rs
2009 - 10 = 71,507,713 – nil
34, 77,800
= 20.56 Rs
86
DIVIDEND POLICY
Dividend is a term that refers to that part of a profit of a company, which is
distributed by the company among its shareholders. It is one kind of reward for
shareholders for the investment made by them in the shares of a company. The
investors are interested in earning the maximum return on their investment &
maximize the wealth. A company on the other hand needs to provide funds to
finance its long-term growth.
If company pays out a dividend most of what it earns, then for the other
business requirement & further expansion it will have to depend up on outside
resources such as issue of new share or depth. Thus, dividend policy of a firm
affects both long-term financing & wealth of the shareholders, since dividend is the
right of shareholders. In return of their investment in the share capital of a
company they ask for participation in the profit & sir plus of company.
 Regular Dividend
 Stable Dividend
 Traditional Dividend
 No Dividend
The Austin Engineering Company Limited does not follow any dividend policy.
Austin believes in conservative money for future expansion currently they declare
1.5 rupees per share.
87
PROFITABILITY ANALYSIS
One of the major measurement instruments for operational performance of
the business is profitability analysis. It indicates whether the firm is performing its
operations effectively or not. If these operations are not performing properly, it
will lead to the low profit. All this happens due to the lack of control over
expenses. The stakeholders like Bankers, Financial institutions & Creditors are the
major concern parties with profitability ratios of any company it is the only
indicator which revels the information about whether company earns adequate
profit enough to pay interest of borrowed capital or not.
Net Profit Ratio:
Net Profit
Net Profit Ratio = ------------------- x 100
Sales
52,647,097
2008-09 = ---------------- x 100
843,295,105
= 6.24 %
88
Net Profit
Net Profit Ratio = -------------- x 100
Sales
71,507,713
2009-10 = ----------------- x 100
688,623,368
= 10.53 %
Operating Ratio:
Sales - Net Profit

Operating Ratio = ------------------------ x 100
Sales
843,295,105- 52,647,097
2008-09 = -------------------------------- x 100
843,295,105
= 93.75%
688,623,368- 71,507,713
2009-10 = -------------------------------- x 100
688,623,368
89
= 89.61%
Return on Share Holder’s Funds
Profit after Tax

Return on Share Holder’s Funds = ------------------------- x 100
Shareholder’s Funds
52,647,097
2008-09 = ---------------- x 100
339,311,333
= 16.39%
71,507,713
2009-10 = ---------------- x 100
401,882,781
= 20.77%
90
MANAGEMENT INFORMATION SYSTEM

Information system is an interrelated components working together to
collect, process, store & disseminate information to support decision-making, co-
ordination, control, analysis & visualization in an organization. MIS usually serves
managers interested in weekly, monthly & yearly results rather than day-to-day
activities. It is generally reporting control oriented. MIS relays on existing
corporate data & have less analytical capability. MIS have an internal rather than
external orientation. It ultimately requires lengthy analysis & design process.
All the back files from various systems are put in to a separate hard disk by
EDP department. They create a separate CD department wise of backup files & put
a mark on it for the identification. All these CDs are stored for 30 days in EDP
department then it is to be shifted to share department for safe custody.
To save the server from virus attack antivirus program is installed so that
any kind of data loss or data corruption can be removed. All the software
developed in house has their own source code of which soft copy will be
maintained by HOD EDP. Thus, in AEC ltd MIS plays an important role in their
data management.
91
SWOT ANALYSIS
 STRENGTHS :
 The directors are well experienced and technically qualified with well
succession plan.
 The company is more than 37 years in this business and enjoys its brand name
in the market.
 The company has wide market network with established customer.
 The company is able to obtain skilled workers at comparatively lower cost.
 The company is a profit making and self-performance are improving year after
year.
 WEAKNESS :
 The industry is highly capital intensive and as such operating at the minimum
economic volume assumes greater significance.
 A decline in the capacity utilization would lead to a major negative impact on
the operational parameters considering the huge initial capital outlay.
 The manufacturers are facing a threat from the spurious parts manufacturer who
manufacture duplicate parts and sell them in the names of popular brands in the
replacement market at a very low price.
 Steel are basic raw-material for the bearing industry and their prices are
expected the upward trend in the coming future.
 Manufactured who manufacture duplicate parts and sell them in the name of
popular bands with lower rate.
92
 A serious threat is being faced from imports due to decline in duty rates and at
the same time, domestic manufacturers are subject to the increased levies.
 Higher inventory holding also lead to increase indirect cost.
 OPPORTUNITIES :
 Penetrations of export market during last couples of years help the company to
increase export performance substantially on regular basis.
 A company is manufacturing specialist type of bearing which serve as higher
valued added product.
 A company’s is manufacturing variety of bearings which serve as a product mix
for maintaining profitability.
 It has a great opportunity to expand the business by taking benefit of its largest
product mix range in the Asia.
 THREATS :
 It is not the advantage of borrowed capital as much as it can.
 From the lower degree of financial leverage, we can say that it does not take the
risk of fix financial charges.
93
FINDINGS & RECOMMENDATIONS
I studied marketing department of “Austin Engineering Co. Ltd.” and I
found some fact which is described as follows.
(1) “Austin Engineering Co. Ltd.” itself never make product but always
makes as per order but what I feel is that it should focus on research and
development and it must add some innovative features in the product or it
should innovate new product.
(2) “Austin Engineering Co. Ltd.” focusing very least on promotional tools
through it is making industrial goods but it should focus on promotional
tools and it should use communication tool which is suitable to its product.
(3) “Austin Engineering Co. Ltd.” believes that they have enough demand
and good brand in market so no need for promotional tools but “Austin
Engineering Co. Ltd.” is in the myth.
(4) “Austin Engineering Co. Ltd.” uses coupons for sales promotion but it is
not suitable for its product (industrial goods) it must use other
communication tools for sales promotions.
94
(5) It is not giving concentration on other communication tools like public
relations and personal selling which is suitable to its product.
95
CONCLUSION
Concluding about the working of “Austin Engineering “ It is truly a well organized

and well managed unit, all department of the unit is perfectly coordinate and
managed properly.
Production department of Austin is full fledged, Marketing needs no reference

because company’s product is in full demand and Personnel is at its best.So,there
is nothing more too critical evaluate the working of the unit.
However, there is some problem faced by the company as by other units but it does
not overall affect the successful image of the unit.
96
BIBLIOGRAPHY
 Human Resources Management K Aswathappa
 Marketing Management Philip Kotler
 Web resources www.aec-bearing.com
 Company’s annual Report
 Reference Report
97

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“Austin Engineering Co. Ltd.

(Manufacturing all types of anti friction Bearing)

Registered Office & Work

The essential thing is in education

Today scenario is very change due to rapid liberalization, privatization and

Date: Yours faithfully

Place: (Trambadiya chirag K.)

Sr. No Particulars Page No

2 Company Profile 7-17

3 Production Department 18-34

4 H.R.M Department 35-51

5 Marketing department 52-66

6 Finance Department 67-88

7 Management Information system 89

9 Findings & Recommendation 92

Bearing industry in India can be divided into three segments viz.

second growth driver. The fact of bearing industry is largely dependent on

Sr. No Particulars Page No

2 Name & Registered office Address 10

6 Contribution of the Unit 17

The Austin Engineering Company Ltd. is one of the leading manufacturers

 Austin Engineering Co, Ltd Patla, Junagadh (''aec”)

NAME & REGISTERED OFFICE ADDRESS

ADD :- “AUSTINE ENGINEERING CO. LTD.”

Patla Taluka, Bhesan,

Via – Ranpur (Sorath)

Post: Hadmatiya – 362030

District: Junagadh (Gujarat)

Phone no: - 0285 - 2680570

Fax no. :- 0285 – 2661505

Junagadh office : - 101, GIDC Estate,

Range :- Manufacturing all types of Antifriction Bearing

Capacity :- 10 mm I.D to 1800 mm O.D

1974 :- Started manufacturing cylindrical roller bearing & deep groove

1975 :- Started manufacturing single row spherical roller bearing for

1978 :- Partnership firm converted in private company limited started

1980 :- Manufacturing capacity of all aforesaid bearing increased up to

1985 :- Converted into public limited company and shares stocks

1990 :- Manufacturing increased up to 600 mm. Started Manufacturing

Large double row tapered & spherical roller bearing.

1995 :- Manufacturing capacity increased up to 800 mm.

1996 :- Started manufacturing flush ground single row bearings for

1999 :- Awards ISO 9001 certification from TUV Rhineland

2001 :- commenced supplies of bearing including call mill bearing to

2004 :- Established a subsidiary in the U.S.A

2006 :- Awarded ISO /TS 16949:2002 BY Rhineland.

There are six types of organization which are as follows:

TYPES OF ORGANIZATION STRUCTURE

Line Functional Committee Matrix Line and

In Austin Engineering Company Ltd follows Line & Staff organization

REGISTERED & TRANSFER AGENT:-

CONTRIBUTION OF THE UNIT

The AUSTIN ENGINEERING CO. is one of the leading manufacturers of

Austin offers a wide range of Bearing in Asia and i.e. 4,500types of

Production is the process by which goods & services are created.

Operations by formal definition are a process of changing inputs in to

Thus, production department is the heart of whole the organization.

Roller bearing can be classified into four types.

Plant layout means the arrangement of departments & equipment’s with in a

TYPES OF ORGANIZATION STRUCTURE :

Process Product Hybrid Fixed

The “Austin Engineering Co. Ltd.” is following process layout. Here in

PRODUCTION PLANNING & CONTROL SYSTEM