Organisational Study Report

A REPORT ON ORGANIZATION STUDY AT
MADRAS ENGINEERING INDUSTRIES PVT LTD. CHENNAI

ABRAHAM JOSEPH

(Reg. No:85211001)

Under the Guidance of
Dr. Mohammed Aslam
Associate Professor
SCHOOL OF MANAGEMENT STUDIES CUSAT

Submitted in partial fulfillment of the requirement for the award of the
degree of
MASTER OF BUSINESS ADMINISTRATION
to the Cochin University of Science and technology

School Of Management Studies
COCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY
Kochi-682022, Kerala, India
2011-2013

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ORGANIZATION STUDY 2011-13 SCHOOL OF MANAGEMENT STUDIES,
CUSAT

DECLARATION

I do hereby declare that this report is a bonafide record of the
organization study done by me under the supervision of Dr. Mohammed
Aslam. , School of Management Studies and Nilanjan Chakraborty, DY.
General Manager (Marketing), Madras Engineering Industries Pvt Ltd, MCity,
during the academic year 2011-2012, in partial fulfillment of the requirements
for the award of the Degree of Masters Programme in Business Administration
of School of Management Studies, Cochin University of Science and
Technology, Kochi.

This work has not been under taken or submitted elsewhere in
connection with any other academic course.

Place: Signature

Date: ABRAHAM
JOSEPH

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ACKNOWLEDGEMENT

I wish to take this opportunity to express my sincere expression of gratitude to
each and everyone who helped me in the completion of this work.

First of all I thank God almighty for giving me all the grace and assistance
throughout my work.

I am very glad to express my gratitude to Dr. P. R. Wilson, Director, School of
Management Studies, CUSAT for his timely help all through my study.

I would like to extend my gratitude to Dr. Mohammed Aslam, Associate
Professor, School of Management Studies, CUSAT, for his valuable
suggestions, advice and encouragement throughout the course of this work.

I owe my gratitude to Nilanjan Chakaraboty, Deputy General Manager
(Marketing), Madras Engineering Industries Private Limited, MCity, for his
constructive criticism and constant encouragement during the course of my
study

I express my deep gratitude to my dear friends for their co-operation and
helping hands, who were always friends in need.

Abraham Joseph

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TABLE OF CONTENTS

CHAPTER CONTENT PAGE No.

CHAPTER 1 INTRODUCTION ABOUT OS
1.1 INTRODUCTION 6
1.2 SCOPE OF STUDY 6
1.3 OBJECTIVE 6
1.4 REASON 7
1.5 METHODLOGY 8
1.6 LIMITATION 8

CHAPTER 2 INDUSTRY PROFILE
2.1 INDUSTRY PROFILE 11
2.2 INDUSTRY STRUCTURE 12
2.3 INDUSTRY GROWTH 13
2.4 AUTO VISION 14
2.5 FUTURE 15

CHAPTER 3 COMPANY PROFILE
3.1 COMPANY PROFILE 16
3.2 COMPANY POLICIES 17
3.3 ORGANIZATION STRUCTURE 24
3.4 PRODUCTS 26
SLACK ADJUSTER MANUFACTURING
3.5 PROCESS 28
3.6 DEPARTMENTS 30

CHAPTER 4 EXTENT OF TECHNOLOGY ADOPTION 67

CHAPTER 5 QUALITY MANAGEMENT IN MEI 70

CHAPTER 6 SWOT ANALYSIS 77

CHAPTER 7 FINDINGS & OBSERVATIONS 79

CHAPTER 8 LEARNING EXPERIENCE 81

CHAPTER 9 CONCLUSION 83

BIBLIOGRAPHY 85

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CHAPTER 1

INTRODUCTION ABOUT OS

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1.1. INTRODUCTION

An organization is a social arrangement which pursues collective goals, which controls its
own performance, and which has a boundary separating it from its environment.
Organization is the association formed by a group of people who see that there are benefits
available from working together towards some common goal.

Organization studies are the study of individual and group dynamics in an organizational
setting, as well as the nature of organizations themselves. Whenever people interact in
organizations, many factors come in to play. Organizational studies attempt to understand
and model these factors. Organizational study is essential to any MBA graduate as it helps
them to connect theory with practice.

Organization study refers to the study of organization as a whole and getting adequate
knowledge with various departments in the organization. The study was carried out at
Madras Engineering Industries, Chennai. This study is based on the different aspects and
dimensions of different departments of the company The study was carried out at the Madras
Engineering Industries, situated at Mahindra city, Chennai.

1.2. SCOPE OF THE STUDY

The organization study at Madras Engineering Industries aims at getting accustomed to the
business environment of MEIL for a period of one month. The study will be conducted to
understand the structure, function and process of various departments and their
interdependence.

1.3. OBJECTIVE OF THE STUDY

The organization study was carried out in Madras Engineering Industries, situated at Chennai

Mahindra city, is to achieve the following specific objectives:

1.3.1 To familiarize with the organization structure and its functioning

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1.3.2 To familiarize with the different departments in the organization and their functions

and activities including documentation.

1.3.3 To understand how the key business processes are carried out in an organization.

1.3.4 To understand how information is used in organization for decision making at

various levels including data flow diagram.

1.3.5 To understand the extent of technology adoption including ICT, in the organization

for various functions/activities.

1.3.6 To understand the growth and diversification strategies, portfolio Structure of the

Organization

1.3.7 To study the Overall performance of the organization

1.3.8 To understand the performance measurements of employees and various employee

welfare activities, Training activities

1.3.9 To understand the steps taken to increase the productivity in the organization

1.3.10 To conduct a SWOT analysis of the organization

1.4. REASON FOR SELECTING THE COMPANY

The reason for selecting the Madras Engineering Industries PVT LTD is that, they are the
largest supplier of automotive slack adjuster to other industries. The industry contains all the
major areas of study.

1.5. METHODOLOGY

The success of a research depends largely on the methodology used. The appropriate
methodology will improve the validity of the findings. The following methodologies
were adopted for the study.

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1.5.1 Identification of the company

Madras Engineering Industries, Chennai was selected for the organization study,
considering various factors including reputation of the firm, ease of getting
permissions, industry, location etc.

1.5.2 Identification of the Objectives

The specific objectives of the organization study was identified and listed out in order
of priority. This helped in conducting the organization study in a systematic and
effective manner.

1.5.3 Data collection

Both primary sources and secondary sources were used in this particular research.

1.5.3.1 Primary Data

Primary data were collected through observation, personal interview, discussion with
managers and employees of the various departments of the organization.

1.5.3.2 Secondary Data

Secondary data were collected through literature review which includes company’s
internal records, publications, annual reports, journal, statutory report, website
(official and others) etc.

1.5.4 Analysis and Interpretation

The data collected must be properly analyzed to evaluate and enhance the data
quality. The analysis is done to identify the actual meaning of the data which helps in

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proper interpretation. Data analysis involves working to uncover patterns and trends
in data sets and data interpretation involves explaining those patter ns and trends.

1.5.5 Documentation

After the analysis and interpretation of collected data, the information is documented
in the form of organization study report, which gives an elaborate report on the
organization study.

1.6. LIMITATION OF THE STUDY

There were some limitations in conducting the organization study at Madras Engineering
Industries Pvt Ltd.
1.6.1. There were difficulties in obtaining data from executives and managers due to their
busy work schedule.
1.6.2. An in-depth study of the company could not be carried out due to shortage of time.
1.6.3. The reliability of data used for study is largely depends upon the companies reports
and the information given by executives.
1.6.4. The company has the limitation to disclose their financial details, so a detailed
analysis of financial performance of the company is not possible.

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CHAPTER 2

INDUSTRY PROFILE

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2.1 INDUSTRY PROFILE

“To emerge as the destination of choice in the world for design and manufacture of
automobiles and auto components with output reaching a level of $145 billion, accounting
for more than 10 per cent of the GDP and providing additional employment to 25 million
people by 2016”

– Automotive Mission Plan, India, 2006-2016

The Indian auto component industry has been navigating through a period of rapid changes
with great élan. Driven by global competition and the recent shift in focus of global
automobile manufacturers, business rules are changing and liberalisation has had sweeping
ramifications for the industry. The global auto components industry is estimated at US$1.2
trillion. The Indian auto component sector has been growing at 20% per annum since 2000

and is projected to maintain the high‐growth phase of 15‐20% till 2015.

The Indian auto component industry is one of the few sectors in the economy that has a
distinct global competitive advantage in terms of cost and quality. The value in sourcing auto
components from India includes low labour cost, raw material availability, technically

skilled manpower and quality assurance. An average cost reduction of nearly 25‐30% has

attracted several global automobile manufacturers to set base since 1991. India’s process
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engineering skills, applied to re‐designing of production processes, have enabled reduction in

manufacturing costs of components. Today, India has become the outsourcing hub for
several global automobile manufacturers.

Innovation and cost pruning hold the key to meeting the global challenge of rising demand
from developed countries and competition from other emerging economies. Several large
Indian auto component manufacturers are already gearing to this new reality and are in the
process of substantially investing in capacity expansion, establishing partnerships in India
and abroad, acquiring companies overseas and setting up greenfield ventures, R&D facilities
and design capabilities.

Some leading manufacturers of auto components in India include Motor Industries Company
of India, Bharat Forge, Sundaram Fasteners, Wheels India, Amtek Auto, Motherson Sumi,
Rico Auto and Subros. The India’s Top 500 Companies, published by Dun & Bradstreet in
2006, listed 22 auto component manufacturers as top companies in India with a total
turnover of US$ 3 bn. These companies are in the process of making a mark on the global
arena, and some have already acquired assets abroad.

2.2. INDUSTRY STRUCTURE

The total turnover of the Indian auto component industry is estimated at US$9 bn in 2006.
The industry has the resources to manufacture the entire range of auto products required for
vehicle manufacturing, approximately 20,000 components. The entry of global
manufacturers into India during the 1990s enabled induction of new technologies, new
products, improved quality and better efficiencies in operations. This in turn effectively
acted as a catalyst to the local development of the component industry.

The Indian auto component industry is extensive and highly fragmented. Estimates by the
Department of Heavy Industries, Government of India, indicate there are over 400 large
firms who are part of the organised sector and cater largely to the Original Equipment

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Manufacturers (OEMs). Another 10,000 firms exist in the unorganised sector that operates in

a tier‐format. The firms in this segment operate in low technology products and cater to Tier

I and Tier II suppliers and also serve the replacement market

Around 4% of the companies operating in the auto component segment cater to 80% of the
demand emanating from OEMs. Within the unorganised segment, apart from supplying in
the aftermarket, a number of players are also involved in job work and contract
manufacturing.

The range of products manufactured, with each broad product segment having a different
market structure and technology, has negated any possible concentration of the market in a
few hands. The market is so large and diverse that a large number of players can be absorbed
to accommodate buyer needs. However, there are a select few large companies that have
integrated their operations across the value chain. The key to competing in this industry is

through specialisation by product‐type, and integrating operations across the related area of

specialisation.

An interesting insight provided by a study conducted by the National Council of Applied
Economic Research revealed that the market segments for auto components included OEMs
constituting 33%, local components having 25% with the balance 42% comprising of

spurious market including re‐conditioned parts. A large part of the spurious or grey market

companies are in the unorganised sector.

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The regional base of auto component manufacturers is mostly concentrated in the West,
North and South of India.This regional concentration of auto component manufacturers has
been dictated by the emergence of automobile manufacturers in these regions. The set up of
Tata Motors, Bajaj, Mahindra & Mahindra and TVS in the 1950s and 1960s laid the
foundation for auto component manufacturers in the West and South, whilst the entry of
Maruti during the 1980s created the base in the North.

2.3 INDUSTRY GROWTH

Production of auto ancillaries was estimated at US$10 bn in 2005‐06 and has been growing
at a robust 20% per annum since 2000. Exports of auto components have been strong
growing at 24% per annum since 2000. This growth in exports if sustained for another five
years will see India’s auto components exports will touch US$ 5 bn by 2011 from the US$ 2
bn at present.

Till the 1990s, the auto component industry was solely dependent on the domestic
automobile industry to drive the demand for ancillary products. This composition of the
market however is undergoing radical changes with global outsourcing gaining momentum.
In recent times, exports has emerged as a significant driver of growth, and the demand
emanating from global OEMs and Tier I manufacturers has opened new opportunities for the
auto component industry in India. At the same time, a bright outlook for the domestic
automobile industry also offers significant growth potential, given the fast rising income
levels with a rapidly growing middle and high income consumers.

Share of exports in total production has risen from 10% in 1997 to 18% in 2006. The
composition of exports in terms of the proportion of OEM and aftermarket has also
undergone a sweeping change since the past decade. The ratio of OEM to aftermarket has
changed from 35:65 in the 1990s to 75:25 in 2006. While exports have been booming, there
has been a sharp rise in imports of auto components as well, especially in the last three years.
From an import of US$ 250 mn in FY03, they have gone up to US$750 mn in FY06. This is
a healthy trend, indicative of rising domestic demand.

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2.4 AUTO VISION

The automotive space has always been considered special in any economy because of the
number of growth impulses that it provides to the economy in general. Given the criticality
of this, the government's department of heavy industries prepared a 10-year vision plan way
back in 2006, which set, amongst others, a target of:

1. Increasing turnover to $122 billion to $159 billion by 2016.

2. Increasing export revenues to $35 billion by 2016

3. Providing employment to additional 25 million people by 2016

4. Empowering the automotive sector to contribute 10 per cent of the country's GDP by
2016.

2.5 FUTURE
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Slowdown in automobile sales has dented growth of the auto-mobile parts industry in India.
Data from Central Statistical Organisation show growth in output of automobile ancillaries
slowed down sharply to 14.9% in April-November 2011, on a year-on-year basis, from
32.3% growth in the previous year.

Automobile sales had registered robust growth in 2009-10 (April-March) after the financial
crisis of 2008. The buoyancy continued in FY11 as well. It is only in the current financial
year that some segments of the industry — mainly passenger vehicles and heavy commercial
vehicles — are feeling the pinch again.

Data from Automotive Component Manufacturers of India show turnover of the automobile
parts industry grew 27.4% to `1,81,842 crore in FY11. The industry’s market size is ex-
pected to grow by a slower 11.8% in FY12. Weak demand from domestic industry and slow
growth in exports are likely to ham-per growth in market size. Exports account for 13-14%
of the industry turnover.

Demand from Europe, which is one of the largest markets for Indian auto components
(accounting for more than 25% of total exports), is likely to be slow in the second half of
FY12.

Depreciation of the Indian rupee is expected to partially negate impact of slower export
numbers. Also, replacement demand for components is likely to be high given the surge in
number of vehicles sold in the past few years.

.

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CHAPTER -3

COMPANY PROFILE

3.1 GENERAL INFORMATION

Madras Engineering Industries Private Limited (MEI) is a Tier I supplier for the OEMs in
the Medium and Heavy Commercial Vehicle sector. MEIL has been in the auto ancillary
industry, for about four decades. The company was founded in Chennai, India in 1966 by
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Mr. E.K. Parthasarathy, current Chairman and Managing Director, to manufacture various
machined components for automotive industry.

MEIL has pioneered the indigenous development of Self Setting Automatic Slack Adjuster
for the global market. It has also developed Clutch Booster, Spring Brake Actuator, Brake
Chamber and Wear Sensor, the commercial production of some of these items has already
commenced. MEIL plants have the total capacity to produce two million Automatic slack
adjusters and 1 million Self setting automatic slack adjusters.

MEI established as a leading global player in commercial vehicle braking system
components with a significant presence in National and International OEM and replacement
markets. MEIL has an average monthly export of 40000 units.

3.1.1 PLANTS:
MEI Operates from three locations in Chennai, India and all the plants are accredited with
TS 16949 : 2009, ISO 14001 : 2004 and ISO 9001:2008 by TUV Germany and the R&D
centre is located at IITM Res Park approved by Govt. Of India.

Plant I

Located in Ambattur, Chennai

Started operations in 1966

14,000 sqft facility located on ½ acre plot

ISO / TS 16949 : 2009 certified

ISO 14001 : 2004 certified

Initial Annual Capacity of 12,00,000 manual slack adjusters

Plant II

Located in Maraimalainagar, (25miles south of Chennai)

Started operations in 1992

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21,000 sqft facility located on ¾ acre plot



Initial Annual Capacity of 6,00,000 automatic slack adjusters

Plant III

Located in Mahindra City SEZ
(30miles south of Chennai)

Operations commenced in May 2007

40,000 sqft facility located on a 5 acre plot

Phase II expansion will add another 20,000 sqft to this facility

Initial Annual Capacity of 6,00,000 automatic slack adjusters

100% of production for exports




Capacity Expansion: MEI to more than triple its Automatic Slack Adjuster manufacturing capacity

• Plant I

o Annual capacity of 15,00,000 Automatic Slack Adjusters

• Plant II

o Annual capacity to 5,00,000 Manual Slack Adjusters

• Plant III

o Annual capacity of 6,00,000 Automatic Slack Adjusters

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Overall annual capacity available

• 5,00,000 Manual Slack Adjusters

• 21,00,000 Automatic Slack Adjusters

3.1.2 MISSION AND VISION

Vision

Establish MEI as a leading global player in commercial vehicle braking system
components with a significant presence in national and international OEM and
replacement markets.

Mission

MEI always focus on gaining a leading market share globally by achieving global
standards in

• Product Technology

• Process Technology

• Quality’

3.1.3 MANAGEMENT

Managed by a professional team of managers, having rich experience in the fields of Design,
Development, Quality, Marketing and Manufacturing from the auto Industry

3.1.4 MARKETING

MEI handles marketing of its Manual Slack Adjusters directly from its plant at Chennai for
all domestic and overseas customers.

MEI is marketing Automatic Slack Adjusters through John Bruce (UK) Ltd. for its overseas
customers.

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For the domestic market MEI Automatic Slack Adjusters and Self Setting Automatic Slack
Adjusters (ASA – SASA) are marketed from its plants in Chennai – INDIA.

3.1.5 MEI SALES AND SERVICE NETWORK

MEI has a widespread spread dealer all over India to take care of the customer needs and un
interrupted supply of its products.

A well qualified team of service staff located at all regime with proven experience provides
service to our customers

3.1.6 OBJECTIVE OF THE COMPANY

Every organization works with specific objectives. Madras Engineering Industries Pvt Ltd
works with the following objectives
• Design & Manufacture automotive components.
• Contract Manufacturing for other auto component companies.
• On time delivery with significantly reduced lead time
• To ensure strict quality control and ISI standards of the product to compete in the
global market
• To maximize the cost reduction
• Overall yield improvement by reducing process rejections.

3.1.7 HISTORY

1966: The company was founded in Chennai, India in 1966, to manufacture various
machined components for automotive industry

1982: MEI started manufacturing manual slack adjusters and parts for air brake systems for
light, medium and heavy commercial vehicles

2000: MEI started exporting Automatic Slack adjusters to United Kingdom, Europe, the
United States of America, Canada, the Middle East, Africa, Australia, New Zealand and

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Southeast Asia. Partnership with John Bruce UK Ltd. to market MEI manufactured
Clearance-sensing Automatic Slack Adjusters.

2007: MEI became the first Indian corporate to indigenously develope and patent self setting
automatic slack adjusters and commenced supplies to all the OEMs in India with a market
share of over 70%.

3.1.8 PHILOSOPHY

MEIL is dedicated to continuous quality improvement and will make no compromise in
delivering products conforming to customer specifications. MEIL products shall be second
to none in achieving global quality standards in their range of manufacture In keeping with
this policy, MEIL has put in place, rigorous quality control procedures to ensure the supply
of defect free products including inspection of incoming material, control over the
manufacturing process, and finished product testing.

3.2 ORGANIZATION STRUCTURE

Organizational structure hierarchy in the organization is given in the following chart:
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3.2.1 BOARD OF DIRECTORS

The Board of the Directors of the organization is as follows.
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▪ E. K. Parthasarathy : Chairman & Managing Director

▪ Priya Sriram : Director

3.2.2 MANAGEMENT

The Management Team of MEIL is as follows.

▪ E. K. Parthasarathy : Chairman & Managing Director

▪ Sriram Sivaram : President

▪ K. Sundararajan : Vice President-Marketing

▪ V. Ravi Sharma : Senior General Manager - Operations

▪ A. Ramaswamy : General Manager - Finance

▪ C. Kathikeyan : General Manager - Human Resource

▪ Nilanjan Chakraborty : Deputy General Manager – Marketing

3.3 COMPANY POLICIES

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3.3.1 QUALITY POLICY

Madras Engineering Industries Pvt Ltd is committed to prociding world class commercial
vehicle air brake and clutch related products at competitive prices.

While doing so, MEI will strive to continuously improve operating performance to enhance
customer satisfaction.

3.3.2 MAJOR ACHIEVEMENTS OF MEIL TOWARDS QUALITY
CERTIFICATIONS

• Madras Engineering Industries Pvt Limited is certified ISO 9001:2008

• MEIL is awarded ISO/TS 14001:2004.

• MEIL is awarded ISO/TS 16949:2009.

• Type Approval by TUV Germany

• Type Approval by Link Laboratory, US

3.3.3 SAFETY, HEALTH AND ENVIRONMENTAL POLICY

The company is committed to maintain their organization remain environment friendly
while achieving our business goals and contribute to sustainable development. The company
shall achieve this by:

• Minimizing the consumption of natural resources through process improvement
resulting in reducing reusing and recycling.

• Preventing pollution through reduced consumption, improve processes and use of
environmental friendly materials.

• Continually improving the environmental performance.

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• Complying with all relevant environmental legislation and regulatory requirements.

• Contributing to conservation of natural resources using renewable Sources of energy
and water harvesting.

• Contributing to social forestation in association with local governmental bodies.

• Creating environmental awareness among through camps and projects with special
emphasis on educational institution.

3.3.4 LEAN MANUFACTURING & 6б

• MEI has fully-embraced “Lean Manufacturing” & “6б” philosophy as the only
means to become a global leader in our field

• MEI participated in an industry cluster program through which all of the employees
of the company have been trained in “Lean Manufacturing”

• MEI has already implemented many “lean” principles and continues to improve its
practices on an ongoing basis.

• MEI invests in training its employees on a regular basis and has two certified 6 б
Black-belts on staff

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3.4 PRODUCTS

The company is largely producing slack adjusters. They produce high quality slack adjusters
that are used in the braking system of heavy vehicles. R & D department of MEIL helps in
maintaining high quality products and also come up with new diversified products.
Production facility at MEIL manufactures three types of slack adjusters.

Extensive Product line

• Automatic Slack Adjusters

• Self-setting Automatic Slack Adjusters

• Manual Slack Adjusters

• Clutch Booster

• Wear Sensor

1. Automatic Slack Adjusters
• Clearance Sensing
• More than 500 variants available
o Can supply an MEI replacement for every Haldex ABA
• Accessories such as mounting brackets, wear indicators, etc. are available
• Custom requirements can be met on request

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2. Self-setting Automatic Slack Adjusters

• Based on patent-pending MEI designs

o Functionally equivalent to Haldex SABA design

• Multiple variants available

o Can supply an MEI replacement for every Haldex SABA

• Accessories such as mounting brackets, wear indicators, etc. are available

• Custom requirements can be met on request

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3. Manual Slack Adjusters

• More than 300 variants

• Cover most global truck, trailer, bus applications

o Review our catalog for an exhaustive cross-reference table

• Guaranteed to exceed SAE performance requirements

• Custom requirements can be met

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NEW PRODUCTS DEVELOPED BY MEIL

1. Clutch booster Assembly

2. Wear sensor

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3.5 Slack Adjuster Manufacturing Process

Manufacturing of Slack Adjusters at MEI involve the following activities

• Machining of the Slack Adjuster Body

• Machining of the Worm Gear at the Ambattur Plant

• Machining of the Worm & Worm Shaft at the Ambattur Plant

• Sourcing of all remaining components from out source

• Assembly of all components to make a Manual or Automatic Slack Adjuster

The customer order process flow can be shown as below.

1. Order receipt from customer

2. Sale order raising by Marketing

3. Sale order schedule by Marketing

4. Sequence posting by PPC

5. M.R.P report generate by PPC

6. Priority wise material requirement to SCM by PPC

7. Schedule to supplier by SCM

8. Skid list preparation by dispatch

9. Order process based on skid plan in ERP by PPC

10. Skid wise route card process by PPC

11. Order wise skid wise casting issue to Machine shop by Store

12. Order wise skid wise machining by Production
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13. Skid wise sent to tuffriding process to s/c by Production

14. Skid wise process at tuffriding – s/c

15. Skid wise Assembly by production

The Tuffriding is a special heat treatment process. Tuffriding is done after the machining
process. But this is not carried out in MEIL plants. The tuffriding process is outsourced to
the following companies

a. Surface Techniques

b. Chennai Auto Metal product

After machining the skid wise organized parts are sent to the above companies for tuffriding.
After Tuffriding, the parts are brought back to the MEIL plant for painting and assembly
process.

Outsourcing & sub-contracting emphasis

• MEI works with numerous sub-contractors who have specialized skills in various
machining, heat-treating, surface treatment activities

• MEI’s supply chain team ensures that all suppliers and contractors meet MEI’s stringent
quality metrics

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3.6 DEPARTMENTS

DEPARTMENTS IN DETAILS

Madras Engineering Industries Pvt Ltd has ten major functional departments for ensuring the
smooth working of the organization. They are:

1) Marketing Department

2) PPC Department

3) Supply Chain Management Department

4) Quality Assurance Department

5) Stores

6) Maintenance Department

7) Production Department

8) Finance Department

9) HR Department

10) R & D Department

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3.6.1 MARKETING DEPARTMENT

The main and major aim of marketing department is to identify the market demand and
supply the goods as per the demand. Marketing department in MEIL is differential, which
mainly focuses on promoting the goods produced and gather a realizable order for the
company such that at no time there is stagnation experienced in the enterprise due to lack of
orders and such that the delivery can be made as per the predefined data. When we compare
MEIL with other similar industries, the advantage is that it is located in the Special
Economic Zone (SEZ), which exempts most of the duties and taxes imposed by the
government. The labor overhead charges occurring in MEIL is low as compared to the
foreign industries. The marketing department plays a vital role in the production planning as
a constant feedback of the quality of finished products is verified regularly to check the
possibility of finishing the production of the user specified products in time.

Structure of marketing department

VP- Marketing

Dy. General
Manager-Marketing

Senior Officer – Excise
Assistant & Export

Functions of marketing department

1) Following the quality management system

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2) Management review

3) Internal communication

4) Customer communication

5) On Time response to enquiries

6) Following up with production/relevant functions to ensure on time delivery

7) Invoice & Shipment

8) Handling of customer complaints

9) Customer satisfaction

Export trend analysis

The export trend analysis of last three years shows that MEIL is growing their business in
the global market. During the 2010-11 periods, the export has almost doubled comparing to
the 2009-10 period i.e. around 197%. During the 2011-12 periods, the export has increased,
but the percentage has come down to 108%. The below graph shows the percentage change
in exports during the last three years. The linear forecast trend line shows a positive growth
trend for the next few years.

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Customer Satisfaction Survey

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MEIL focus on both domestic and international market.

Domestic market

The Ambatur plant and 80% of Maramalai Nagar plant production is for domestic purpose.
The main OEM customers are

1. Ashok Leyland

2. TATA Motors

3. Volvo Eicher Commercial Vehicles

4. Swaraj Mazda

5. Asia Motor Works

6. Bharath Benz(Daimler)

7. Mahindra Navistar

International market

The MEIL plant in Mahindra World City caters to the International market. The main global
customers are

1. KAMAZ, Russia

2. Arvin Meritor, USA and Italy

3. Gigant, Germany

4. SAF, Germany

5. Knorr Bremze, UK and Brazil

6. Scania, Sweden

7. FEBI, Germany

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8. Boowon Autoparts, Korea

9. MAN, Germany

10. BPW, U.K.

11. KTK, Germany

12. Diesel Technic, Germany

13. MASTER, Brazil

The Ambattur plant and the plant at Maraimalai Nagar are mainly working on the domestic
market and the Mahindra World City plant is focusing on the international market. The plant
at Maraimalai Nagar also produces manual slack adjusters for the overseas customers.

The marketing department collects the product order and the required dispatch date from
various customers. For export, the orders are obtained from OEM customer Kamaz and from
the marketing partner John Bruce UK. Based on this, marketing department prepares the
sales order and hands over to production department. This will be usually done 15 days
ahead of a month. Similarly is the case with domestic market also. The final requirement for
the month is prepared on the 1st of the respective month. No more revision is done until
unless the change is inevitable from the customer side due to any urgent requirement. The
final dispatch plan is prepared and given to PPC. The production will be planned according
to this plan.

Once the production is completed, the marketing department will verify it based on the initial
requirement plan and gives the approval for raising invoices for shipment to dispatch
department. The dispatch department will prepare the invoice and shipment documents
against the Performa invoice/Purchase Order. They will make the arrangements to take the
consignments to the freight forwarder who is nominated by the respective customer.

The main payments modes are followed in MEIL are:

1. Direct payment – The amount will be collected from the customer in advance i.e.
before the consignment is send.

2. Payment against document – payment is done after the consignment is shipped. The
bill of lading and other originals will be handed over to customer directly.
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3. Letter of credit - In this mode, a bank will act as a mediator between the customer
and MEIL. A contract is prepared based on this. The bank will act as a guarantee for
the customer for all the purchase done between the customer and MEIL. Based on the
terms and conditions mentioned in the LC, MEIL should act.

4. Freight on board: MEIL submit the full set of shipment document such as bill of
lading, shipping bills, packing list and other original invoices through the mediator
bank. The bank will send the originals to the customer bank. The total payment is
taken care by the banker. The customer makes the payment after verifying the
Performa Invoice.

Promotional activities: MEIL take part in the automobile exhibitions conducted in the
international and the domestic market. The strength of MEIL is delivering high quality
product at a competitive price which itself act as a promotion.

Customer satisfaction survey: Currently the customer satisfaction survey is carried only for
few OEMs which need to be carried out covering the wider range of customers. This is an
area for improvement.

New marketing activities: Looking to capture the market through product diversification in
the same product line. MEIL has a strong R&D department with Govt. of India approval.
This helps MEIL to develop innovative and high quality products.

Customer complaints: The customer complaints are given high importance and immediate
action is taken care. The customer complaints are received by the marketing department.
Marketing department assigns a unique id to the complaint and communicate the details to
the quality assurance department. Then a meeting will be arranged between the members
associated with the particular issues and then handles the issues through 8D problem solving
process/report.

The 8D problem solving process includes the following steps.

1. D0 – Customer Reported Problem

2. D1- Team formation

3. D2 – Problem Description

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4. D3

a. Containment Action

b. Interim Corrective Action

c. Validation

5. D4

a. Occur Root Cause

b. Escape Root Cause(s)

6. D5

a. Occur permanent corrective action chosen

b. Escape permanent corrective Action(s) chosen

7. D6

a. Occur Permanent Corrective Action(s) Implemented

b. Escape Permanent Corrective Action(s) Implemented

8. D7 –Preventive Action

9. D8 – Team and Individual Recognition

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3.5.2 PPC DEPARTMENT

PPC is the planning and scheduling department in MEIL. Its plays an important role in the
proper functioning of MEIL. The marketing department communicates with PPC to handle
the sales orders raised by customers. The organization structure of PPC department is as
follows:

President

HOD - PPC

Assistant
PPC

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In the Customer Order process flow in MEIL, the PPC handles the following actions
1. Sequence posting by PPC
2. M.R.P report generate by PPC
3. Priority wise material requirement to SCM by PPC
4. Order process based on skid plan in ERP by PPC
5. Skid wise route card process by PPC
PPC prepares the monthly and daily schedule regarding the manufacturing of the product as
ASA and SASA. Based on order receipt from customer, the marketing dept raises the sales
order and sales order schedule. Sales Order is then given to PPC.
The first sales order for a particular month is raised 10 to 15 days prior to the month. Then
PPC prepares the purchase schedule and the manufacturing schedule based on the sales
order.
The purchase schedule is given for the Supply chain management department and the
manufacturing schedule is given to the stores department. PPC manages the entire process
with the help of ERP.
In the PPC process, the first step is sequencing posting. PPC prepare the schedule on the
production target for the month. The sequence report is generated in ERP. Based on this
schedule, the monthly production is scheduled and carried out. (Based on revised sales order
from marketing dept, the sequence is updated.)
Based on sequence posting, M.R.P report is generated. The material requirement is analysed
and as per the production request generated by marketing department the M.R.P. is prepared.
This is used by purchase dept. PPC also manages the day to day material requirement for the
manufacturing (based on daily production schedule).
Daily analysis on the jobs completed is also done based on the schedule prepared by PPC.
Priority wise material requirement is given to supply chain management by PPC.
And skid plan is also prepared by ERP and based on skid plan, order process is carried out.
Skid wise route card process is also done by PPC.
PPC maintain update on the entire customer order process flow. i.e. product finished
production in manufacturing section, in assembly section etc.

Route card process is the process of tracking the work progress in manufacturing section.
Each bin that reaches the machine shop contains a route card. One bin can contain maximum

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of finished body(min of 1). The route card has approval space for the four stages of
manufacturing. As each stage in machine shop gets over, the section supervisor should verify
and enter the approval signature in the respective column entry in the route card. Each bin
carries cast body of particular part no, and the route card also contains all info pertaining to
part no.

3.5.3 PURCHASE DEPARTMENT

Purchase or supply chain department (SCM) is one of the important departments in MEIL.
SCM ensures that the right quality of goods is available at the right time and right place
without any delay. SCM ensures the availability of the required material at the right time at
right quantity to different departments for smooth functioning of the organization. Each plant
has its own SCM department for managing the inward and outward flow of raw materials.

Structure of Purchase department:

PRESIDENT

HOD-Purchase
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Assistant
Purchase

3.5.3.2 Functions of Purchase department

One of the primary tasks of SCM is Supplier selection. It is done in the following way.
a) Supplier registration
b) Supplier audit – Onsite evaluation (it should > 70%)
c) Vendor code creation
d) Purchase Order raising
e) Initial sample (prototype) released
a. Further sample version are alpha, beta, QP1, QP2, QP3
b. Mass production
Onsite Evaluation
The onsite evaluation is conducted Vendor rating. There are various criteria in onsite
evaluation
They are
1. Pricing of the material for supply
2. Checking with the vendor’s customer list to check whether they supply for the
competitors
3. Supplier’s approved vendor list.
Supplier selection from the approved list
Choosing the right vendor from the approved vendors list is other major tasks of SCM. The
following steps are taken in this process.
1. Identify the component for purchase and their design
2. Choose the associated vendors from the approved vendor list
3. Send the design to the vendor and collect feasibility and collect the quotation
4. Compare the quotation the price quote prepared by MEI
Purchase order plan
The M.R.P prepared by the PPC is given to SCM to prepare the purchase order plan.

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a) SCM prepare the schedule of purchase based on M.R.P and priority requirement i.e.
may be daily, weekly or monthly basis)

Schedule for supplier – The schedule is prepared by SCM are given to supplier to ensure
the prompt supply of raw materials. The supplier will give acknowledgment for the schedule
of raw material.
a) SCM has to ensure the prompt supply of the raw materials form the supplier as per
the scheduled plan.
Material Reception – the material received in the stores is first verified by inspection
department and standard lab. The accepted products are then moved to the store. The
rejected materials are cross verified by the SCM dept with master piece and ensure the actual
reason for the rejection before communicating to supplier

ERP is the software application used by SCM. It is used for monitoring the task, and for
scheduling the purchase plan.

3.5.4 QUALITY DEPARTMENT

The receiving inspection department verifies the quality and dimensions of raw materials
that are received from approved vendors against the values addressed in their respective
designs.

RI handles the selection and approval of both brought-out and sub-contracted components,

Once the GRN note is issued by stores department for the brought in goods, the components
are received and taken to the receiving inspection department. The quality check is done
through sampling techniques. Standard sampling plans are followed by RI. The organization
structure of quality department is as follows:

HOD-Quality
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Assistant
Manager

Senior
Engineer

Engineer

Junior Engineer

Metallurgists

3.5.4.1.1 Functions of Receiving Inspection

RI dept follows a specific working instruction for sampling plan. As per the sampling plan,
the components are categorized to 4 major inspection levels. They are S1, S2, S3, S4.(S1 –
Casting , packing, welding, wooden etc. s4 – Springs, Rubber/Plastics.

For each Inspection levels, the sample size is determined based on ISO 2859 AQL 1%
standard for different batch size. For example, for a batch size of 2 to 8, S1, S2, S3, S3
sample size is 2. For batch size of 35,001 to 150,000 the sample size component wise is S1 –
8, S2 – 13, S3 – 32, S4 – 80.

RI inspects the following factors for a new supplier:

• Dimension

• Material

• Test Rig
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For the above RI inspections, the acceptance number is 0 and the rejection number is 1.

For critical components as Rack, pinion, worm shaft, etc., double sampling plan is conducted

100% checks are carried out for the reworked parameters as applicable

Once the components are accepted, they are forwarded to the metallurgic laboratory for the
quality test. The rejected materials are kept in the rejection section of store and returned to
the supplier.

The inspection results are updated through ERP and reports are generated based on which
the vendors rating are prepared by the SCM department.

3.5.4.2 METALLURGIC LABORATORY

Metallurgic Laboratory ensures conformance to material specifications. After the dimension
verification by receiving inspection department the samples will be send to the metallurgic
laboratory for the material quality test. ML department has specific process flow for the
quality check.

Lab test associated with the quality check. In this, they check for the components hardness
test and the tensile test.

Quality is checked against the standards. If not matching the component is rejected.
Accepted components are taken to the stores.

Facilities in Metallurgic Laboratory include

• A complete chemical & mechanical lab

• Digital image analyzer

• Magnetic crack detector

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3.5.5 STORES

The main function of stores is to maintain the stock of necessary components used for
production. The organization structure of stores is as follows:

President

HOD - Stores

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Officer stores

Staff

3.5.5.1 Functions of Stores

There are mainly two type of store. i) Casting store ii) Component store

Casting store contains the casting raw material associated with machine shop and the
component store consists of raw materials associated with assembling. The entire
functionalities are managed with the help of ERP.

he marketing department plays a vital role in the production planning as a constant feedback
of the quality of finished products is verified regularly to check the possibility of finishing
the production of the user specified products in time.

Material management flow:

Sales
order

Production
work order

Purchase Order

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Job Order

Gate Inward

Goods received
Management

Quality Clearance

Stores

Store Process

1. Stores receives the M.R.P report from the PPC 10 days ahead of the months
production (revision may take place in between). Purchase order is generated by
SCM and job order is processed

2. Goods Received Note is given by stores department that permits the supplier to
unload the materials at the store entrance

3. Mainly 3 invoices are issued at the receiving the materials. One for the stores, one for
accounts and one for excise.

4. Materials taken for inspection at receive inspection department.

5. From RI, the sample components taken for Laboratory test

6. After the quality checks, the materials are taken to stores

7. Accepted components kept in the store (after categorizing)

8. Rejected components will be kept to return to the supplier

9. Assembly components returned within one week

10. Assembly components are kept in bin. Each bin contains store card

11. The operators can take the required components and entered in the store card

12. From the store card it is updated in ERP
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13. Department has to ensure maintaining min stock for 5 days

14. Another important task of Stores is the issue of Delivery channels and CRS while
sending the casting materials to tuffriding from the machine shop.

3.5.6 PRODUCTION DEPARTMENT

Production department is the major department in MEIL. It handles the production of ASA,
SASA and manual slack adjuster in MEIL. The main function of the production department
is to manage the production of the different products as per the production schedule prepared
by PPC. The organization structure of production department is as follows:

DGM

AGM 51
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Asst Manager

Senior Engineer

Engineers

Junior Engineer

3.5.6.1 Functions of Production department

The production department can be divided into two sections. They are Machine shop and
Assembly.

The process flow of Production department is as shown below:

i) Machine Shop

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The main functioning of machine shop is machining the body part to assembly form. The
raw cast is converted in to main body part as per the design specifications.

PPC prepares the production work order for a month. This will be handed over to the
production department.

A skid list is prepared based on which the casting is performed. Based on the skid list, route
card process is prepared by PPC. Then store will issues order wise skid wise castings to
Machine shop. (casting store -> Machine shop).

Now the production starts in the machine shop. Order wise skid wise machining is carried
out by the Production department.

The part number is generated for each casting. A bin of 10 casting raw material is given to
the machine shop. The bin contains the route card that specifies the 4 stages of machine
shop. When each stage gets completed for a bin, the route card is filled by the respective
supervisor. This help to identify the proper flow of machine shop process.

The 4 stages of machine shop for ASA are

i. Pre machining

ii. Finish machining

iii. Tail hole

iv. Nipple hole drilling

The features of Machine shop are

• Specially designed body machining lines including

o Special purpose-built machines

o General purpose Horizontal Machining centers

• Versatile fixtures & tooling designed

o Support hundreds of body types

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o Changeover times of <5 minutes

• Extensive gauging and on-line process control methods utilized

o Ensures very low rejection

o Sustains high Cpk values

ii) Tuffriding: The next stage after machining is tuffriding. Tuffriding is a heat
treatment process which is Sub-Contracted to two companies i) Chennai Auto metal
industry ii) Surface Techniques. the components are sent to tuffriding process by
Production on skid wise basis. Skid wise process at tuffriding

iii) Painting: After heat treatment, the part is brought back to MEIL. It is taken to the
painting section. The body will be coated with the indented colour.

iv) Assembly

The main functioning of assembly department is to assemble the components with the main
body part to form the final slack adjuster.

After tuffriding and returned to the company, the body is painted and send for assembling.
Assembly section assembles all the body parts together to form the final product. The
assembly assembles the parts in skid wise basis. There are two separate assembly section for
ASA and SASA. The assembling process includes 5 stages.

The stages of assembly are:

i. Tail bush

ii. Worm gear and worm shaft assembly

iii. End float and rack assembly

iv. Greasing and spring retaining

v. Performance testing

The main features of assembly line are

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• Flexible manufacturing lines with MOQ per part number = 1

• All models of automatic slack adjusters assembled on the same line

• Poka-yoke elements included to ensure error proofing

• Automated testing and performance data storage

• Traceability by Serial number

• Marking, labeling and packing done on-line

v) Once the assembling is finished the parts are packed in the packing section and make
it ready for dispatch.

Packing models are of two types:

• Y packing – for OE customer

• Aftermarket packing – for aftermarket sales. It also contains instruction paper within
the packet.

In production, average daily production targets will be set based on the monthly requirement
from PPC. Every day evaluation is conducted to analyze the day to day production and
updates the average production target accordingly.

3.5.7 MAINTENANCE DEPARTMENT

Maintenance department is an important department the take care of the proper working of
the entire plant. The organization structure of the maintenance department is as follows:

DGM

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AGM

Asst Manager

Senior Engineer

Engineers

Junior Engineer

3.5.7.1 Functions of Maintenance department

The main functions of maintenance department are to make sure that all the machines are
working properly and the production process carried out uninterruptedly. They look after all
the issues associated with the machines in the plant (both machine shop and assembly),
electrical and electronic components. The maintenance department also handles the purchase
of new machines for the plant.

The user departments inform the maintenance department about any breakdown of machines
or equipments using a job requisition format. The maintenance person attends the complaints
on priority and emergency basis after the job requisition if the break down can be set right by
the in house facility. In case if the break down cannot be rectified in house the work is
transferred to an external agency through purchase and planning department.

When the work is completed, it is collected and after verification it is transferred to the
concerned department. The details of all maintenance done are recorded in the equipment
maintenance chart.

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3.5.8 HUMAN RESOURCE DEPARTMENT

HR department is the most important department in a business concern. Proper management
of human resource is very essential.

Structure of HR department

General Manager
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HOD –
Personnel

Staffs

3.5.8.1 Functions of HR department

The main functions are

• Conducting job analysis

• Planning labour needs and recruiting job candidates

• Selecting job candidates

• Conducting orientation and training programs for new employees

• Managing wages and salaries

• Providing incentives and benefits

• Appraising the performance

• Communication with employee (interviewing, counselling, discipline)

• Training and developing managers

• Building employee commitment

3.5.8.2 Administrative Function

a. Liaoning with government and local bodies

b. Correspondence with various government and non government organization. All the
Internal and external mail, letter and memo, registered items handled by this
department

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c. Security – A well equipped security forced is provided for safeguarding everything
inside the factory complex.

d. Monitoring the daily inward and outward dispatch.

3.5.8.3 Personnel Function

a. Man power planning

b. To ensure optimum use to human resources employed.

c. To determine further recruitment level.

d. To forecast further skill requirements that will serve as a basis foe training and
development programs.

3.5.8.4 Recruitment

Recruitment is the process of searching right persons and stimulating them to apply for job in
the organization. Recruitment in MEIL is carried out based on departmental requirements.

a. Executives – Asst. manager and above

i. Recruitment done through reference or consultants. Probationary
period of 6 months

ii. CV is collected from the employees. It is scrutinized an d list for
interview is prepared based on this CV. Interview is conducted under
the observation of HR and the respective departmental HOD.
Conducted in the corporate office

b. Staff – Supervisors, line employees

i. Recruitment done through reference or consultants

c. Machine Operators-they are selected from local environment. First 2 years,
they are employed as trainees and the 3rd year will be probation period. After
this, they will be promoted as permanent employees. Employees are selected
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strictly based on their educational qualification, work experience, technical
knowhow and age.

3.5.8.5 Induction

a. 12 day induction program is conducted for the newly selected employees

b. 6 day class room training and 6 days on the job training

c. Conducted by the HODs and HR

d. During the induction program the company policies, rules and regulation, plant
overview, job overview are explained to the employees

e. The induction helps the employees to gain information on the company and the
operation carried out

3.5.8.6 Training

a. Annual training plan is prepared and conducted throughout the plant

b. Training conducted for the employees at all levels

c. After training, the effectiveness analysis is conducted.

d. Different trainings conducted are:

i. Orientation training

ii. On the job training

iii. External training

iv. Internal training

3.5.8.7 IR

a. HR plays an important role to maintain good relationship between the employees and
the departmental heads.

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b. Frequent meetings are conducted between the HOD and the employees

c. Monthly departmental review meeting is also conducted to make the employees
aware of the departmental performances.

3.5.8.8 Grievance handling

a. Grievance handling is done by HR and the associated departmental heads. Employee
grievance is given greater importance in MEIL. Immediate action will be taken in
case of grievance.

3.5.8.9 Separation

a. Notice period of 1 month.

b. No specific exit interview conducted.

c. Separation procedures are done manually

3.5.8.10 Attendance management

a. The employee attendance management is also carried out HR department.

b. Punch card system for permanent employees

c. Manual attendance management for the contractual employees

The HR department takes care of the following statutory functions also

a. Companies holydays calendar making

b. Salary and other remuneration

All of the executives, trainee workers and operators earn salary on the last working day of
every month.

Salary structure consists of;-

a. Basic pay

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b. Fixed DA

c. HRA

d. Conveyance & other allowance.

3.5.9 FINANCE DEPARTMENT

For smooth functioning of every organization proper money management is essential. Only
through proper money management a firm can identify it strength and weakness in the
financial structure. The MEIL also give great important to its financial department.

3.5.9.1 Financial Functions

1. Passing and settlement of all miscellaneous advances.
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2. Perform all works connected with insurance coverage of fixed asset.

3. Keeping personnel file of employees relating to salary computation and annual
increment.

4. Prepare profitability trend reports and wage analysis.

5. Quarterly and yearly financial report preparation.

6. Making bank statements

7. Preparation assisting the coordination at all works connected with

8. Finalization of accounts.

9. Assisting statutory/ vigilance/ auditors from head quarters.

10. Make internal and external purchases

3.5.9.1 Structure of financial department

Senior General
Manager

HOD –
Finance

Senior officer
Accounts

Capital budgeting

The capital budgeting is done at the beginning of the year itself. The requirement of capital
will be specified for approval. During the budgeted year, if any further requirement of capital
is faced then a proper justification has to be made. If the requirement is seen as an important
one then approval of the capital is sanctioned.

Cash management

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Cash management system is one of the key areas in any business. Apart from the fact that it
is the most liquid asset, cash is the common denominator into

Which all current assets can be reduced because other major liquid assets, receivable and
inventory get eventually converted into cash.

Credit control function

A trade credit arises when a company sells on credit and does not receive cash immediately.
A company grants credit to protect its sales from the competitors and to attract potential
customers to buy its product at favourable terms. Credit period allowed is 6 days to 90 days.
The collection of credit will be handled by senior sales officers up to 180 days and it will be
handed over to the factory manager. The company will give the creditors a further extension
of one month ,then legal action will be taken against the person or the company. If the
cheque has bounced or has been dishonoured then the company can sue or take legal action
against the person or the company.

Planning of funds

Planning of funds is a careful estimate made by the manager about the total funds required.
This is the estimation done by the observation over the physical activities of the company.

Allocation of funds

Providing funds to proper place at proper time is also an important task to be done by the
financial manager. He studies the cash requirement of each department and then funds are
distributed.

Recording of transactions

Each and every transaction that takes place in the company has to be recorded properly for
the purpose of having better control over the funds and optimality. All the transaction are
recorded in journal and posted to the ledgers.

Fixed assets

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Fixed assets form the major part of the working of any company. Depreciation of fixed
assets is charged on diminishing balance method.

Cost control

The cost is controlled either in the acquisition of raw materials or reduction in operating
expenses or both, as there should be limitation in the utilization of funds. The company
will always have a comparison of budgets and actuals.

3.5.9.2 SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements are prepared under the historical cost convention on accrual basis,
except as otherwise stated and in accordance with the applicable accounting standards.

Use of estimates

The presentation of financial statements in conformity with the generally accepted
accounting principles requires estimates and assumptions to be made that affect the
reported amount of revenues and expenses during the reporting period. Fixed asset are
stated at historical cost less depreciation written off and impairment in value, if any, is
adjusted.

Depreciation

1. Depreciation on assets is provided at the rate prescribed in schedule XIV to the
companies Act, 1956 as under;

a) In respect of plant and machinery, on straight line method

b) In respect of other assets, on written down value method

2. Depreciation on tools and moulds is provided on written down value method at the rate
of 33.33% p.a on technical assessment, which is higher than the applicable rate prescribed
in schedule XIV to the companies Act 1956.

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Investments

These are valued at cost and permanent fall in long term investment if any is provided for.

Inventories

Inventories are valued at lower cost or net realizable value. For this purpose the cost of
bought out inventories comprises of the purchase cost of the items and cost of bringing the
items to factory on FIFO basis. The cost of manufactured inventories comprises the direct
cost of production plus appropriate overheads.

Foreign currency transaction

Monetary items denominated in foreign currency are reported at the exchange rate
prevailing as at the date of the balance sheet and the resultant exchange gain /loss, if any, has
been adjusted to the profit and loss account, to the extent they relate to items other than
liabilities incurred for acquiring for fixed assets. Those relating to liabilities for fixed assets
have been adjusted to the carrying cost of the respective assets.

Sales

Revenue is recognized when the significant risk and rewards of ownership of goods have
been passed to the buyer. Gross sales are inclusive of excise duty and are net of trade
discount.

Retirement benefit

Liabilities of gratuity for employees determined based on actuarial valuation as on the
balance sheet, date is funded with the Life Insurance Corporation of India, and the
contribution there of payable is absorbed in the accounts. Liability for leave encashment
benefit determined based on actuarial valuation as on the balance sheet date is provided for
in the account.

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3.5.10 RESEARCH AND DEVELOPMENT

MEIL has pioneered the indigenous development of Self Setting Automatic Slack Adjuster
for the global market. It has also developed Clutch Booster, Spring Brake Actuator, Brake
Chamber and Wear Sensor, the commercial production of which will commence soon.

MEI’s R & D centre at the IITM res Park, Chennai is recognised by the DSIR, Ministry of
Science & Technology, Government of India. MEI’s R & D is continuously involved in the
process of product improvement, new product development etc. fulfilling customers needs
and demand

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R & D helps in delivering high quality products from MEIL. R & D focus on design and
testing of the products. It also ensures product performance to SAE and customer specific
test norms

Structure of R & D department:

Major facilities available in R & D are

• Durability/Lifecycle test rigs

• Endurance test rig

• Dynamic Salt Spray test rig

MEI got 2 approved patents also.

The major projects currently undergoing in R & D are

1) Clutch booster

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2) Wear sensor

3) Slack Adjuster

4) Caliper

5) PLM Implementation

CHAPTER 4

EXTENT OF TECHNOLOGY ADOPTION

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The IT department takes care of the information and communication technology matters in
the MEIL plants. There is 5 dedicated staff in the whole MEIL plants. The IT departmental
structure consists of one HOD and 4 staff. They provide the main IT related services in the
entire organization. It includes IT administration, services, software updating, system
configuration, ERP customization and management, report generation etc. One IT employee
is available in each plant to take care of IT related issues.

4.1 ENTERPRISE RESOURCE PLANNING

All department of MEIL function as a part of ERP, which functions as a root base, thus
interlinking of all departments functions effectively so as to result in a smoother functioning
of the organization. This department deals with the overall working of the enterprise.

Previously each department functioned as a single non-related entity which resulted in
restricted access of valid documents between departments. This in turn resulted in a
constriction in the working, which was eliminated with the introduction of ERP. It inter
related the department and gave access to the documents of each unit to authorized personnel
even if that particular person is not a part of particular department. For this purpose ERP
uses specialized software, which enables the unit to maintain the record of each department
in an ordered manner on an oracle database in user friendly layman terms, hence enabling
every person with authorization to access the database. The reports from all departments are
incorporated into the database. Initially a user has to sign in on the database with a user ID
and password provided. He then gets access to the list of the data from departments. The
major modules covered by ERP in MEIL are

1) Common masters

2) Marketing/sales

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3) Design

4) PPC

5) Purchase

6) Security

7) Inventory

8) Subcontract

9) Quality

10) Production

11) Payroll

12) Accounts

ERP modules have a common server in the backend. This helps data sharing more effective
among the entire company.

The ERP software is self customized by the MEIL IT department. As per the requirements
the modification are carried out.

Report generation for the entire modules is carried out by the IT manager.

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CHAPTER 5

QUALITY MANAGEMENT IN MEI

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5.1 ISO CERTIFICATIONS

The ISO 9000 family of international quality management standards and guidelines has
earned a global reputation as a basis for establishing effective and efficient quality
management systems. The need for International Standards is very important as more
organizations operate in the global economy by selling or buying products and services from
sources outside their domestic market.

Madras Engineering Industries Pvt Limited is certified ISO 9001:2008. ISO 9001:2008 is the
International Standard for Quality Management Systems (QMS). It provides your company
with a set of principles that ensure a common sense approach to the management of your
business activities to consistently achieve customer satisfaction.

Any organisation can benefit from implementing ISO 9001:2008 as its requirements are
underpinned by eight management principles:

• a customer focused organisation

• leadership

• the involvement of people

• ensuring a process approach

• a systematic approach to management

• a factual approach to decision making

• mutually beneficial supplier relations

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ISO/TS 14001

MEI is awarded with ISO 14001:2004 certification. ISO 14001 is an internationally accepted
standard that sets out how you can go about putting in place an effective Environmental Management
System (EMS). The standard is designed to address the delicate balance between maintaining
profitability and reducing environmental impact; with the commitment of your entire organization, it
can enable you to achieve both objectives.

What’s in ISO 14001

• General requirements

• Environmental policy

• Planning implementation and operation

• Checking and corrective action

• Management review

So ISO 14001 is relevant to every organization, including:

• Single site to large multi-national companies

• High risk companies to low risk service organizations

• Manufacturing, process and the service industries; including local governments

• All industry sectors including public and private sectors

ISO/TS 16949

MEI is also awarded with ISO16949:2002. ISO/TS 16949:2002 has been developed by the
industry, the International Automotive Task Force (IATF), to encourage improvement in
both the supply chain and the certification process. In fact, for the majority of leading vehicle
manufacturers, certification to this specification is a mandatory requirement for doing
business.

ISO/TS16949:2002 is relevant to all types of automotive supply companies, from small
manufacturers to multi-site multinational organizations located anywhere in the world.
However, it is only applicable to sites where production or service parts are manufactured.
Organizations wishing to break into the automotive market must wait until they are on an

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automotive customer's potential supplier list before they can progress with certification to
this specification.

5.2 SIX SIGMA

Six Sigma at many organizations simply means a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-driven approach and methodology for
eliminating defects (driving toward six standard deviations between the mean and the nearest
specification limit) in any process -- from manufacturing to transactional and from product
to service. To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities. A

Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma
opportunity is then the total quantity of chances for a defect.

The fundamental objective of the Six Sigma methodology is the implementation of a
measurement-based strategy that focuses on process improvement and variation reduction
through the application of Six Sigma improvement projects. This is accomplished through
the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma
DMAIC process(define, measure, analyze, improve, control) is an improvement system for
existing processes falling below specification and looking for incremental improvement. The
Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement
system used to develop new processes or

products at Six Sigma quality levels. It can also be employed if a current process requires
more than just incremental improvement. Both Six Sigma processes are executed by Six
Sigma Green Belts and Six Sigma Black Belts, and are overseen by Six Sigma Master Black
Belts.

Thus, Six Sigma = TQM + Stronger Customer Focus+ Additional Data Analysis Tools

+ Financial Results + Project Management

5.3 5S

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5S is the name of a workplace organization methodology that uses a list of
five Japanese words which are seiri, seiton, seiso, seiketsu and shitsuke. Transliterated or
translated into English, they all start with the letter "S". The list describes how to organize a
work space for efficiency and effectiveness by identifying and storing the items used,
maintaining the area and items, and sustaining the new order. The decision-making process
usually comes from a dialogue about standardization which builds a clear understanding
among employees of how work should be done. It also instills ownership of the process in
each employee.

Phases of 5S

There are 5 primary phases of 5S: sorting, straightening, systematic cleaning, standardizing,
and sustaining. Additionally, there are three other phases sometimes included; safety,
security, and satisfaction.

Sorting (Seiri)

Eliminate all unnecessary tools, parts, and instructions. Go through all tools, materials, and
so forth in the plant and work area. Keep only essential items and eliminate what is not
required, prioritizing things as per requirements and keeping them in easily-accessible
places. Everything else is stored or discarded.

Straightening or setting in order / stabilize (Seiton)

There should be a place for everything and everything should be in its place. The place for
each item should be clearly labeled or demarcated. Items should be arranged in a manner that
promotes efficient work flow, with equipment used most often being the most easily
accessible. Workers should not have to bend repetitively to access materials. Each tool, part,
supply, or piece of equipment should be kept close to where it will be used – in other words,
straightening the flow path. Seiton is one of the features that distinguish 5S from
"standardized cleanup". This phase can also be referred to as Simplifying.

Sweeping or shining or cleanliness / systematic cleaning (Seiso)

Clean the workspace and all equipment, and keep it clean, tidy and organized. At the end of
each shift, clean the work area and be sure everything is restored to its place. This makes it
easy to know what goes where and ensures that everything is where it belongs. Spills, leaks,

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and other messes also then become a visual signal for equipment or process steps that need
attention. A key point is that maintaining cleanliness should be part of the daily work – not
an occasional activity initiated when things get too messy.

Standardizing (Seiketsu)

Work practices should be consistent and standardized. All work stations for a particular job
should be identical. All employees doing the same job should be able to work in any station
with the same tools that are in the same location in every station. Everyone should know
exactly what his or her responsibilities are for adhering to the first 3 S's.

Sustaining the discipline or self-discipline (Shitsuke)

Maintain and review standards. Once the previous 4 S's have been established, they become
the new way to operate. Maintain focus on this new way and do not allow a gradual decline
back to the old ways. While thinking about the new way, also be thinking about yet better
ways. When an issue arises such as a suggested improvement, a new way of working, a new
tool or a new output requirement, review the first 4 S's and make changes as appropriate.

5.4 LEAN CONCEPTS

Lean Concepts or Lean Manufacturing is a systematic methodology that identifies and
eliminates all types of waste or non-value-added activities; not only in production or
manufacturing operations, but in the service industry as well. Whether you are
manufacturing a product or providing a service, there are components that are considered
"waste". Lean concepts are purely about creating more value for customers by eliminating
activities that are considered waste. Any activity or process that consumes resources, adds
cost or time without creating value becomes the target for elimination.

Lean focuses on the "big picture" or improvements in the entire business process as opposed
to incremental improvements. It is the business process system that can significantly improve
a company's profitability.

Lean concepts improve operating performance by focusing on the continuous flow of
products, materials or services through the value stream. To achieve this, the various forms

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of waste must be identified and eliminated. Waste can include any activity, step or process
that does not add value for the customer.

Lean Manufacturing, sometimes also referred to as the Toyota Production System, is about
the systematic elimination of waste.

The Toyota Production system identifies seven major forms of waste. They are:

Waste from Overproduction — producing more than is required by the customer or
marketplace which generates unnecessary inventory.

Waste from Transportation — multiple handling or movement of products does not add
any value to the product.

Waste of Motion — of the workers, machines, and handling. Searching for tools or parts
due to the inappropriate location of these items is considered waste of motion.

Waiting — a worker waiting for a machine to finish a cycle, waiting for a supervisor to
answer a question, or waiting for information or materials reflects an interruption to flow and
need to be eliminated.

Processing — unnecessary processing steps should be eliminated. Combine steps where
possible.

Inventory — or Work In Process (WIP) is material between operations as a result of large
lot production or processes with long cycle times. This reflects system problems.

Defects — producing defective products are pure waste. Prevent the occurrence of defects
instead of scrapping or repairing.

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CHAPTER 6

SWOT ANALYSIS

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6.1 SWOT ANALYSIS

The study, subject to the limitations, highlights the following strengths, weaknesses,
opportunities and threats:

STRENGTH
1) The company situated in SEZ, so they enjoy lots of benefit. MEIL can run their
exporting easily and also they enjoy some tax benefits.
2) Dedicated young work force
3) Financial strength of the company
4) Capable marketing personnel
5) MEI group has nearly 40 years of experience in the design and manufacturing of
slack adjusters.
6) Excellent infrastructure for manufacturing products.
7) Total in house production is a major strength of MEIL
8) Govt. of India approved R & D makes MEIL the top player in this sector.

WEAKNESS
1) Customer satisfaction survey is not covered for a wide range of customers.
2) ICT is not used effectively in the plants.

OPPORTUNITIES
1) To excel as a reliance company for global outsourcing requirements.
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2) Diversification of the product line with new high quality products such as clutch
booster, brake chamber, Spring Brake Actuator
3) Unexplored global market

THREATS
1) Fluctuating economic environment
2) Recession in the global market
3) Availability of skilled labours.

CHAPTER 7

OBSERVATIONS & SUGGESTIONS

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7.1 OBSERVATIONS

Based on the study conducted, the following observation are made
1. MEIL produces the best slack adjusters in India and in the world
2. The company is running in a systematic and organized manner
3. The internal communication of the company is doing well
4. Majority employees of MEIL are men.
5. The manufacturing unit is well maintained, clean, hygiene
6. The employees are satisfied with the working conditions and working hours of the
firm
7. R&D cell of MEIL is well acclaimed
8. Both punching cards and biometric (using swipping cards) system is used to mark
attendance
9. Workers health and safety are given prime importance.
10. Diversification of products in the same product line

7.2 SUGGESTIONS

1. Based on the study conducted, the following suggestions are made
2. MEIL has the potential to expand its business in the global market.
3. MEIL can use modern technologies in the ICT department.

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4. MEIL can adopt strategies that would result in lowering the wastage and thereby
lowering the production cost.
5. MEIL can add some recreational activities for the employees.
6. MEIL can design and execute a CSR activity in Chennai

CHAPTER 8

LEARNING EXPERIENCE

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