Preface

This report gives an insight into the practical realities,

which the students confront while in the practical project

report preparation. In this report we have studied how to

develop a feasibility report and how to develop a new

project by seeing the environmental, financial, economical

requirements of country as well as of the investors.

Authors

Acknowledgements

All praises are for Allah Almighty who bestowed potentially upon us to

accomplish this report successfully.

We also have sense of gratitude to Honorable teacher Mr. Liaqat Javed

for his generous initiation and guidance in writing this project report.

Preparing a report on any subject is not an easy task without the help of

some guiding bodies. This report also required the assistance of some

helpful persons. It would be unfair if we do not mention the names of

those persons who honestly have helped us. Following are persons who

have helped us a lot.

Mr. Shamim Ahmed

(M.D. Liaqat Corporation)

Mr. Aamir Khan

All these personalities have been a source of guidance for us during the

preparation of this report. We acknowledge with thanks for their help.

Needless to say that all the shortcomings of the report remain to be our

responsibility.

Authors

P r e f a c e

This report gives the overall view of the

I have met different shopkeepers at Khan Plaza And Hafiz Centre

(Lahore) for gathering as much information as I can. I have implied my

mental abilities to arrange the information and present it in a good

manner, so, the reader can draw information about my research work.

Chapter No.1

Introduction And History of

Organization

Introduction of ATLAS GROUP OF COMPANIES:

Established 1962

Products Cars, Motor cycles, Batteries,

Insurance, Leasing, Investment

Banking, Trading, Automatic parts,

Information Technology.

Introduction of HONDA ATLAS CARS(PAKISTAN) LTD.:

Honda Atlas Cars(Pakistan) Ltd. is a joint venture between Honda

Motor Company Ltd., Japan & Atlas Group of Companies, Pakistan

signed on August 5, 1993. The agreement signed between the two

sponsors is for collaborations for development of parts and systems for

manufacture of Honda Cars in Pakistan. Pakistani and Japanese cultures

have blended exceptionally well to form a professional team of

dedicated specialists. This team has done wonders since it's inception

and has created many records. It was on April 17, 1993 when the

foundation lying ceremony was held and in a record period of eleven

months on March 31, 1994 the construction and plant and machinery

installation was completed. Running race again time the first car was

rolled out of the assembly line on May 8, 1994 passing the way for a

formal inauguration of the plant.

No other persons than the president of Pakistan and the president of

Honda Motor Company graced the occasion of inauguration on July 13,

1994. The first CIVIC made in Pakistan started with pomp and grandeur

on July 14, 1994 at 6 dealerships in Karachi, Lahore and Islamabad.

The response received from customer was overwhelming and a morale

booster for all concerned at HACPL. It is to be noted that HACPL was

the first in Pakistan to introduce 1500cc cars, prior to this, there were

same sized cars with smaller engines. With the rapid increase in

business, new warehouse facilities were constructed in June 1995.

HACPL keeping its promise to come upto the customer's

expectations and to give them money's worth introduced a full model

change in January 1996. This was made possible after almost a year and

a half of production of the previous model. These models namely, VTi,

EXi & LXi in 1600 and 1500cc were offered. Later in the year

Automatic Transmission was introduced in EXi & VTi model. These

models were again based on customer's demands gathered from various

surveys. Like previous records, these models also had many firsts in

Pakistan. To name a few:

PGMF-i (Programmed Fuel Injection)

VTEC (Variable Value Timing & Life Electric

Control)

Automatic Transmission

The main features being:

Alloy Wheels

Rear seat belts

Power Antenna

Later on, Honda City was introduced to enable those customers to

own Honda Cars who could not buy CIVIC due to price factor.

Company Philosophy:

1. Dynamic Manufacturing and marketing of prestigious products

to the entire satisfaction of customers.

2. Create ideal working environment for continuous development

of product and personnel.

3. Provide adequate return to shareholders and fulfil corporate

civic and fulfil corporate civic obligations.

Image of Company:

(1) Zero line stop and zero defect.

(2) No.1 customer satisfaction

(3) Fair rules.

(4) Profitable organization

(5) Market leader.

(6) Respect for all.

(8) Self reliant, exceeding the goal.

(9) Open and frank atmosphere.

(10) Believe in originality

(11) Encourage localization

(12) Environment friendly

Company Information

Registered Office

1- Mcleod Road, Lahore, Pakistan.

Phone: 042-7238005

Fax: 042-7233518

Factory

43-km, Multan Road, Manga Mandi, Lahore, Pakistan.

Ph. No: 042-5750011-17 & 19 Fax No: 042-5750020

Regional Office:

There is only one regional office which is located in Karachi.

This regional office is concerned with the delivery of spare

parts and service only.

Shareholdings

Honda Motor Company Limited, Japan...........51%

Atlas Group Of Companies, Pakistan...............30%

Public offerings.................................................19%

Paid up capital...................................................Rs. 400 million

Dealership Network

Islamabad .......................... 1

Karachi .............................. 4

Lahore ............................... 1

Multan ............................... 1

Gujranwala ......................... 1

Sialkot ............................... 1

Peshawar ........................... 1

Quetta ............................... 1

Faisalabad .......................... 1

Hyderabad ......................... 1

Important Features Of Honda Atlas Cars (Pakistan) Ltd.

Honda Atlas Cars Ltd. is rated very high in tons of efficiency,

quality and working condition.

The buildings of HACPL are neat & beautiful.

The security system of factory is very tight. Transport vehicles

are carefully checked before allowing them to enter the factory

premises.

Pakistani and Japanese cultures have been blended to form a

professional team of dedicated specialists.

"Equality" is a significant feature of HACPL. The president of

the company sits along with other employees in a hall. His desk

is not different from those of others. He has no secretary.

There is no residential colony for employees.

Special coasters have been hired for travelling of employees

between Lahore and factory.

Following facilities have been provided to employees in factory

premises:

- Mosque

- Canteen

- Fair price shop

- Lockers

Product Range

(i) City ( EX, EL)

(ii) Civic (VTi , EXi, LXi)

Chapter No.2

Operations Strategy

Product Plans ................................. Assemble to order strategy

Competitive Priorities ...................... Low cost

Consistent quality

On time delivery

Process Design ................................ Labour + Moderate

technological intensive

Material Management ...................... Formal Supplier Relations

Production Plans .............................. For 1 month.

Scheduling ....................................... Planned for ahead

Capacity .......................................... Lower utilization

Chapter No.3

FACILITY LOCATION

Facility location is the process of determining a geographic site for

a firm's operations. As mentioned earlier, the factory of Honda Atlas

Cars (Pakistan) Limited is situated near Manga Mandi at a distance of

43 km from Lahore.

Factors Contributing Towards Location

Following are the factors which contributed towards this facility

location.

1. Proximity To Market

Perhaps this is one of the most important factors which contributed

towards the present location of Honda Atlas Cars (Pakistan ) Ltd. The

market of Honda comprises of :

Business executives

Politicians

Landlords

According to information provided by company sources, HACPL

has a network of 14 dealers. Out of these, 7 dealers are located

within a radius of 400 km from the factory. HACPL has an edge over

Indus company ( the manufacturer of Toyota) in this regard. Since

Toyota cars are manufactured in Karachi, so dealers of only two cities

(i.e. Karachi and Hyderabad) fall within a radius of 400 km from the

factory.

2. Favourable Labour Climate

The factory of Honda Atlas Cars (Pakistan) Ltd. is located

near Manga Mandi which is not very far from Lahore. Lahore is the

second largest city of Pakistan. A large number of industrial units are

operating here and this along with the presence of many technical

training institutions have contributed towards the provision of abundant

skilled labour. Since there is no residential colony of HACPL so some

problem might have been created in this regard. However, the

management have solved this problem by living comfortable coasters

for pick & drop of its employees.

3. Infrastructure

The place where factory of HACPL is located, is rapidly becoming

an industrial zone. Some of the famous organizations having factories

in the area are Rafhan, Volvo, etc. The decision of these organizations

for selecting this location might have been influenced by excellent

infrastructure available here. All these factories like electricity,

telephone, etc are also easily available.

A Negative Feature Of Present Location

Some 62% of the parts used in Honda Cars are imported. Since the

factory of HACPL is at a distance of more than 1,000 km from the part,

this results in higher transportation cost for inputs. Indus company, the

major competitor of HACPL, has an edge in this respect since it is

located in Karachi.

Transportation Cost

Honda Atlas Cars (Pakistan ) Limited, tries to reduce the

transportation cost through the following ways:

HACPL prefer that vendor who supplies material at the

HACPL's destination (plant) while remaining in suitable price

and quality ranges.

HACPL charges Ex-factory rate for its product from customers.

The customers have to bear the transportation cost from plant

to the respective dealer of their city. (For example, the

customers in Multan have to bear about Rs 5,000 for

transportation and insurance charges. However, sometimes, this

cost is beared by the dealer to satisfy frequent buyers)

The reason why HACPL charges the transportation and insurance

cost from customers is that its insurance cost from customers is that its

market consists of upper-middle and upper class and paying an extra Rs

5,000 is not a problem for members of these social classes.

Chapter No.4

FORECASTING

Forecasting is the prediction of future events used for

planning purpose. It may involve taking historical data and projecting

them into future with some sort of mathematical method adjusted by a

manager's judgement.

Planning of an organization depends upon the forecast of the

demand of the product. There are three approaches of forecasting.

Qualitative approach

Quantitative approach

Casual forecasting

Forecasting At HACPL

Honda Atlas Cars Ltd. employees one year forecasting.

They forecast the demand of Civic and City and then make production

decisions.

Method Used For Forecasting

Sales Force Estimate

Executive opinion

Naive Method.

The method of forecasting in HACPL is the combination of

executive opinion and naive method.

In annual meetings, executives from different departments jointly

determine the product demand on the basis of several factors such as:

The trend in the economy

Annual budget of the country

The policies of government

The inflation rate

The policies of large companies regarding the provision of

transport facility to their executives.

The cotton crop ( to some extent )

The past sales data.

The role of Marketing & Sales Department is very crucial in the

whole Forecasting Procedure. Hence the influence of Marketing

Manager is more in this regard but the main thing here is the mutual co-

ordination and agreement.

Chapter No.5

Process Design

Honda Atlas Cars (Pakistan Ltd. has a separate production

department which is headed by Vice President (Production). A

Japanese person is currently working on this seat.

The production department has a number of sections such as:

Vendor Section

Engine Section

Welding Section

Maintenance Section

Paint

Vehicle quality control.

These along with some other sections are arranged in four groups,

each one headed by a Gm. For Example, there is one GM for welding,

paint and maintenance.

Plant Capacity

Currently the plant has the capacity of 35 vehicles per day which is

lower than that of Toyota. As for as the production level is concerned,

it varies from time to time.

It was 15 cars per day when I visited the factory. This shows that

the plant is being underutilized. There may be several reasons for this

under-utilization such as:

Weak economic condition of the country.

Problems with cotton crop.

High price of Honda Cars.

Decrease in purchase of cars by large companies.

Presence of Toyota

Decrease in the purchasing power of potential customers.

Machinery:

A brief list of machinery used in HACPL is given below:

Boilers

Compressors

Water treatment plant

Ovens (for backing the body of cars)

Spot welding guns.

Two-post lifts

G-SWAT/ B-S / S Side Slip / Shower testers

Important Parts:

Various parts of engine

Brakes

Seats

Lights

Cooling System

Tyres

Rims

Fuel tank

Production Process:

In order to fulfil requirements of widely diversified needs of the

market, HACPL has developed its production facilities from a dedicated

engineering set up to a highly flexible and wide range production

system comprising of following activities Shown in chart.

Production Procedure

1. The production procedure starts from welding. This is done with

the help of special machines. In this way the basic frame is

manufactured and is transferred to panting section.

2. The painting section is equipped with modern machinery. Here,

the process starts with wiping, cleaning and degreasing of frame

which are followed by Phosphating and ED coating. Now the

frame is backed in special ovens. After backing, following coat are

applied:

Base coat

Final coat

Clear coat (for shining)

3. After painting, the frame is shifted to assembly line. Here

ornamental parts such as lights are fixed followed by heavy parts

like engine, tyres seats, wind shield, etc. The procedures at

assembly line can be understood by figures mentioned earlier.

4. After passing through assembly line, the car moves to "vehicle

quality department". Here, different tests are applied. Currently,

HACPL is using three QAEs (Quality Assurance Equipment)

which are mentioned below:

"G-SWAT" ( Geometrical Static Wheel Alignment tester) for

alignment.

"B-S testor" for testing breaking force and speed meter.

"S-S testor" for testing side slip:

After applying these test, the car is driven an a 1-km "test course".

Here the noise and performance of car an different road conditions

are tested. Finally, a "shower test" is applied to find leakages if

any.

5. In this final stage, pre delivery inspection (PDI) is made and a

sticker is attached. Now, the car is ready for shipment.

Quality Control

A lot of importance is given to " quality control" in HACPL. The

personal of HACPL is highly qualified in this regard.

When purchase material arrives, thorough checking of that material

is made. If any deficiency is found then it is reported. If the

deficiencies are beyond the acceptable level then the material is

returned to supplier according to terms & conditions of the contract.

However, the chances of such happenings are very less because HACPL

has very tight purchasing policy and it has no compromise on quality.

Similarly, the finished product is tested before delivering it to the

customers in order to assure the quality standards. On the whole, the

quality control / quality assurance personnel are continuously engaged

in improving quality to need the requirements of each customer

individually and the market as a whole.

HACPL is successfully using "Kaizen" system for quality

control. Employees are encouraged to improve quality and reduce cost.

Every month, about 20-25 prizes are given on showing good

performance.

HACPL is ISO 9002 certified. It was the winner of "Best Quality

Award for Asia" in 1996,1997 & 1998.

Chapter No.6

Planning And Development:

Currently, Honda Atlas Cars (Pakistan) Limited is not in a position

to make major changes in its cars. Only minor changes can be made

here and decisions about these changes are made at the top level.

Marketing & Production people play an important role in this regard.

Research & Development Department:

The role of research and development is to introduce innovative

ways to achieve the objectives especially through production facilities.

Unfortunately, there is no research and development department in

HACPL. This function is performed by Honda Motor Company, Japan.

All major changes in models of Honda cars are introduced there.

Employees of HACPL are sent to Japan, where they are trained

according to new conditions. Later on, these changes are introduced in

the models offered in Pakistan.

Deletion Programme:

“Deletion is to replace the imported parts of vehicles with the parts

either manufactured in house or purchased through local vender

industries.”

Honda Atlas Cars (Pakistan) Limited is persuing a realistic and

progressive deletion programme for indigenisation of assemblies, parts

and components. This dynamics programme is being implemented

through in-house assemblies and manufacturing operations, and is being

supplemented by vendor development.

HACPL is almost same as that of its major competitor, i.e. the

manufacturer of Toyota Cars. Efforts are being made by top

management to increase this percentage.

Achievement of Objectives Through Operations:

The production department of HACPL is playing a vital role in

achieving the overall objectives of the company through efficient

utilization of resources.

1. HACPL is achieving production efficiency through:

Evaluation & improvement of quality control.

Training of production employees.

Modernization of plant and machinery.

2. Similarly cost minimization objective is being achieved through:

Deletion programme

Avoiding poor quality products, which are a loss for

the company. As mentioned earlier, HACPL is

achieving excellent quality levels through giving

training to personal plus proper use of technology.

Chapter No.7

Inventory

Inventory is a stock of any things held to meet future demand.

Inventory is created when the rate of receipts exceeds the rate of

disbursements. It is depleted when disbursement exceeds receipts.

There are three types of inventory:

Raw material inventory

W.I.P. inventory

Finished goods inventory

The basic objective of any firm is to minimize total inventory cost

(ordering & carrying). The same is the case in Honda Atlas Cars

(Pakistan) Limited.

In HACPL, the whole inventory system is computerized.

Following are the advantages of this computerized system.

1- Updating records.

2- Providing management reports.

3- Automating the recording process.

4- Re-computing decision parameters.

In HACPL, the inventory basis and audit reports are prepared.

Reason for P-System:

1. Administration of the system is convenient because replenishments

are made at fixed intervals, Employees can set aside a day or part of a

day regularly to concentrate on this particular task.

2. Order for multiple items from the same supplier may be combined

into a single purchase order. This approach may result in a price break

from the supplier and saves the buyer some paperwork, thereby

reducing ordering costs, suppliers also may prefer combined orders

because all items in the order may be shipped at the same time, reducing

transportation costs and increasing vehicle utilization.

3. The inventory position, IP, needs to be known only when a service

is made.

Safety Stock

HACPL maintains a safety stock of 2 to 3 months. The reason for

maintaining a safety stock is as follow:

To protect against shortage that occur due to suppliers.

To protect smooth and continuous operations.

In HACPL, the inventory is held in the following forms:-

Inventory of imported parts.

Inventory of local parts.

In order to avoid stock out, they have more safety stock of

imported parts as compared to that of local parts.

Shortage Of Inputs

There are special warehouse for the purpose. Both imported and

local parts are stored here. The boxes of parts are placed at approximate

distance and fork lifts can easily move within the warehouse. The

results in convenient movement of parts from warehouse to assembly

line etc.

Storage Of Output (Cars)

There is no proper warehouse for parking of cars moving out of

assembly line. A place has been assigned for this purpose but there is no

roof over it. Actually these can are serviced when they arrive at the

showrooms of dealers so management of HACPL does not feel any

need of having a covered place for these cars.

Chapter No.8

Aggregate Planning

Aggregate planning is a statement of production rates, work force

level and inventory holding based on estimates of customer

requirements and capacity limitation.

Production Plans

The production plans are prepared for three months based on the

customers orders and uncertainty in demand,

Work Force Level

In HACPL, work force schedules are arranged on the basis of

production plan. If demand is high, then extra workers can be hired on

contract basis or the existing permanent employees can be employed in

extra work to meet the targets.

When I visited the factory of HACPL, the daily production was 15

cars. For this reason, there was a single shift except for maintenance

department.

Chapter No.9

Material Management

Material management concerns short-range decisions about

supplies, inventories, production level, staffing patterns, schedules &

distribution is as follows:

Purchasing:

Purchasing in the management of the acquisition process, which

includes deciding which supplies to use, negotiating contract and

deciding whether to buy locally or centrally. Purchasing must satisfy the

firm’s supply needs and support the firm’s production capabilities.

In HACPL, the whole action can be described under following

headings.

HACPL imports materials from the parent Honda Motor Co, Japan

in the CKD (complete Knocked Disk) form.

HACPL also purchases materials from the Local Vendors

Supplier Selection:

HACPL prefer those suppliers who fulfill the following

requirements:

Provide best quality material at low cost.

Shorter Lead Times

Provide material to production plant of HACPL. (i.e.

provide material at destination).

On time delivery

These are the reasons which forces HACPL to go for local

contracting.

Procedure For Returning Of Low Quality Material:

HACPL has its own quality standards regarding materials. HACPL

has not any habit of accepting Low Quality Raw Material at low rates.

HACPL returns the low quality materials to the supplier according to

the terms and conditions of the contract.

Supplier Relations:

HACPL, Vendor Development is mainly entitled with the

responsibility of establishing working relationship with all the agencies

(Vendors) involved in Supply if materials. Similarly HACPL has formal

relationships with the local vendors.

Distributors:

To store the finished products, (Honda Civic & Honda City),

HACPL uses both FORWARD BACKWARD PLACEMENT.

HACPL has a country-wise network of Sales Dealers who are

actively engaged in promoting the image of HACPL and its cars.

The details of HACPL’s dealers have been mentioned earlier.

Transportation Mode:

HACPL has a habit of using only one mode if transportation (i.e.

Highway) for the both inputs and outputs. The logic behind this mode is

low cast and flexibility of shipping to almost any location in Pakistan.

Currently, HACPL has no transportation fleet of its own. Nearly

five transportation companies are performing this function on contract

basis. NLC is also included in these companies.

Chapter No.10

Total Quality Management

Total Quality Management: (T.Q.M.)

T.Q.M. stresses three principles:

Customer Satisfaction

Employee Involvement

Continuous Improvement

Attaining quality in all areas of a business is a difficult task.

It is necessary for an organization to provide its customers with best or

even consistent quality products in order to survive in the environment.

The success of any business depends upon how accurately the company

perceives the expectations of Customers plus its ability to bridge the

gap between consumer expectations & operating capabilities.

In HACPL the concept of T.Q.M. is more common. This can be

explained as follow:

Customer Satisfaction:

HACPL’s employees try at their level best in satisfying the

customers & hence stepping forwards the objective of the company.

The contribution of Marketing & Production department is very

important in this regard. These departments continuously go for the

ways to improve the features of existing HACPL’s products and hence

satisfying the customers.

Employee Involvement:

HACPL’s management considers its employees a great asset. The

employees along with sales dealers are part of the large “Honda Family”

and they form an integral part of policies and decisions that help shape

the future of the company.

The management of HACPL considers the proposals/Suggestions

of its employees up to a great extent. It appreciate the employees in this

regard through Monetary or Non Monetary benefits. Management of

HACPL put great emphasis on creating and maintaining an enterprise

environment in the company that maximizes the interest and

motivations of its employees which is very vital to enhance labour

productivity and efficiency.

Training of Personnel:

HACPL puts great emphasis on training and development of

employees to help them realize their full potential. Employees from all

departments especially form production, finance and marketing attend

training courses in their respective fields. This has greatly contributed in

improving employees performance and efficiency at all level.

Continuous Improvement:

The Management of HACPL has a view of continuous

improvement in order for the better Utilization of resources and

improving Honda brand image in the market. HACPL is trying at its

level best to introduce and implement better quality control procedures,

redesigning the production process, automating the whole plant etc.

Employees involvement is playing vital role in this regard.

Chapter No.11

Suggestions

1. Efforts should be made to reduce the cost of Honda cars.

2. There should be more coordination between HACPL and its

suppliers.

3. A low-priced model should be introduced to capture the

market share of SUZUKI.

4. Deletion programme should be implemented rapidly.

5. Although HACPL has taken some steps for environmental

protection, more efforts should be made in this regard.

6. The dealership network should be widened.

7. Employees should be encouraged to give suggestions.

8. Some sort of research should be done at HACPL.

9. Efforts should be made for better utilization of capacity.