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A
PROJECT REPORT
ON
“RECONCILIATION AND COST OF CONVERSION”
AT
SATPUR, NASHIK.
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
SUBMITTED TO UNIVERSITY OF PUNE
FOR THE ACADEMIC YEAR(2010 – 2012)
UNDER GUIDENCE OFMISS. MOHINI MONDOKHOT
BYMR. TUSHAR RAVINDRA LACHAKE
MBA (PART – II) FINANCE
NGSPM’S BRAHMA VALLEY INSTITUTE OF MANAGEMENT, ANJANERI,
NASHIK.
CEAT TYRE LTD.NASHIK PLANT
ACKNOWLEDGEMENT
It was a wonderful opportunity for me to work with this organization and to do study on “
Reconciliation and Cost of Conversion”. Firstly, I would like to thanks Mr. Devlalkar Sir
(Finance). For allowing me to work on the project and encouraging and introducing me to the
working environment of the organization. The project was constantly supervised by Mr.Nikhil
Deshpande and Mr Meghe. He personally devoted his valuable time at various stages and was
always there to help me out at any confusing moment.
During the project, I got valuable information about CEAT Tyres.ltd. and knowledge
about Reconciliation and Cost of Conversion. This project helped me to get in touch with
practical use of management studies. I would like to take this opportunity to thank all those
account staff members who helped me in completion of my project.
Last but not the least I would like to thank all the faculty members and especially to Miss.
Mohini Mondokhot of my Institute, Nasik. Who were instrumental in providing the concepts,
which were put into practice in order to complete the project.
MR. TUSHAR RAVINDRA LACHAKE
MBA ( PART-II) FINANCE
DECLARATION
I Tushar Ravindra Lachake student of MBA (Part-II) 2010-2012 studying at Brahma
Valley Institute of Management Anjaneri, Nashik. Solemnly declare that the project work title as
“RECONCILIATION AND COST OF CONVERSION” was carried by me in partial
fulfillment of the MBA programmed under University of Pune is genuine work of mine. It has
not been either fully of partly related to any other institute prior in any other connection. Thus
project was undertaken as part of the academic curriculum according to the university rules and
norms and by no commercial interest and motives,
Signature of the Student
Tushar Ravindra Lachake
M.B.A. (Part-II) Finance
INDEX
CHAPTER NO.
CONTENTS PAGE NO.
CHAPTER : 1 INTRODUCTION
1.1 Object of the project1.2 Selection of the study1.3 Objectives of the study1.4 Research Methodology1.5 Scope of the study1.6 Limitations of the study
CHAPTER : 2 PROFILE OF THE ORGANIZATION
2.1 History of the organization2.2 Organization Chart2.3 Products / Services of the organization2.4 Interdepartmental relationship in the organization2.5 General Information
CHAPTER : 3 THEORETICAL BACKGROUND
3.1 Definition of Material Reconciliation3.2 Need of Material Reconciliation3.3 Essentials of Material Reconciliation3.4 Procedure of Material Reconciliation3.5 Uses of Material Reconciliation3.6 Presentation of the data in table, graphs, diagrams3.7 Interpretation of the data/information collected
CHAPTER 1 : INTRODUCTION
1.1 Object of the project
The main objective of carrying out this project is to know and gain practical knowledge
about the organization’s work culture. Also according to Pune University circular, every student
has to undergo project training in an organization for the time span of a minimum of forty five
days to gain practical knowledge with education.
The purpose of the project is to know the operation of the organization to do the
thorough study and recommend the alternative solutions to the organization.
1.2 Selection of the study
Today optimum utilization of material is vital task for every business unit. Without
proper utilization of material business cannot maintain its quality with its low price. Instead of
concentrating on marketing aspects and core financial aspects of business, I think material is
very basic and important area of business. Therefore I decided to focus on ‘Material
Reconciliation’ concept.
Material reconciliation helps to management for Inventory control system. This helps in
many tools such as ABC Analysis, XYZ analysis, VED Analysis, GOLF Analysis etc. Material
reconciliation helps in controlling all type of material which is used in all type production
process. It means that to convert raw material in finished goods.
1.3 Objectives of the study
The study was carried out keeping in view the following objectives: -
To review the Standard method Material reconciliation.
To study what is mean by material reconciliation.
To study the procedure of Material reconciliation.
To study Results report for material reconciliation.
To compare performance given by Trimbak Rubber and Art Rubber as per reports
1.4 Research Methodology
Research in a common parlance refers to a search for knowledge. Research can be
defined as a “Scientific & Systematic search to pertain information on a particular topic”.
Research is considered to be the more formal, systematic and intensive process of carrying on a
scientific method of analysis. Research methodology is a way to systematically solve the
research problem. “The procedures by which researchers go through their work of describing,
explaining and predicting phenomenon is called methodology.”
Appropriate methodology is an essential characteristic of quality research studies,
irrespective of the discipline to which they are related. The research is totally dependent on the
data, which has to be collected through various methods. The following are the types of data:
DATA COLLECTION
Data Collection is an important step in methodology of any project and success of any
project will be largely depend upon how much accurate you will be able to collect the data.
Information & data collected for the purpose of the study is categorized in two parts:
1.Primary Data
2.Secondary Data
PRIMARY DATA
It is data, which we collect on our self from observations or asking questions o others.
The primary data is collected from Finance Department of CEAT Ltd, Nashik. This data includes
information on company profile, its products. Primary data is collected by the means of
discussions, difficulty solving sessions.
SECONDARY DATA
Secondary data is such a data which is already exits i.e. they refer to the data which have
already been collected and analyzed by someone else. When the research utilizes secondary data
then he has to look into various sources whose he can obtain them usually the published data are
available in various publication technical and trade journal books, magazines and news paper and
reports etc. The various sources of secondary data includes
1.Annual Report of Ceat Ltd.
2.Website of Ceat Ltd.
3.Different Books of Financial Management
1.5 Scope of the study
The organization wherein the study was conducted is one of the large organizations of
Nasik City. The total turnover of the CEAT Ltd. is about 1400 crores and has a large share in the
country’s tyre exports, out of which the Nasik plant contributes a turnover of about 564 crores.
Thus the scope of the study was also vast.
The project was conducted under the efficient guidance of qualified and expert staff in
their fields. Latest knowledge could be acquired in various fields of accounts such as Finance,
Costing and Budgeting, Auditing. Knowledge about the information technology (ERP) i.e.
Enterprise Resource Planning used in all fields of accounts. Fruitful experience of working at
CEAT Ltd. and knowing about the management strategies & polices.
1.6 Limitations of the study
Basically being a Process industry, and continuous production schedules being operated it
was not feasible to study 100% of the process in minute detail.
As I was personally involved in Material reconciliation and physical verification there
were some observations:
It has a large and a wide scope in improving productivity and efficiency of employee. It is a continuous process. It helps to develop the human resources and cordial relations.
Limitation:1. Due to limitation of time period, achieving sufficient details was not possible.
2. Due to secrecy of organization detailed information was not available.
3. Proper inspection must be required for reducing the defects.
4. Skilled workers are must be required on large basis.
5. Sometimes there will be no proper utilization of raw material.
CHAPTER 2 : PROFILE OF THE ORGANIZATION
2.1 History of the Organization
Ceat was established in Turin Italy, in the year 1924. The founder was Dr. Virgin
Tedeshchi. Ceat started effectively making cables for telephones and railways. After the First
World War Ceat diversified into textiles and tyres.
Ceat the four letter word in Italian actually stands for Cavi Electrici Affini Torino
(Electrical Cable And Allied Products Of Turin) Ceat of Italy had gained recognition in post-war
Europe as a tyre manufacturer of excellence. This reputation, plus 34 years experience and the
complete commitment of the promoters to make India a base for tyres of quality – at par with the
world’s best, and towards contributing to the nation’s basic industry infrastructure, forms Ceat’s
inheritance.
On 10th March 1958 Ceat tyres of India ltd. was formally incorporated with a capital of
Rs. 1.15 crores contributed in a 60: 40 ratio by Ceat of Turin, Italy and Investment Corporation
of India. (A Tata group company)
The Italian’s also brought in the machinery and technical knows-how. On 22nd February
1960 the first tyre heaved out of the steaming mould in the Ceat factory at Bhandup. The
production at the end of first year came to 45,246 tyres valued at Rs. 1.37 crores. This was an
output by 200 workers.
On 15th August 1973 the second manufacturing plant of ceat was started in Nasik. At
present “Ceat” is amongst the forerunners in India’s tyre industry. The production in 1960 was
45000 tyres and has multiplied over the years and today is close to 6 million tyres per annum.
Ceat ltd. has a technical collaboration with Yokohama rubbers (company of Japan) with
two full-fledged manufacturing plants. Today, the total production per annum is close to 6
million units, making Ceat one of the top 20 tyre companies in the world.
Ceat’s turnover is exceeding Rs. 3000 crores. In a span of five decades, Ceat has grown
to offer the largest range of tyres in the Indian market. With tyres for every user segment, from
scooter and trucks, to large off the road tyres, one out of every 35 Indian citizens has been a
proud Ceat customer. While enjoying a position of privilege as a major supplier to OEMs, the
service to the retail market includes over 90 Ceat shoppes. These exclusive passenger tyre retail
outlets, set up in every part of the country, offers a wide range of services in addition to selling
tyres, with a service network of over 4,500 dealers, 30 regional offices, 93 Ceat shoppes and 100
C & F (carrying and forwarding agents.) Ceat is truly dedicated to the safety and comfort
of its customers. The quality of products has also ensured a firm foothold in export markets such
as USA, Germany and many Asian countries.
Corporate History
1. A recollection of our past gives us pride, but it is the responsibility of the future that makes us
wise.
2. CEAT International was first established in 1924 at Turino in Italy and manufactured cables
for telephones and railways.
3. In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in collaboration
with the TATA Group.
4. In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the company
CEAT Ltd.
The journey since has been smooth, ups and downs notwithstanding. Today, we are on a roll and
looking long distance. Our current mileage:
1. Operations in Mumbai and Nasik plants
2. Exports to USA, Africa, America, Australia and other parts of Asia
3. Network of 34 regional offices, 7 Zones, over 3,500 dealers and more than 100 C&F agents
4. Dedicated customer service, with customer service managers in all four divisional offices,
assisted by 50 service engineers.
5.Over 6 million Tyres produced every year.
Vision of Ceat Tyres Ltd.
"CEAT will at all times provide total customer satisfaction through products and services of highest quality and reliability."
Mission of Ceat Tyres Ltd.
"To nurture an exciting and challenging work environment with fairness and transparency.” Our commitment to quality ensures that you have a safe ride, always. So go on, defy destiny.
2.2 Organization chart
Mr. R. P. Goenka
(CHAIRMAN)
Mr. Rahul Avasthi
(V. P. MANUFACTURING)
Mr. Hundal Singh
(G. M. NASHIK)
Mr. H. R. Goenka
(VICE-CHAIRMAN)
Mr. P. Choudhary
(MANAGING DIRECTOR)
Mr. Devlalkar Sir
(FINANCE MANAGER)
Mr. Nikhil Deshpande
(MANAGER COSTING)
2.3 Product & Services of the Organization
Ceat Ltd. has a very good presence in the tyre-manufacturing segment. The details of the
available products: -
Category
Truck tyre
Industrial Tyres
Earth Mover Tyres
Light truck tyre
Passenger tyres (Three-wheeler /Maruti / Jeeps )
Two-wheeler tyres (scooter / motor cycle)
Tractor tyres
Agricultural Tyres
ADV tyres (Animal Driven Vehicles)
Off Road Tyres i.e. earth movers tyres.
With two full-fledged manufacturing plants ceat has a wide range of tyres for all user
segments. The striking features of Ceat’s performance are the success it has achieved not only in
the domestic market but also in the international market. Despite the highly competitive nature
of the international market, ceat has made significant progress in export.
More significantly ceat 's main market is in developed countries like USA, Germany and
other European countries. Tyres are exported to over 40 countries worldwide and range from
tyres for truck, buses and graders, to cars, light truck and industrial tyres. On home front, the
company enjoys a privileged position as major suppliers to original equipment manufacturers
(OEM).
2.4 Interdepartmental relationship in the organization
There are many departments in ceat ltd. and all these departments in coordination with
each other are working together to achieve the end objectives of the organization. All these are
functioning as a team and each department has an individual vital role to play.
In Ceat ltd. the marketing department forecasts the market demand of tyres as per the
study, survey and research. These demands are than put forward to the production-planning
department and in turn the production plans for a particular period are prepared. Than material
requirement planning (MRP) is carried out. Than the materials requisitioned are arranged in
stores department which in turn are sent to the production department on a regular basis.
The quality assurance department measures and controls the quality and the required
tolerances of the product. Accounts and costing department arranges for funds and makes
payments to the supplier of the material, wages, salary and other expenses. The costing
department arrives at the unit cost of production and takes steps in reducing costs in all areas of
operation.
Human relation department also plays an important role to maintain the employee
relations at the shop floor. Similarly there are many sub departments which play a dominating
role in achieving the objectives of the organization i.e. Maintenance department looks after the
proper preventive and corrective maintenance of the machinery and keeps them in good working
condition to achieve the budgeted production targets. Utility department provides basic utilities
for production, EDP(Electronic Data Processing i.e. IT realated) department provides a data base
for MIS to control activities and other monthly required data (payroll, ledger etc). The logistics
department helps in distribution of the products to various regions of the market. This constitutes
the inter relationships among the various departments.
2.5 General Information
CEAT expands capacity at Nashik Plant by over 1000 tones per month
India is one of the fastest growing economies, globally. Economy is booming, rains are
favorable and overall sentiments in India are positive. Economists are talking about double digit
GDP. Businesses are witnessing huge demands. One such industry that is witness to huge
demands is the automobile industry, not only the passenger cars, but also trucks, LCVs and
tractors. The overall automobile industry has witnessed a robust growth in India in the past one
year. There has been a huge demand for LCV, truck and tractors due to favorable conditions. The
demand in this category has shown high growth year on year.
CEAT envisaged these sentiments and geared itself to address the huge demand. It has
already increased its production capacity at the Nashik Plant by over 1000 tonnes per month. The
CEAT Nashik plant produces truck, LCV and agricultural tyres. The capacity of the plant has
increased for the truck by 170,000 nos. p.a., LCV by 96,000 nos. p.a. and Tractor Rear categories
by 50,000 nos. p.a. This expansion adds up to 1000 tonnes per month. CEAT sees a robust
opportunity for increasing its market share in these segments. With this expansion the company
aims to increase its overall market share by more than 2%.
CEAT has invested Rs 20 cr for the expansion. The company has achieved technological
superiority by installing state-of-the-art machinery as a part of its production capacity expansion.
Though CEAT is the highest exporter of truck and LCV tyres, through this expansion, the
company is also looking at addressing the export demands and further increasing its market share
in the international terrain. Maharashtra is the second largest State of India and it is also a very
important region for CEAT. The state is well connected by rail, road and airways. This helps
CEAT to boost its distribution cycle. Also, the Government of Maharashtra has been very
supportive. It has provided the company with various facilities that have prompted CEAT to
increase their investment in Nashik.
CEAT To Expand Its Halol Facility
CEAT, one of the leading tyre manufacturer in India and part of the Rs 16,000-crore RPG
Group is on expansion path. As part of its expansion, it is investing an additional Rs 630-crore to
enhance the existing capacity of the radial tyre unit in Halol, Gujarat.
The fourth largest tyre manufacturing firm in the country by tonnage in the country is
also starting the operations at the greenfield facility in Halol by October this year, where it has
already pumped in Rs 620-crore. The Mumbai-based company, which is also the fourth largest
tyre making company by tonnage in India, will start the operations at the greenfield facility in
Halol, where it has already invested Rs 620 crore, by October 1.It is understood that the firm's
board is meeting in the near future for the approval of enhancement of capacity of the Halol plant
from the existing 130 tonnes a day to 300 tonnes a day. The new greenfield facility was
originally planned to be operational by May this year. It later got postponed to the present launch
date of October. What is more, a substantial part of production from this facility would be for
exports, it is learnt. The additional capacity with an investment of Rs 630-crore is planned at a
time when the Indian commercial vehicle players including Tata Motors, Ashok Leyland and
Mahindra were lamenting for the shortage of tyre supply within the industry. Eyeing the huge
potential for the truck radial tyres, the company might as well expand the Halol capacity
fourtimes, which could take the company's total capacity to 600 tonnes a day.
Planning a four fold capacity enhancement might be its long term goal, but plans are
afoot to increase the capacity three fold to 450 tonnes a day in the next four years, with an
investment of about Rs 1,500-crore, including the second phase of expansion. The facility can
produce four million tyres a year in the first phase, a substantial portion of that would be radial
tyres for heavy trucks, buses, light trucks and passenger cars. The plan is to ramp up further to 12
million tyres a day in the long run. Currently, around 25 - 40 percent of the total production from
its Halol unit is meant for the export market.
About CEAT Ltd:
CEAT Tyres, the flagship company of RPG Enterprises, was established in 1958. Today,
CEAT is one of India’s leading tyre manufacturers and has a strong presence in both domestic &
international markets. The company manufactures over 10 million tyres every year and enjoys a
major market share in the light truck & truck tyre market. CEAT tyres, tubes and flaps are
renowned for their superior quality and durability. CEAT offers the widest range of tyres to all
user segments and manufacture world-class radials for all Indian vehicles including: Heavy-duty
Trucks and Buses, Light Commercial Vehicles, Earthmovers, Forklifts, Tractors, Trailers, Cars,
Motorcycles and Scooters, Auto-rickshaws.
Achievements & Awards
Sometimes being up on the victory stand is all that matters. Getting an award is the pat-
on-the-back that is also a slight push forward. It means 'hey you've done well!' But it also means
'watch it now; you've expectations to live up to!'
We do not believe in blowing our own horn. But we do believe that understating our
success would mean undermining the efforts that went into achieving it.
1. CEAT wins awards for Employer Branding and Best HR Practices for 2010
2. CEAT receives Reader's Digest Trusted Brand Gold Award for 2009
3. The 2007-08 Raid de Himalayas 2 wheeler Rally was won on CEAT Tyres
4. CEAT was the no 1 in exports amongst all tyre companies in India..... Source ATMA Report
2007-08
5. CEAT Shoppe wins Best Innovation Award 2007-08 (* Franchisee Association of India)
6. From a 2 wheeler tyre to a Car Tyre to a Giant OTR Tyre, CEAT makes the entire Range of
Tyres.
7. CEAT won the Employer Branding Award for "Excellence in Training 2007-08" ( * Awards
by the Asia Pacific HR congress)
8. CEAT has adopted a village "Tirad Seth", near Nasik as part of its CSR activities.
9. ICQCC Distinguish award for Quality Circle in 2002 at Lucknow India
10. NCQC Distinguish award for Quality circle in 2004 at Mumbai
11. NCQC Distinguish award for Quality circle in 2006 at Kanpur India
12. CCQC Mumbai Chapter Distinguish Award for Quality Circle in 2007
13. Best case study award from CII in 2005
14. RPG Best TQ\M Team Award for CFT in 2005 and 2006
Recognized with RPG BTT Six Sigma Team Award in 2005-06
Winner of RPG Quality award in 2003, 2004 & 2006
Certificate of merit in RPGOE in 2005
100 percent vendors are ISO certified
Rated amongst top four auto ancillaries
National Exports Award (CAPEXIL) - 13 times
Best Exports certificate of merit - 7 times in the last 20 years
Achievements for us are like milestones. They don't tell us how far we have reached, they tell us
how much there is to go.
CEAT Corporate Social Responsibility
We believe, that as a responsible organisation, we have a duty towards the positive growth and development of our society at large. It is our integral duty to preserve our surroundings for the future generations. Therefore, we undertake a number of initiatives every year to fulfill our Corporate Social Responsibility (CSR). Some of the key initiatives are as follows:
1.CEAT Partners with Nashik Police for a crime-free Nashik
As part of our CSR philosophy and building strong social relationships, CEAT entered into a unique partnership with Nashik Police. Under the guidance of Police Commissioner Mr.Vishnudeo Mishra to curtail the crime in Nasik City a Bit Marshal patrol is formed & deployed in various areas of the city. The bit marshals are now equipped with advanced equipment's / weapons, new uniforms, & bikes. With the help of CEAT LTD Nasik and Satpur
Police head, the bit marshals have been provided with special commando uniforms. The bit marshals will patrol near crowded areas, jeweler's shops, schools Colleges, & other sensitive areas.
Over 100 Bit Marshalls will have the CEAT logo on their uniforms . This once again reinforces the commitment of CEAT towards a larger social cause. Commissioner of Police Mr. VD Mishra had felicitated us during the inauguration ceremony which was attended by top 100 police brass of Nashik and received a positive media coverage. He has also issued an appreciation letter as well as mentioned CEAT's good work in press release.
2. Bal Chetna Shibir
In June 2009, we organised a 'Bal Chetna Shibir' for children living in the slum areas in the vicinity of CEAT's Bhandup plant. This was conducted under the auspices of the Art of Living Foundation by one of our employees, who is an active volunteer at the Foundation. The aim of this 'Shibir' was to inculcate cultural values and foster self development and spiritual growth in children.
3. Red Book
'Red Book Complaints System' ensures effective and efficient resolution of all employee complaints. Volunteers have been identified from each shift and each department for the same. This initiative has received a favourable response from our employees/workmen.
4. Welfare Centre Initiatives
Our CSR cell runs a welfare centre. The primary objective of the centre is to conduct vocational training and promote self-reliance. It organizes regular professional classes on tailoring, beauty therapy, mehendi making, etc. for women.
5. Initiatives for Cancer Patients
The Company plays an active role in providing support to cancer patients. Apart from offering moral support, our CSR team also liaisons between the patient and the authorities at the Cancer Patients Aid Association.
Alliances
It has been our privilege to support some of the best vehicle manufacturers in the country with our products. Well, shouldn't the best go with only the best?
2 Wheelers
3 Wheelers
4. Passenger
5. LCV
6. Truck
7. Farm Tyres
8. OTR Tyres
Ceat flagship company of RPG enterprises.
An RPG company is among leaders in their business segments. RPG enterprises are
India's 4th largest business house having turnover of 64 millions.
Ram Prasad Goenka (RPG), founder of the group, presently the chairman emeritus, is a luminary
in Indian business.
Harsh Goenka, eldest son of R. P. Goenka is the chairman of US $ 1.6 billion RPG
enterprises; the group is actively engaged in tyre manufacturing, power transmission,
information technology & communications, financial services, entertainment, rubber chemicals
and related products, pharmaceuticals & retailing.
Sanjiv Goenka; youngest son of R. P. Goenka is the vice-chairman of this group. The
Goenka's believe to make RPG the most exciting place to work. The group outlines the possible
spheres of Ceat’s forward and backward linkages that could mean new opportunities to its
employees: fresh interaction for its investors and pleasant Surprise for its consumers.
Other major companies in RPG group.
CESC limited
HMV
KEC international
Asian Cables
RPG Telecom & Paging
Searle India
Philips carbon black
Harrison Malayalam
Ceat financial services
RPG Vision. Since inception, the RPG group has grown rapidly through acquisition and the
setting up of joint ventures. Thus, RPG group believes in becoming India’s biggest group with a
focus on market capitalization through,
Leadership in profitability and revenue growth in their chosen business.Being a customer centric
organization.Being most exciting workplace.
RPG ValuesPeople orientation, innovation and entreprenureship transparency and
integrity anticipation; speed and flexibility passion for superior performance, RPG group is one
of India's best-managed groups of companies with a diversified but integrated presence.
Corporate office: -
Ceat limited,Ceat mahal,
463, Annie Besant Road,
Worli,
Mumbai – 400025.
Works: -
1. Ceat limited,
Village road,
Bhandup,Mumbai- 400 078.
2. Ceat limited,
82 MIDC,
Satpur,
Nasik – 422007.
joint ventures & sourcing units: -
South Asia tyres ltd. Aurangabad.
1. Rado tyres ltd. Chennai
2. Tyre corporation of India ltd. Calcutta.
3. Associated Ceat Pvt. Ltd. Srilanka
4. Kelani tyres, Srilanka
5. Ace rubber manufacturer, Hyderabad
6. Innovative tyres, Baroda.
7. Excel rubber, Hyderabad.
8. Trambak rubber industries ltd. Sinnar.
9. Art rubber industries ltd. Nasik
10. P.J rubber, Cochin
11. Mysore polymers, Mysore
The Strategic Alliance in SriLanka-The strategic alliance between Associated Ceat
private ltd. (ACPL) & overseas joint venture in Srilanka, Kalani tyre ltd. (KTL) has been
effected. The commencement date of the alliance was effective 1st Nov 1998 .the turn over of this
joint venture for the year 98-99 is SriLankan Rs.1293 million & in 1999-2000 turnover is
SriLankan Rs.1357 million. The company KTL represents the 55 % to 60% of the market share.
The profit before tax for 98-99 was SL.Rs.58.68 million & which increased to Rs.75 million in
99-00.
Quality Policy
For the man who counts signals to reach home safely. For the woman who drops her
child to school. For the vendor who has to reach the market in time. For the young rider who
wants to race the wind... we make quality our responsibility. And we take our responsibility
seriously.
We make sure our processes and products are approved by the appropriate certifying
agencies. We have been the first tyre company in India to get the ISO/TS 16949:2002
certification, which is a combination of ISO 9000 and QS 9000.
We are mighty kicked about this one! Because it's not just a certification, it's a quality
management system that promotes continual improvement. It allows us to keep our supply chain
trim by preventing defects and reducing waste. Not only that, it measures the ultimate challenge
for any manufacturer- customer satisfaction. Some of the other things it ensures:
1.Export to almost all parts of the world
2.Fundamental quality management system requirements
3.No multiple certification audits
4.The PDCA (Plan, Do, Check and Act) cycle of process approach
T yre Manufacturing Process
1. Mixing the materials
Various grades of natural and synthetic rubber are combined with carbon black,
sculpture and chemical products in an internal mixer to meet specific compound requirements.
The resulting blend is called the "master batch", which is formed into rubber sheets, and cooled.
Some rubber is used for additional processing while the majority is prepared for the extruding
stage.
2. Extruding the tread
Heat is applied to the rubber to make it more elastic and then it is put through extruders
machines where the tread and sidewalls, which require two different rubber compounds, are
formed into the required shapes. The extruders produce a continuous sheet of tread rubber, which
is then cooled and cut to specific tyre lengths.
3. Weaving the plies
Spinning cords such as rayon, nylon, steel and polyester undergo a process called
“calendering”, where they are woven into sheets and coated with rubber on both sides. Once this
is finished, the sheets are then cut at the proper angle into specific widths and lengths and
eventually used for casing and cap plies, while steel cords are used for the belts.
4. Preparing the bead core
The bead core is formed by aligning, and then coating plated steel wires with rubber.
After, it is wound on a coil a certain number of times to form bead rings, which provide a
specific diameter and strength for a particular tyre.
5. Building process
The building process involves two stages.
Stage 1: Beginning with the woven sheets, the inner liner, body plies and sidewalls are placed on
the building drum. The correctly-positioned beads rings are then attached, which results in the
automatic wrapping of the ply edges around the bead core, and the simultaneously movement of
the sidewalls into position.
Stage 2: The tyre is shaped by inflating the rubber and applying sidetread rubber, two steel belts
and a cap ply to achieve a "green" tyre.
6. Vulcanization
One of the key steps in the manufacture is called Vulcanisation, a process invented by
Charles Goodyear in 1839. The “green” tyre is placed in a curing press for a certain period of
time (10-15 minutes) at a specific pressure and temperature. Once heat and pressure has been
applied to the tyre, it is then removed from the mould having achieved its final size, shape and
tread pattern.
7. Trimming
Excess rubber from the curing process is removed, and the tyre is trimmed to order.e.ut
to specific tyre lengths.
8. Final inspection
Each tyre is visually and electronically inspected for balance, quality and uniformity.
This final check ensures consistent and reliable performance.
CHAPTER : 3 THEORETICAL BACKGROUND
3.1 Definition of Material Reconciliation
Simple definition of material reconciliation is “the difference between actual
consumption & theoretical consumption also”
Material Reconciliation = Theoretical bal –Actual closing stock
(Theoretical BAL =opening stock +net sent – Total Dispatch – Adjustment,
Actual closing stock= raw material (actual phy.stock) + from flag compound slug )
The main aim of M.R. is to control on raw material which is used in finished product with
desired output with standard terms & condition.
Martial reconciliation mainly deals with the control on raw material .Material
Reconciliation is a continuous process in every manufacturing industries as per there need of
outsource.
Basic Motto of Material Reconciliation
Basic motto behind the Material reconciliation is to optimum utilization of raw material
which cause increased in profitability & efficiency .raw material which is used in the process of
production & occupier major & minor part in the product.
Material is the first and most important element of cost In most of the manufacturing
organization materials form the single largest component of cost The term material simply means
any commodity or substance which is processed in a factory in order to be converted into
finished product .Material may be classified as follows;
Raw materials are the basic materials supplied in crude from to be used for production
e.g. jute cotton ,steel ,timber ,rubber ,coal ,etc ,
Components are not raw in nature rather are finished parts made out of raw materials
which are assembled to make the finished product e.g. tyres and tubes in car manufacturing
industries ,stabilizers in A.C. and fridge manufacturing. monitors in computer etc.
Tools are appliances used in the manufacturing operations e.g. hammers ,screw –
drivers .drills ,milling cutters etc. Spare parts are used for the maintenance of plant ,machinery
and buildings and for smooth running of production schedule. Consumable Stores are the items
used for smooth running of the machines e.g .lubricants oil, cotton waste ,rage ,brooms etc. The
substance from which the product is made know as material It may be in raw or a manufactured
state .It can be direct as well as indirect .
Materials include both direct and indirect materials Direct and indirect material are both
treated as stores items ,whereas stocks of finished goods is not treated as a stores item. Direct
and indirect materials purchased for stock purpose to be issued to different jobs, work orders or
department as and when required are known as stores .On the other hand finished goods are
treated as stock we may also refer to the commonly used term inventory and finished goods Thus
stock of materials but also stores and spares work in progress and finished goods .Thus stock of
material is only a part of inventory held by a manufacturing unit .
Material which form part of a finished product are known as direct material in other
words direct material can be conveniently and accurately allocated to a particular unit of
cost .For example leather used in the making of pair of shoes and yarn required for a meters of
cloth ,and rubber in tyre manufacturing industries.
There are two type of raw material 1)Direct material ,2) Indirect material
1) Direct material –
All material which becomes an integral part of finished product and which can
conveniently assigned to specific physical units is terms Direct material
direct material is also described as process material prime cost material production material
store material constructional material
D.M are those material which occupies major portion in the product & also make vital
impact on the cost of production this material directly visible and decides the structured of
product
i.e. cloth in shirt ,wood in table ,as we are studding the tyre of manufacturing industries example
of direct material of the same is rubber in tyre.
2) Indirect material –
All material which is used for purpose ancillary to the business and which cannot be
conveniently assigned to material consumable store, oil & waste printing & stationery material
etc are few example of Indirect material its occupies smaller portion in the product which do
not directly attention of viewer i.e. cap ,core in tube
Material include physical commodities used to manufacture the final end product it is the
starting point from which the first operations start.
Out of all the factors of production ,material because of its basic nature is the most
flexible and controllable input Material has two unique features first it is inventorial and does
not get waste and exhaust with the passage .of time as labour is wasted with the passage of time
whether in use or not Second ,material can be purchased in varying quantities according to the
requirements of the firm whereas other elements of cost like labour and other services cannot
be easily varied once they are established .That is why cost and management experts put in lots
of efforts to control material cost.
Material control
Material control is system which ensures that right quality of material is available in the
right quantity at the right time and right place with the right amount of investment .It can be
defined as a comprehensive framework for the accounting and control of material cost designed
with the object of maintaining material supplies at a level so as to ensure uninterrupted
production but at the same time minimizing investment of funds .In simple words material
control is a systematic control over the purchasing ,storing and using of materials so as to have
the minimum possible cost of materials because materials constitute such a significant part of
product cost and since this cost is controllable , proper planning ,purchasing handling and
accenting are of great impotence .
Material control is accomplished through function organization ,assignment of
responsibility , and documentary evidence obtained in various stages of operation from the
approval of sales and control involves recording on printed forms all steps and movements which
are ready for sale and shipment .Material control involes recording on printed forms all steps
and movement which occur in the acquisition and utilization of materials .Effective control also
requires the systematic preparation of periodic summaries and repots.
Dimensions of Material control
Material control has two dimensions 1)quantity or unit control 2)rupee or financial
control
Production executive and storekeeper are primarily interested in quantity control because their
interest is to see that there should be no stock out problem on the other hand ,financial executives
are interested that too much money should not be invested in materials and every rupee spent in
materials should be efficiently and effectively utilized .keeping in view unit control and financial
control ,material control should meet these two conflicting objective 1.the maintenance of
sufficient quantity of every item of material for efficient operations and
2. Maintenance of an inventory that is not detrimental financially.
Aspects of material control
1. Accounting Aspect –
This aspect of material control is concerned with maintaining documentary evidence of
movement of materials at every stage right from the time sale and production budgets are
approved to the point when materials are purchased and actually used in production operations.
2. Operational Aspect – This aspect of materials control is concerned with the maintenance of material supplies at
a level so as to ensure that material is available for use in production and production services as
and when required by minimizing investment in material.
3.2 Need of Material Reconciliation
1. Availability of materials- There should be a continuous availability of all type material in the
factory so that in the factory so that the production may not be held up for want of any martial
minimum quantity of each material is fixed to permit production to move on schedule.
2. No excessive investment in materials- There should be no excessive investment in stocks
Investment in material must not tie up funds that could be better used in other activates
overstocking should be avoided keeping in view the disadvantages it carries For this purpose a
maximum quantity is assigned to each item of material above which stock should not be exceed.
3.Reasonable price – While purchasing materials it is seen that it is purchased at a reasonably
low price Quality is not to be scarified at the cost of the lower price The material purchased
should be of that quality alone which is needed.
4. Minimum wastage –There should be minimum possible wastage of material while these are
being stored in the warehouse by storekeeper or used in the factory by the workers .Wastage
should be allowed up to a certain level known as normal level of wastage and it should not
exceed that level. Leakage or theft of materials must be avoided to keep the cost of production
under control. Storekeeper and workers should be trained to handle the materials in a scientific
way to avoid the wastage .The Storekeeper is to keep the stores neat and tidy to avoid the
wastage due to rust, dust or dirt.
5. No risk of spoilage and obsolescence – In order to avoid spoilage and obsolescence, a
maximum quantity of each material is determined and a proper method of issue of materials is
followed .
6. Ready information about availability of materials – The Storekeeper can supply this
information because he keeps an up –to-date record of every item of stocks under a proper
system of material control.
7. Misappropriation of material – Material can be easily misappropriated by employees
because generally misappropriation of cash is considered to be more serious than
misappropriation in kind Therefore this requires an internal check on material which is part of
material control.
8. Right amount of payment to suppliers – Invoices received from the suppliers should be
approved for payment only if the items of materials ordered have been received and properly
checked to avoid excess payment to the suppliers.
3.3 Essentials of Material Reconciliation
1. There should be proper co-operation and co-ordination among the department involved in
purchasing, receiving and inspection storage, sales, production and accounting so that there may
be no inadequate availability of materials which may disrupt production and lose sales At the
same time purpose of co-ordination is that there should be no excessive investment in materials
leading to unnecessary carrying costs and obsolescence risks.
2. Purchases of materials should be centralized i.e. one purchasing department should be
authorized to make all purchases of materials to avoid reckless buying by all departments and to
ensure that all purchases are made at the most reasonable prices .
3. There should be proper scheduling of materials.
4. A good method of classification and codification of materials should be followed.
5. There should be proper inspection of materials when they are received by the receiving
department
6. Standard forms for requisitions, orders, issue, and trensfer of material from one job to the
other and transfer of material from the job to the stores should be used.
7. The storage of materials should be well –planned to avoid losses from theft, carelessness,
damage, deterioration, evaporation and pilferage.
8. A good method of issue of materials to various jobs, orders or processes should be followed so
that there is delivery of right type of materials to the jobs, orders or process in the right quantity
at the time they are needed.
9. Perpetual inventory system of materials should be operated to facilitate regular checking and
avoiding closing down factory for stock –taking with this system it is possible to determine at
any time the quantity and value of each type of materials in stock.
10. A system of internal check should be introduced to ensure that all transactions involving
materials are checked by properly authorized and independent persons.
11.Minimum ,maximum and re-ordering levels for each type of material should be fixed to
ensure that there is no shortage of materials and that is no over –stocking .
12. Ordering quantity for each type of material should also be fixed to reduce the ordering cost
and carrying cost of materials.
13. A careful choice should be made of the method of valuating the material issues because it
affects the cost of the jobs or processes and the value of the closing stock of materials in the
stores.
14. Adequate records to control materials during production should be maintained to ensure that
there is minimum possible wastage.
15. Information about availability of materials should be made continuously available to the
management so that planning of production may be done keeping in view the inventory balances
in stores .Information about obsolete and defective stock should also be given to the management
from time to time so that steps may be taken for the disposal of such stock.
Advantages of material control: A good system of material control-
1. Eliminates waste in the use of materials;
2. Reduce the risk of loss from fraud and theft;
3. Help in keeping perpetual inventory and other records to facilitate the preparation of accurate
4. Material reports to management;
5. Reduce the capital tied up in inventories;
6. Reduces the cost of storage.
3.4 Procedure of Material Reconciliation
Basic information for activities of controlling raw material and Finished goods at
sourcing units
Nashik plant is responsible for controlling the preparation of material reconciliation for
the following outsourcing units.
1. Art Rubber industries
2. Camal Tread Co. Pvt. Ltd.
3. Trimbak Rubber
There are transfers for other outsourcing units like Innovative tyres, Excel Rubber Pvt.
Ltd., Bhagavati Rubber Products Indust. from Nashik Plant. There are also transfers to Bhandup
plant from Nashik Plant.
But Nashik plant is responsible only to control and reconcile material at following outsourcing
units.
1. Art Rubber Industries: Unit is located at Ambad. Responsible for preparation of tubes. The
goods are cleared under F4 (Means all FG are directly returned to the CEAT Nashik plant). The
unit is currently shut down because of strike since 20th February 2008.
2. Camal Tread Co. Pvt., Ltd. : Unit located at Gonde (about 25 km from Nashik). Responsible
for preparation of Flaps. Goods are cleared under F4 (All FG is returned to Nashik Plant and no
dispatch from sourcing unit).
3. Trimbak Rubber: Unit located at Sinnar (Musalgaon 35 KM from Nashik). Responsible for
preparation of Flaps and tubes. Tubes are cleared under F2 (FG cleared directly from sourcing
unit). Flaps are cleared under F4 (Returned directly to the plant)
Raw material including packing material for the sourcing unit is provided by Nashik
Plant or there may be direct supply from the vendors to the sourcing units (Billing for the same is
done at Nashik Plant only)
Activities of the sourcing units are monitored and checked by the Sourcing Cell
(Bhandup Plant). Sourcing Cell is the authority giving instruction to the sourcing units about the
quantity to be manufactured, production schedule, and compounds to be used to the sourcing
units. Nashik plant is responsible only for correct recording and reconciliation of the use of raw
material.
One representative of CEAT is present at the sourcing units to ensure the quality and
quantity of the raw material and FG at the sourcing unit. Mr. Pawar for Art Rubber and Camal
and Mr. Patil is for Trimbak Rubber. These people check the physical stock at the sourcing units
every month.
Material Reconciliation:
Material Reconciliation statement is prepared for every outsourcing units at the end of every
quarter by the Costing and MIS department at the Nashik Plant.
Procedure:
First quantity wise data is considered.
STEP - I
Opening stock of raw material at the sourcing unit is taken from last report. Material sent to the
sourcing unit (month wise) is taken. The same information is available from raw material stores.
The report is directly taken for the system. Addition of opening stock and material sent is made.
STEP - II
Further, any material returned is deducted from the Step I.
STEP - III
Then Fly loss (0.4% for specified materials other than natural rubber and 0.1% for natural
rubber) is deducted from the step II to derive at net sent goods.
STEP - IV
Then actual dispatches from the sourcing units are taken from the invoices given by the sourcing
units
Tubes and flaps are nothing but Rubber compounds. From the quantity of finished goods the
quantity of rubber Compounds prepared by the sourcing units is dervied.
HO gives specification (Called as “Spects”) for the rubber compounds. These are nothing but
some standardized formulae for use of raw materials for manufacture of particular rubber
compounds. These are quantity-based specification. (Percentage of raw materials required is
given)
STEP - V
On the basis of specifications given quantity of raw material used is derived.
STEP - VI
Raw material used by the sourcing unit (derived by Step V) is deducted from the net Goods sent
(derived from Step III) to get the theoretical Stock in Hand.
STEP - VII
Reports of actual physical stock is taken from the representatives and compared with theoretical
Stock in hand (derived from step VI). The difference between Theoretical Stock and actual stock
is taken.
STEP - VIII
There are some types of raw materials, which are used as a substitute for each other and
negatives of one are allowed to be set off against positive of the other.
The quantity of the same difference (Step VII) is multiplied by the standard rate of raw material.
If the total of difference is negative, debit note on the Sourcing unit is raised. No action if the
there is positive Difference.
Post SAP:
Access for SAP is also given at the sourcing units’ end. Ideally there should be auto
reconciliation of material.
As per the basic information from the Costing & MIS department sourcing units are not agreeing
for system generated Reconciliation statements.
