Sagar [ Sangam Electronic ]

InTRODUCTION

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1.1) INDUSTRIAL DETAIL

The Electronics Industry in India took off around 1965 with an

orientation towards space and defense technologies. This was rigidly controlled and

initiated by the government. This was followed by developments in consumer

electronics mainly with transistor radios, Black & White TV, Calculators and other audio

products. Colour Televisions soon followed. In 1982-a significant year in the history of

television in India – the government allowed thousands of colour TV sets to be

imported into the country to coincide with the broadcast of Asian Games in New Delhi.

1985 saw the advent of Computers and Telephone exchanges, which were succeeded by

Digital Exchanges in 1988. The period between 1984 and 1990 was the golden period for

electronics during which the industry witnessed continuous and rapid growth.

From 1991 onwards, there was first an economic crises triggered by the Gulf War which

was followed by political and economic uncertainties within the country. Pressure on the

electronics industry remained though growth and developments have continued with

digitalization in all sectors, and more recently the trend towards convergence of

technologies.

After the software boom in mid 1990s India's focus shifted to software.

While the hardware sector was treated with indifference by successive governments.

Moreover the steep fall in custom tariffs made the hardware sector suddenly vulnerable to

international competition. In 1997 the ITA agreement was signed at the WTO where India

committed itself to total elimination of all customs duties on IT hardware by 2005. In the

subsequent years, a number of companies turned sick and had to be closed down. At the

same time companies like Moser Baer, Samtel Colour, Celetronix etc. have made a mark

globally.

B.R.C.M COLLEGE OF BUSINESS ADMINISTRATION

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1.2) COMPANY DETAIL

Name of the company: SANGAM ELOCTRONICS

Registration No.; U17119GJ1991PTC015213

Date: 14/3/1991

Registered Office: 8, parekh wadi,katargam G.I.D.C (old)

Name of the owner 1.) Arvindbhai sakariya

2.) Harikrushan Ankoliya

Company Secretary Rashik prajapati

Bankers: 1. Bank of Baroda

2. Allahabad Bank

3. State Bank of Saurastra

4. Bank of India


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1.3) HISTORY OF COMPANY

Sangam E lec t ron i c s Company i s a un ique and p ionee r ing

o rgan i za t i on i n va r i ous Power p roduc t s s i nce 1994 .

Sangam e l ec t ron i c s co . i n t roduced l a t e s t t e chno logy o f

power p roduc t s t o fu l f i l l t he f r equen t power f a i l u r e d i s t u rb ing

no rma l l i f e . P r e sen t l y , mos t o f t he homes , o f f i c e s and i ndus t r i e s a r e

equ ipped w i th soph i s t i c a t ed e l e c t r i c a l equ ipmen t s l i ke t e l ev i s i on .

Compu te r , P r i n t e r , f ax , s e rve r , DLC, t ex t i l e & d i amond e l ec t ron i c s

mach ine ry wh ich a r e h igh ly s ens i t i ve t o power f l uc tua t i on .

Managemen t o f s angam e l ec t ron i c s co . c ame up w i th a

v i s i on t o de l i ve r be s t o f i t s k ind t e chno logy by de s ign ing i nnova t i ve

p roduc t s . Keep ing i n v i ew to ge t a s t ab l e & c l ean supp ly , s angam

e l ec t ron i c s co . have deve loped a r ange o f power cond i t i on ing

equ ipmen t s

Vision:

Ou r company ph i l o sophy ha s a lways focused on s a t i s f ac t i on

w i th uncompromis ing i n t eg r i t y . Sangam e l ec t ron i c s co . c a r r i e s

p roduc t s and s e rv i ce s w i th t he f i ne s t va lue s and qua l i t y i n t he

ma rke t . To mee t ou r cus tomer ’ expec t a t i ons , we ensu re t ha t ou r s a l e s

peop l e and cus tomer s e rv i ce r ep re sen t a t i ve s gene ra t e en thus i a sm and

r e spond w i th ex t r a e f fo r t s i n add re s s ing ou r cus tomer s ’ needs Our

peop l e a r e t r a i ned t o be open and hones t w i th you . We a r e a lways

l ook ing fo r new and be t t e r ways t o improve ou r bus ine s s

r e l a t i onsh ip . Wi th ou r con t i nued succe s s and ha rd work , ou r v i s i on

ha s becomes r ea l i t y !


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Mission:

We a r e an e l e c t ron i c equ ipmen t manufac tu r i ng , s a l e s and

s e rv i ce company commi t t ed t o c r ea t i ng wea l t h fo r a l l ou r cus tomer s .

We wi l l s t r i ve fo r l e ade r sh ip i n ou r chosen p roduc t and

s e rv i ce s t o ou r cus tomer . We wi l l s e ek p ro f i t ab l e g rowth by

i nnova t i ve app l i c a t i on o f s c i ence and t e chno logy .

We wi l l pu r sue exce l l ence i n a l l t ha t we unde r t ake and

t ake s t eps t o con t i nuous ly improve . we w i l l t ake r e spons ib l e c a r e o f

t he env i ronmen t a round u s and improve t he qua l i t y o f l i f e i n t he

commun i t i e s we ope ra t e i n .

Team work:

Toge the r eve ryone ach i eves more . Teamwork and succe s s go hand -

in -hand


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Excel lence:

W e o f f e r n o t h i n g b u t t h r o u g h a f o c u s o n d e l i v e r i n g h i g h q u a l i t y s e r v i c e

a n d c o n t i n u o u s l y i m p r o v i n g o u r s e l v e s a n d o u r w o r k .

Integri ty:

In t eg r i t y i s nece s s i t y - hones ty ; open commun ica t i on and

p ro fe s s iona l i sm d r ive Each and eve ry i n t e r ac t i on .

Dedicat ion:

E v e r y i n d i v i d u a l i s c o m m i t t e d t o t h e s u c c e s s o f e a c h i n t e r a c t i o n t o

t h e b e s t o f H i s a b i l i t y .

1.4 ) BRANCHES AND LOCATION

8, parekh wadi, opp.kasa nagar,

Nr.bada ganesh temple,

Sangam co. road.katargam G.I.D.C (old)

Surat -395 004. (GUJ)


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1.5 ) ORGANISATIONAL STRUCTURE


C.E.O

Managing Director

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1.6 ) FUTURE PLANS

SANGAM ELE CO. Wan t t o expand t he i r bus ine s s . t ey wan t

t o s a l e t he i r p roduc t i n bang l adesh ,nepa l . They a l so wan t t o

i nc r ea se p l an t c apac i t y and t hey have a l r e ady s t a r t ed cuns t ruc t i on

be s ide t he i r p l an t .


ProductionManager

MarketingManager

H.RManager

FinanceManager

Manager ManagerManagerManager

workerworkerworkerworker

Marketing department

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2.1) INTRODUCTION

Market: -

The common usage of market means a place where goods are bought or sold. In

its strict meaning market need not necessarily mean a place of exchange.


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Marketing: -

Marketing is concerned with selling but now a days the concept has enlarged its

meaning. We know that a product is provided with the aim of sale. The aim producer

totally depends on marketing. Without marketing no unit can run. It covers marketing

research, new product development and so many other important functions.

“Marketing is the process of discovering and translating consumer needs and wants

into product and service specifications, creating demand for these products and services

and then in turn expanding this demand.”

In SANGAM marketing management has the task of regulation of level, liming and

character of demand in a way that will help the organization to achieve its objectives. The

aims of producer totally depend on marketing, without marketing not a single unit can

run.

“SANGAM” marketing philosophy aims not to sell electronics but to help customer by

education them the modern technology and the use of electronics for optimum crop out.

In SANGAM marketing is done by head office at Surat. SANGAM has nationwide

marketing network and has covered all major stated in the countries.

2.2) MARKETING DEPARTMENT STRUCTURE


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2.3) TYPES & CLASSIFICATION OF PRODUCT

The products may be classified into the following categories:

1. Industrial Goods: -Industrial goods are those, which are used for further production of

goods or services, and include capital goods, raw materials, component parts

etc. These are used as input in producing other products.

2. Consumer Goods:-Consumer goods are meant for final consumption by consumers and

not for sale. SANGAM Pvt. Ltd. is producing industrial goods, which

indirectly affects the consumers.


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Product Mix: -“Product mix is also called as product assortment which is the set

of all product lines and items that a particular seller offers for sale to

buyers.”

A company’s product mix has certain width, length, depth and

consistency. These concepts are illustrated for industrial products of

SANGAM Engineering Pvt. Ltd.

L E N G T H

WIDTH

UPS Stabilizer CVT Lights Battery

On line

Off line

Voltage Stabilizer

Servo stabilizer

Constant

Voltage

Transformers

Rechargeable Tourch emergencyTourch

Dry Battery

Water Battery

Sangam co. Electronic product production and sales

Year Production (Lack ) Sales (Lack )2006-07 22.45 20.152007-08 27.47 26.452008-09 33.85 34.902009-10 39.35 38.802010-11 44.50 42.75


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2.4) Details of competitors

SANGAM generally does not face any stiff competition as the Generally competition

exists in free trade. Some of the competitors of SANGAM are:

Sr. no Name

1 HOME AUTOMATION (INDIA) PVT.LTD

2 EVEREST ENTERPRISES

3 KELKON

4 ULTRON

5 NEW POWER PLUS

2.5) PRODUCT OF THE COMPANY

(1) UPS

Off line ups Features:

DC start function

Short circuit protection

Both audible and

indication lamp alarm

Function

Over temperature

protection

Over load protection

Intelligent battery

management

Compatible with small

generator

Auto restart


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Hot swappable battery

On line ups Features:

•Wide input voltage window

• Intelligent CPU control

• Protection for short circuit

and overload

• Both audible and indication

lamp alarm

Functions

• Intelligent battery

management

• Dry contact with monitoring

software

• Auto restart


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(2)Servo Stabilizer &

CVT

• Optional Futures:

• By pass facilities

• Generator compatible

circuit

• Isolation transformer / Ultra

isolation transformer

at o/p

• Ammeter : To see load

current

• Digital voltmeter & Digital

Ammetercification

Servotabilizer

(3) CVT

• Adjustment: Output voltage

adjustment of ± 5V per

phase

• Short circuit & overload

protection by meens of

MCB/MCCB/SFU

• Overvoltage &

Undervoltage trip O/P power

on with specified time delay.


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2.6) CUSTOMER SEGMENTATION & TARGET MARKET

Market segmentation is an effort to increase a company’s precision marketing.

The starting point of any segmentation discussion is mass marketing.

“Market segmentation consists of taking the total heterogeneous market for a

product & dividing it in to several sub-markets or segments, each of which tends to be

homogeneous in full significant aspects.”

Business market can be segmented with some variables employed in consumer

market segmentation, such as geography, benefits, sought & usage rate. Yet business

marketer can also use several other variables.

Buyer’s behavior is never the same & the market could be segmented on the basis

of buyer’s characteristics. The producer must understand the behavior of his customers &

adopt different strategies according to the needs & characteristics of his customers, so that

physical & human resources of the enterprise may be fully exploited & marketing

objectives may be fully meet. There are three types of marketing strategies viz.

There are certain criteria for market segmentation. If industrial market is divided

by industry, the company size & location the criteria is called demographic. If the

industrial market is divided according to technology, user or non-user status & customer

capacities, the criteria are called as operating variables. The other criteria are purchasing

approaches, situational factors & personal characteristics etc.

Sangam produces electronics machinery etc. this product is purchased by any

company of firm which use high voltage machinery therefore there is no certain basic

criteria dividing the market.


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2.7) DISTRIBUTION NETWORK

SANGAM handles its distribution of electronics by making division situated at surat.

The department of electronics guides the management of SANGAM for the distribution of

electronics product. Products, which are produced at SURAT, are dispatched directly to the

customers. It involves distribution channel also, SANGAM has develop for distribution of

electronics products.

Channel of Distribution

PRODUCER DEALER CUSTOMER


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Mode of Distribution: -

Proper planning and close monitoring enabled the society to dispatch it is allocation from plant

site to various destinations by optimal use of rail and road mix.

1. Railway: - major part of all types of products almost 79% is transported through railway

line to the states like Maharashtra, Madhya Pradesh, Punjab, Haryana and Uttar Pradesh.

2. Roadways: - the dispatch of all types of products through roadway is limited to the state

like Gujarat, Rajasthan, Madhya Pradesh, and many other states

Is round around 21%.


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2.8) SALESE PROCEDURE

Step:1

First Sangam do advertisement in news paper, internet, and many more sources. Then customer send inquire by mail or come directly at company to know about

machine feature, price, etc. Then If customer get satisfaction about product then place order. In order they

mention quantity of machine, price or machine, discount and Terms and condition about delivery of goods.

This all are fixed in Rate contract so, no require every time deal with them at the time of sales.

Step:2 After getting order from customer then they check product in stock, if stock is

available then they follow delivery procedure otherwise they put order in pending list.

This all information are knows from the MRP system

Step:3 If stock is available then they prepare challan for that and also make bill for

customer. There are two type of billing I) Excisable Goods II) Non-Excisable

1. Retail invoice2. Tax invoice

If customer is out of Gujarat then they make Retail invoice or customer have not Sales Tax Registration Number .When customer in Gujarat then they make Tax invoice

Step:4After completing invoice procedure then now time to dispatch goods. So if

Customer near to Factory location then they send local or special Tempo, but if Customer very far from the Location (out of State) then send through Transport Company by Train, by Truck. So for that they first book space in Transport company after they get LR(Lori Receipt)

Step:5 After complete 4th step then send goods and dispatch material and customer return

acknowledgment copy about goods receipt.

Step:6 Now goods are reached to customer now need engineer to fit all part of machine

it know as erection process


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Step:7 After completing all sales procedure then turn come of Payment, this is depend on Payment terms of company.

2.9) ORDER PROCESS

Firstly, buyer generates the inquiry from concern Dept. about the product, terms &

conditions of business through either by inquiry letter, by telephone, or any other sources.

After discussion about the product & its price over reports have been prepared by

marketing Dept. and it is been given to customer. A contract is made when the customer

wishes to purchase the product as per the terms and conditions. Some of the charges are

fixed like transportation, sales tax, etc.

Both seller and buyer have to sign and stamp on the contract paper and even

sometime advance system may be adopted. After contract is made information are

provided to production Dept.

Sales Dept. has duty to visit the customer sight as inspection is necessary. Few

days before the completion of machine customer have been informed. So he can do

arrangement of fund well in advance.

2.10) FORECASTING & SALES PLAN PREPARITION

Beginning and end of marketing management research is the systematic and

intelligent investigation or study of the who, what, when, why and how of actual and

potential buyers.

Marketing research can be defined as “the application of scientific method to the

solution problems”. Marketing research is the systematic and objective search for and

analysis of information and solution of any problem in the field of marketing.

Marketing research is the systematic, design, collection, analysis & reporting of data

& findings relevant to a specific marketing situation facing the company.


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In the current competitive situation, it is necessary for every organization to research

or examine their market situation at regular interval of time. Therefore company

researches their prevailing market situation.

Sangam has separate research and development for marketing research. It observed

the needs, wants and preference of the consumers, it proper the report on the consumers

need what they want, what their complaint against product etc. the report prepares of

distribution, dealer and market segmentation.

A) Retail Report:-

B) Daily Consumption

C) Looking at the scope of increasing the total consumption of a day.

D) Receiving the ideas and suggestions from distributions dealers and consumers of

the product.

2.11) PRICING POLICY

Profit of company mainly depends upon cost of production and price of the

products manufactured. SANGAM as a manufacturer of electronics item has very

limited role to play in declaring the prices of products is decided by the marketing

department.

When pricing of the products is regulated by marketing department following

points are taken into consideration: -

1. Cost of production

2. Transportation cost

3. Profit margin

4. Taxation rate


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2.12 PROMOTIANAL & ADVERTISING POLICY

An obvious fact that advertising is a form of mass communication. It is paid for by

a sponsor (seller) who wants to communicate about his product or service to his

customers. The advertiser or sponsor wants to persuade and induce the readers, viewers or

listeners to take some action viz. to buy the advertised product so that the advertiser can

have profitable sales.

“Advertising is a any paid form of non-personal presentation & promotion of idea, goods

or services by an identified sponsors.”

Consumer is the king in the modern market. Without consumer the task of

business is incomplete. So consumer must know about the product of company. Now a

day, advertisement is the best way to introduce the product to consumer.

SANGAM’s advertising mainly depends upon its customer & their customers

they are mostly illiterate. So, media gives advertisement in regional language, but in

present time customer are also develop so advertising strategy also taken into

consideration. Company gives its advertisement in local newspapers also like Gujarat

samachar, loksata, and jansatta, sandesh etc T.V; Radio magazines are also taken as a

media for these purpose.

Different language like Hindi, Punjabi, Marathi and Gujarati over various

stations of all over India radio. For the popularity of SANGAM large no. Of holdings &

roadside boards are installed on highway, bus pan ness, wall paintings and glow sing at

airports have also been installed for above purposes. Advertisements have been realized

from time to time in the dealing newspapers, and other periodical, special supplements

were brought in English, Hindi and regional languages.

They also convert old machine in new machine if customer not want invest

more capital in new machine. This is crucial aspect of customer satisfaction.


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2.13) TAXES APPLICABLE ON SALE ACTIVITY

There are mainly two type tax applicable Direct taxes, Indirect Tax.

Direct Tax is the tax paid to the government directly by the assessee like the

Income Tax or the Capital Gains Tax. There has been a steady rise in the net Direct Tax

collections in India over the years.

All the collections of the direct taxes in India like the Corporate Tax, Personal Income

Tax, Securities Transaction Tax, Banking Cash Transaction Tax, and the Fringe Benefit

Tax have been going through a healthy ascent. For instance, in the current year the

personal income taxes collection have increased with the rate of TDS being higher than

the previous years

Indirect Tax or the tax that is levied on goods or services rather than on persons

or organizations are of different types in India like Excise Duty, Customs Duty, Service

Tax, and Securities Transaction Tax. In India, there are a series of Tax laws and

regulations in order to control the indirect taxation, which can be either law, made by the

central government or even can be state specific laws. As a result these taxes are an

important part of the total cost. It is thus essential to make appropriate planning for such

costs.

When goods are manufacture then Excise duty are levy on that and goods are sold

in manufacturing state then VAT(Value Added Tax ) applicable and When Goods are

sold out of State then CST(Central Sales Tax) applicable, then “C” for m also submit to

refund the tax.

When goods are Export to other country then export duty like Custom duty are

applicable and when goods are Import then Import duty applicable.


PRODUCTION department

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3.1 PRODUCTION DEPARTMENT STRUCTURE

P


Production manager

Light & BatteryManager

CVTMANAGER

UPSMANAGER

Supervisor Supervisor

Worker

Supervisor

Worker Worker

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3.2) HOW PRODUCTION PLAN IS PREPARED FROM SALES

PLAN?

In simple term, production planning mean decide the sequence of each activity to

carry out finish product or item. Production plan is the heart of the organization.

Production planning is the plan of future production, which is prepared by production

manager with the help of the sales plan of the organization. Production planning is the

primary step of any organization. So that it is most important for any organization. It is

very useful for the control of the organization’s activities.

In technical term, production planning is that function of management, which

decides about the resources that will be required for future manufacturing operation, and

allocating of resources to produce the desired output at right time, in right amount, of

required quantity and at minimum cost. There are three levels of production planning

which are different from each other based on time horizon it covers.

1. Strategic planning.

2. Tactical planning.

3. Operation planning.

First, this plan is use to achieve the goal of the organization and it is mostly 4-5

years. Second plan is planning of operations over medium range and it is make for 6-8

months. Third type of planning is most important for real shop floor planning. It is mostly

for 1-3 months.

We know the business is dynamic nature. Sometime, it may happen that the

demand is very little in the market. So we can see the excess of material. On the other

hand, when the demand of the product is very high. We see the shortage of material. So

both the types of problems are solve with the help of production planning. Effective

production planning helps to the organization to avoid such situation.


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In SANGAM, the production plan is prepared based on sales plan, which help

them to avoid situation as mention above. The process of SANGAM is as given below.

The company requires specification about the production from the customer. This

step is performing when the order placed by the customer and afterwards production

schedule is to be prepare.

The staff of the sales department prepares sales monitor report for the purpose of

giving the best services in the term of delivery dates specified by the customer. So they

easily produce as per customer requirements. One copy of this report is send to the

production department. So sales planning is not done on the basis of the production

planning rather then production plan is based on the sales plan.

The customer specification included type of the product lot size, delivery date,

material to be used for the products, quality required, etc.. On the basis of these

specifications, production plan is prepared.

It is deciding in advance the short term as well as long term conversion if raw

material and other inputs in to finish product or product to be utilized as inputs for further

production by enhancing the utility of inputs. So that, they satisfies customers needs on

time.

Production Plan Is Converted In MRP

The whole process of material requirement planning or preparation of material

requirement panning is indirectly depending upon the customer orders. Because when the

customer give order than they also specifics the material to be used .as per customer

specification raw material is used.

Thus order placed by the customer or their specifications plays a dominant role in

material requirement planning. When manager purchased the raw material that will be

used full in satisfy the customers demand.


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Before deciding the required quantity of the material to be needed for the

production, the inventories are deducted from the requirement. The fresh material placed

after calculating the inventories. The prime objective of material requirement planning is

to be trigger timely purchase action of various dependent demand items. Which raw

material is required urgently and providing conveys which can be delayed required details

of MRP to purchase department . if helps maintain priority control.

As far as data of schedule is concern , the customer also specifies it and according

to buy the raw material . the supplier on the basis of the delivery schedule , if a supplier

can supply the material according to the production schedule he can be selected.

In SANGAM the use material requirement planning as manufacturing resource

planning . the planning is divided in to two parts.

1). Manufacturing resource planning-1

2). Manufacturing resource planning-2

MRP –1 includes man, machine, and material where as in MRP-2 a part from it

money and marketing are also included MRP- 2 provides greater control over inventory

of system is used properly as in MRP-1 name applies plans only the requirement. This

system takes care of whole organization in place of single unit . MRP-2 is associated with

single unit of an organization. MRP-2 is the expansion of MRP-1.

Material requirement planning menus: Design Development Dispatch Inquiry bills of material Bills Inventory Indent Purchase order Work order Planning Vendor Requisition


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Customers

3.3) ANALYSIS OF PLANT LOCATION

Plant location is same as plant layout. Plant location, which cover main production

area, offices for production employees, other offices and other departments of the

organization. In technical term, plant layout is physical arrangement of various

buildings, production department, technical utilities, personal utilities and locations of

various machines within each production department.

In, plant layout of it very effective. The main factors which affect its location are as

followings:

1). How much to manufacture?

As we know SANGAM produces the electronic machines. The manufacturing of

those machines requires large space. While they decided the plant lay out or location.

They also decide their capacity of manufacture machines. The customer’s need or not .

They first study sales plan and bases on that prepared that production plant & lay out.

2). Location:

SANGAM is on Parekh vadi. Which is good area? There are also many industries

in that area. They can do easily their production activity. They also build multi storage

building. So their plant lay out is very effective.

3). No . of employees and visitors.

In SANGAM, they have 125 employees in that total employees work, 30%. Of

workers are ladies. They also provide good canteen facility, insurance facility,

educational facility, etc. to their employees, every year many no. of student came in

SANGAM for the training. They provide good response to that trainer.


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3.4) PLANT LAY -OUT


MATERIALSTORAGE

ROOM

FINISH PRODUCTSTORAGE

ROOM

RECEPTIONOFFICE

BATTERYDEPARTMENT

TOILETCALL SERVICE CENTER

UPSDAPARTMENT

CVTDAPARTMENT

REPAIRINGDAPARTMENT

TOILET

GENERETERROOM

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3.5 MATERIAL HANDLING EQUIPEMENT

With in production department. they normally use an elevator to pickles up or

to put down the raw materials and machines. They also use other material handling

equipment like lift , bins, trolley etc. they have also facility to store the material handling

equipments.

Material Handling Equipment

Shelf-Trolley


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Hand Carts

Goods Lift

Shelf-Trolley


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3.6) INVENTORY CONTROL SYSTEM

Online Inventory Management MRP-II system, interfaced with design&

Development Control System.

Planning, Purchase & Stores

1. Online inventory management MRP-II System is being used for material

planning and inventory control.

2. In addition to production facilities, the company has also developed about

250 subordinate units, owned by qualified engineers. This has made the

Company able to absorb latest technology and accept to suit local

requirements.

3. Vendor development cell is started to develop new sources.

4. Stores are controlled by MRP System.

FIFO system is followed.

Shelf Life Items are identified and stores separately same is periodically

verified

They are using Linux Server

1. 10g Oracle using as Database (server) backend.

2. VB-6 using as fronted

3. Using backup media as Tape Drive, External Hard Disc, DVD

4. Anti-Virus Server on Window-2003

5. 24 hrs Internet Connection on EDP

6. On software we have own package which are developed by our EDP Staff


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1 MRP-Manufacturing Resource Planning Control all inventory as per flow chart

2 FAS-Financial Accounting Systems

3 Payroll Systems

4 Tools Calibration

5 Drawing Control

ABC ANALYSIS

ABC stands for always better control. ABC is the value basis analysis. in this analysis

, the part , this has more value in term of rupees to the machine’s total cost .Its inventory

is given more attention and stock of required quantity is maintained .In SANGAM

Engineering Pvt. Ltd. ABC is not using..

3.7) MATERIAL CODIFICATION SYSTEM

The different code for the different material are as following:

A – Aluminium J - Motor

B – Bearing K – B.O.M.

C – Circuit L – Packing

D – Display M – Machine

E – Electrical N – Assembly

F - Finish P – Stationery

G - Gauges R – Raw material

H – Hardware S – Semi finished good

HZ – zinc coated h/w T – Jigs & fixture

I –Electronic U – Tools


35

3.8) Different Record kept in store:

The store manager has to perform only one important function ex. To watch the good

receive as per its requiring quantity and quantity. The store manager performers the

following steps.

1) He checks the quantity and quantity of raw material received on the basis of

preset standard goods.

2) Good shall be stored in location and location number shall be given by the store

clerks.

3) This location number must be recorded in documents and also in computer.

4) All the events of receipt and issued record shall be filled and balanced.

5) If goods are available as per the requirement than it is issued.

6) Details of issue and receipts of material shall be recorded.

7) FIFO system is applicable and goods are checked before issue.

3.9) MATERIAL RECEIPT PROCEDURE

Goods shall be received along with challan of bill in factory premises together

with gate entry. The incoming material shall be checked by the entry of

contraband and dangerous items.

Details of incoming goods shall be record inward register, format No. F:IW:04.

Quantity shall be verified against mentioned or the vendors challan or bill.

Material identification tag, format No.F:IW:02 shall be attached with the material.


36

Goods receipt not as per format F:IW:01 shall be prepared.

Goods shall be forwarded to incoming inspection department along with the goods

receipt note format No.FIW:03 shall be sent to the respective work center.

Customer supplied products shall be identified by stomped as “customer supplied

products”.

In case of cash purchase, computerized inward note cum material issue slip,

format NoF:IW:05 shall be prepared & goods will be given to respective work

center.

Goods shall be received, recorded & issued as mentioned in the table No.1.

Quantity shall be verified against the above-mentioned formats.

Goods shall be stored in location & the store clerk shall given location.

The location number shall be recorded in the recording documents mentioned in

table.

Store location shall be displayed in the store layout.

Bin lag i.e. format No.f: st:01 shall be filled & balanced for all the items except

tools, stationery, oil, paints, and other consumable items.

A control number shall be allocated to each document for receipt.

At the event of receipt &issue, the document for record shall be filled & balanced.

The availability of required goods shall be verified by referring the store ledger

book i.e. format No. ST:03.

If the required goods are available then they shall be issued.

Details of issue & receipt of material shall be recorded in comprised

manufacturing resources planning system by the store


37

3.9) MATERIAL ISSUE PROCEDURE

Flowchart of the dispatch:

A) Dispatch of material having sales order and job work.

Finish components which have the sale order to be dispatched , shall be received

along with challan – invoices as per format No. F:DC:/02 the work center.


Dispatch instruction received

form concerned department with

related documents.

Verification of material

Packaging of material

Arranging for transport

Prepared dispatch documents

Loading material on transport vehicle

38

The dispatch clerk shall verify the quantity against the challan cum invoice ,

format No. F:DC:02.

Gate pass shall be prepared as per format No. F:DC:04 and approved by the

stores, inward and dispatch in charge.

Components shall be dispatched as per delivery schedule mentioned in sales order.

Based on the sales order monitoring list , the excess components manufactured

shall be sent to the general stores along with the inspection report, format

No.F:Q:01 .

For dispatched components two copies of challan cum invoice format No.

F:DC:02 , shall be sent to customer and one to main gate and dispatch department

shall retain one copy.

B) Dispatch of general items (without sales order):

General items to be dispatched shall be received along with dispatch advice i.e. format No. F:DC:01.

Verification of quantity of returnable or non-return etc. shall be done against the dispatch advice, format No. F:DC:01.

Challan and gate pass shall be prepared by the dispatch clerk which shall be approved by the stores in charge.

For dispatch components two copy of challan per format No.F:DC:03shall be sent to the consignee , one copy to main gate and dispatch department shall retain one copy.

The dispatch clerk shall verify the appropriate packing of material to be dispatch.

Dispatch of job work item shall be done after receiving the challan format No.F:DC:05.

Rejection coming form incoming inspection department shall be received along with GRN rejection dispatch advice format No.F:DC:06 by the dispatch clerk.

The non-conforming components shall be dispatch with challan No.F:DC:05 and F:DC:06.


39

3.10) PURCHACE PROCEDURE

Purchase indent shall be received from the computerized resources planning

system as per format No, F:PL:11 duly approved by assistant work manager.

To send inquiry delivery conformation letter to the approved vendor, which

are entered in M.R.P. system

Generate the purchase order by related purchase office.

Purchase coordinator shall verify the purchase order for commercial aspect.

The purchase manager shall approve purchase order.

Final approve of the director shall be taken incase of purchase.

Purchase order shall be sent to vendor through convenient media.

Follow up activity shall be done with supplier.

Material re4ceived from vendor according to purchase order is verified at

inward department.

Inward department shall prepare good receipt note f:1w:01&send material to

quality control department for inspection of the purchase product.

Inspection shall be done as per procedure of incoming inspection.


40

3.11) MAINTENANCE PLANNING

Preventive maintenance

Critical machines: machines that are decided by work manager and maintenance in

charge are considered as critical machines.

The maintenance in charge shall prepare preventive maintenance schedule for the

critical machines.

A copy of the preventive maintenance schedule shall be circulated to each concerned

work center.

Control of maintenance spare:

Received spare shall be verified by the maintenance in charge.

Received spare shall be identified by a tag and kept in location along with spares

location along with spares location card, format no F: TS :01.

Spears shall be preserved in rust preventive or oil to prevent it from rusting.

Break down maintenance

On the event of the breakdown of a machine, the supervisor shall fill up the maintenance requisition slip as per format no F: MT:01, which shall be given to the maintenance in charge.

The workmen shall carry out breakdown maintenance as per work instruction W: MT:02.

On completing repair work, the supervisor shall check the machine for normal functioning and he shall certify the same on the first copy of maintenance requisitioship format no F: MT: 01.

Machine history and format no F: MT:02 shall be filled. Corrective and preventive action to prevent reoccurrence of the problem shall be taken

and records of the same shall be maintained in format no F: MR:04 wherever required. The maintenance in charge shall ensure the calibration of test equipments as per

calibration plan. Tread analysis of machine break down shall be done and recorded on format no F:

MT:06.


41

3.12) QUALITY CONTROL SYATEM

The Quality policy of SANGAM ELECTONICS. Shall be

Continual improvement of their products and services.

Their focus is customer satisfaction at all times, and striving to exceed his

expectations.

We will always comply with our quality management system and improve its

effectiveness, by establishing performance objectives for our product and

people.”

The Product policy of SANGAM ELECTONICS. shall be

Control customer complaints within two complaints per month on an average-

DEC.2007

Achieve production of at least three machines components per month

Clearance of 85% order within target

Supply of machine components without shortage

Maintain rework/rejection percentage 5% to reduced by 3% with respect to total

production

90% customer satisfaction by December 2007

Quality control procedure of purchased goods:


42

Quality control personnel determine the category of the component as per work

instruction. Work instruction for sampling or lot inspection to be done is

determine.

The quality control personnel inspection the purchased product as per

specification / requirements.

The acceptance criteria of the product are decoded as per product as per quality

plan and /or specifications.

Non-conforming products are kept in demarked zone.

The quality control personnel fills the details of quantity checked in goods

receipt note, which is approved by the quality control manager and data is

entered in the computerized manufacturing resource planning system.

MRP system shall generate inspected goods receipt and rejection dispatch

advice.

The non-conforming product is sending to dispatch department along with

rejection dispatch advice.

Copy of goods receipt note is send to billing section and supplier for further

action.

Quality control personnel whenever required shall do verification of purchased

products at supplier’s premises


43

Flowchart of the work in process and final product:


Material loading on machine with route card, drawing job

Required operation done as per drawing & route card

Inspection

Rework Reject

Regarded or scrap

Surface treatment if required

Inspection

Rework

Reject

Store

Dispatch

44

List of Records

Sr.No Description Format No. Revisio

n No.

Retention Period

1. Inspection report F:QC:01 2 1 Month

2. Tool issue slip F:TC:01 1 1 Month

3. Purchase request ion F:PL:01 1 2 Month

4. Work order F:PL:02 2 2 Month

5. Route Card F:DD:01 0 During production

6. Job card F:PN:02 1 Up to Dispatch/store

7. Daily production report F:PN:03 1 1 month

8. Daily in-process rejection

report

F:PN:05 0 1 month

9. Shortage material

requisition slip

F:PN:19 0 1 month


Regarded or scrap

FINANCE department

45

4.1) INTRODUCTION

Finance is the blood of the business. “Finance Management is that managerial

activity which is concerned with the planning and controlling of the firm’s financial

resources.” Finance management is the most important activity of the firm and it means

that the firm secures capital, if needs and employees it

Finance management is mainly concerned with raising fund in the suitable manner

using the funds as profitably as possible, planning future operations and controlling

current performances and future developments through financial accounting, cost

accounting, budgeting and other functions.

The Finance and Accounts Department of SANGAM CO. plant is located in the

Administration Building, which is situated outside the Plant factory gate. The Finance &

Accounts (F & A) Department is a service department and its name function is to co-

ordinate the financial activities at Plant Site. The F & A department maintain the records


46

as required under various statute and get the same audited by Statutory Auditors under the

functional supervision and guidance of SANGAM CO.OFFICE at SURAT

4.2) FINANCE DEPARTMENT STRUCTURE


47

4.3 REVENUE BUDGET

A letter duly signed by Chief Manager (F&A) is sent to all departments asking

them to submit the likely requirements of the year, before specific date (mostly last day of

November). They will also have to send the justification with adequate proof for the sum


M.D

SENIOR ACCOUNTANT

SENIOR ACCOUNTANT

SENIOR ACCOUNTANT

CHIEF ACCOUNTANT

DATA ENTRY OPERATOR

DATA ENTRY OPERATOR

DATA ENTRY OPERATOR

PEON

48

they demand. Concerned department while submitting their proposals will also submit the

report containing details of expenditure done under the same head last year.

From all the information thus available, a preliminary budget formation takes

place. Subsequently discussions are held at various levels to check the validity of the

budget so formed and finally after passing through all checks it is presented before the

Board of Directors for final approval.

The above written procedure is not as simple as it seems and takes 4-5 months.

The concerned department also has to ensure that it neither asks for too much or too less

amount for in first case it would be questionable for excess amount lying unutilized,

whereas in later case they would not be given any additional amount to purchase in

excess of budget.

REVENUE BUDGET PROCESS

4.4) COSTING METHOD


BUDGET SUBMITTED TO DEPERTMENT

GENERAL MANAGER F&A

MANAGING DIRECTOR

BOARD OF DIRECTORS

49

ACTIVITY-BASED COSTING.

Activity-based costing (ABC) is a secondary and somewhat

complementary (or better, supplementary) method to the two traditional costing

techniques. Whereas traditional methods might classify costs in generic

categories like direct materials, labor, and other overhead, ABC clusters all the

costs associated with a single manufacturing task, regardless of whether they fall

under the headings of labor or materials or something else. So in the bottling

example activity-based costs might include operating the dispensing machines,

performing quality checks, moving pallets of bottles, and so forth. Each of these

activities may involve human labor, equipment costs, energy and expendable

resources, and materials, but for analytic purposes the costs are all lumped

together under a single activity concept. The advantage of this approach is that

management can then observe which tasks cost the most versus which add the

most value; this analysis may indicate that a disproportionate amount of money is

being spent on low-value activities, signaling a need for process changes or for

outsourcing to a vendor that can perform the tasks less expensively. Use of this

method is sometimes referred to as activity-based cost management (ABCM) or

simply activity-based management (ABM).

4.5) COST SHEET


50

COST STUCTURE OF THE SANGAM ELE. CO

NOTES….. ON…... COSTING.BASE

SANGAM TEXTILE ENGINEERING PVT. LTD.

A UNIT COST……..

1 RAW MATERIAL COST

U LABOUR COST

1 RAW MATERIAL COST

A….RAWMATERIAL COST

LESS: DISCOUNT IF ANY…..ASPER….PER..APPROVED. P.O.

B….EXCISE DUTY….CENTRAL GOVT……..

C….TAXES….VAT IN GUJ….C.S.T.O/S.GUJ

D…..FREIGHT….TRANSPORTATION…./REJECTION

2 LABOUR COST

A….O'S…LABOURCOST…….LBR.WORK.DONE.ATO/S…..ASPER…P.O

B….INHOUSELABOURCOST……

INCLUDES 1). POWER..HP/MIC*0.74*LOADFACTOR*HRS/MTH*RATE.RS.UNIT

2).DIR.LABR…OPERATORM/C*WAGES.EARNING RATE.RS./MONTH

3)..IND.LABR……WAGE/SALARY….RELATED….INVOLVEMENT.IN PRODUCTION.

4).CONSUMABLESTR.ETC….I.E.INSERT/OIL/SPARES.EIC.COSUME.IN.M/C

5)OVERHEAD…1.SERVICEDEPTT.SALARY/FACT.EXPS./REP.MAINT/ADM.O.H.ETC 6)..M/C.DEPR…FOR1SHIFT…4.75/YEAR….2SHIFT…7.42/YEAR

7)..REJECTION…ETC....

…………..ABOVECOST,IS,WORKEDOUT..RS./M/CHR

B CALCULATION…..THROUGH….COMPUTERPROGRAME

1 R.M.COST/ITEMWISE…..INWARD.ITEMWISE./ VENDERWISE.RECD.DURING.PERIOD

……………………………..SHOWING…BASICRATE/EXCISE/TAXES…ASPER.P.O.

……………………………..IFMORETHAN.ONEVENDER….MAXIMUMOTY.RECORD/.VENDER.CONS

IDERED

2 ASSLY.COST…………….ITEM.REQD.IN.ASSLY.AS PER PLANNIG*COST/ITEM

3 LBR.COST………………..O/S.LBR.COSTASPER..ITEMWISE…/VENDER

4

INHOUSE

LBRCOST……RATE.RS/M/CHR…*OPERATION.TIME/ITEMWISE.M/CWISE..ASPER.PLANNIGDEPT

4.6) WORKING CAPATIL MANAGEMENT


51

Working capital is the difference between current assets and current liabilities.

Clearly, the safest position to be in is to have more assets than liabilities, and the

bigger the difference the better.

Current assets and current liabilities include three accounts which are of special

importance. These accounts represent the areas of the business where

managers have the most direct impact:

accounts receivable (current asset)

inventory (current assets), and

accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it

represents a short-term claim to current assets and is often secured by long term

assets. Common types of short-term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased

current assets (that is received cash, or other current assets) or has decreased

current liabilities, for example has paid off some short-term creditors.

Factors determining working capital requirements

Size of business

Stage of development

Time of production


http://en.wikipedia.org/wiki/Current_liabilities

http://en.wikipedia.org/wiki/Current_assets

http://en.wikipedia.org/wiki/Debt

http://en.wikipedia.org/wiki/Accounts_payable

http://en.wikipedia.org/wiki/Inventory

http://en.wikipedia.org/wiki/Accounts_receivable

52

Working Capital Requirement of the year of 2008

Current Assets 2010 2009Raw Material 800 750Inventory 50 45Debtors 100 125Cash 100 105Other Current Assets 75 50

TOTAL 1125 1075

Current Liabilities Creditors 50 55Provision for Taxation 25 20

TOTAL 75 75

Total Working Capital Requirement 2100 1000

4.7) ANALYSIS OF FUND FLOW STATEMENT


53

particulars Previous

year

Current year increase Decrease

A. Current assets

Inventory 45 50 5 -

Debtors 100 100 - -

Cash and bank 100 100 - -

other 75 75 - -

TOTAL 320 325 5 -

LESS:

B. Current

liabilities

Creditors 50 55 - 5

Provisions 30 25 5 -

TOTAL 80 80 10 5

Workin capital

(A-B)

240 245

Changes iv

working capital

5 (C-P)

4.8) ACCOUNTING POLICIES


54

1. Basis of accounting:

The financial statement have been prepared on the historical cost convention

and in accordance with normally accepted accounting principles by following

mercantile system of accounting.

.

2. Fixed Assets:

The company has been incorporated on 20-12-2006 under part ix of the

companies act ,1956, accordingly the fixed asset are carried at the cost of acquisition less

depreciation as per income tax act, 1961 claimed by the erstwhile partnership firm.

Cost of acquisition comprises of purchase price, other attributable cost and

net cenvat availed.

3. Investment

Investments are stated at cost.

4. Inventories

Inventories are valued at cost or net realizable value whichever is less.

The valuation of inventories has been as taken, prepared and valued by the management.

5. Inter Division Sales & Purchase:

Inter division sales and purchases are shown as sales and purchase of

respective division.

6. Machinery Spares:

Machinery spares including computers, which can be used as or in

connection with an item of fixed asset are capitalized with the cost of fixed assets or as

fixed asset.


55

7. Taxation :

Provision for income tax inability comprises of current tax and differed tax.

The differed tax for timing difference between the accounting income and the gross total

income is accounted using tax rates and tax laws existing at the balance date.

8. Impairment of Asset:

The carrying values of assets / cash generating units at each balance sheet date

are reviewed for the impairment of assets. If any indication of such impairment exists ,the

recoverable amount of those assets is estimated and impairment is recognized , if the

carrying amount of those assets exceeds their recoverable amount . The recoverable

amount is the greater of the net selling price and their value in use .Value in use is arrived

at by discounting future cash flows to their present value based on appropriate discount

factor. When there is indication that an impairment loss for an asset in prior accounting

period no longer exists or may have decreased such reversal of impairment loss is

recognized.

9. Contingent Liabilities:

Contingent liabilities not provided for in the accounts, are disclosed by way

of note in Notes to Account.


56

4.9) INVENTORY MANAGEMENT

For many business firms, inventory is one of the visible and tangible of doing

business. Raw materials, work in process and finished goods all represent various form of

inventory. In simple words, inventory refers to stocks of good necessary to do business.

In fact, for a business firm, inventory is both an assets and a liability. Too much

inventory consumes physical space, causes of financial burden, and increasing the

possibility of damage, spoilage and loss. On the other hand, too little inventory disrupts

manufacturing operations, engenders chaos on the shop floor, poor customer service.

Need to hold Inventory:

Business firm keep inventory for different purpose. Every firm, big of small, trading of

manufacturing has to maintain some minimum level of inventories.

Transaction motive:-

Every firm has to maintain some level of inventories to meet the day to day requirement

of sales, production process, customer demand etc. the inventory level will provide a smoothness

to the operation of the firm.

Precautionary motive:-

A firm should keep some inventory for unforeseen circumstances also. For example,

supply of raw material may not reach due to strike by the transporters.

Speculative motive:-

The firm may be tempted to keep some inventory in order to capitalize an opportunity to

make profit

Types of Inventory:-

1) Raw Material Inventory:

These are goods which have not yet been committed to production in a manufacturing

firm. They may consist of basic raw material.


57

2) Work-In-Process:-

This includes those materials which have been committed to production process but have

not yet been completed.

3) Finished goods:-

These are completed products awaiting sale. They are the final output of the production

process in manufacturing firms.

4) Supplies:-

A fourth kind of inventory, Supplies or what is called consumable -stores are also

maintained by the firms. These materials are of low value & they do not enter the production

process, for example oil, fuel, bulbs, soaps etc.

5) Scrap:-

The waste of materials arising during manufacturing process is also a part of the

inventory. Even defective pieces to be disposed off are a part of in inventory.


58

4.10) P&L ACCOUNT & BALANCE SHEET

Profit & Loss A/C of SANGAM ELE CO. As on 31st March 2010

Description Value(in lacks)

Income

Net Sales 1350

Other Income 150

Total Income 1500

Expenditure

Staff Cost 75

Other Expenditure 225

Depreciation 50

Cost of Row Material Consumed/Purchases 800

Cost of Bullion 37.5

Increase/Decrease in Stock in Trade 50

Interest 105

Exceptional Item 7.5

Profit (+)/ Loss (-) from ordinary Activities before Tax 150

Tax 59.5

Net Profit(+)/ Loss(-) from ordinary Activities after Tax 90.5


59

Balance Sheet and General report

Particular2009 – 10(in lacks)

2008- 09(in lacks)

(I) Source of Funds

(1) Capital 1000 750

(2) Reserve & Surplus 325 300

(3) Loans

(a) Secured - Debenture 500 5000

(b) Unsecured - Loan from Director's Relative 250

1825 1800

(II) Application of Funds

(1) Fixed Assets (Net) 1250 1100

(2) Investment

(a) Government Security 250 350

(3) Current Assets, Loan & Advance

(a) Inventory 50 45

(b) Debtors 100 125

(c) Cash & Bank 100 105

(d) Other Currant Assets 75 50

(e) Loan & Advance 25 30

Less :-

(a) Liabilities ( Creditors ) 50 55

(b) Provision 25 20

275 280

(4) Miscellaneous Expenditure the Extant not Write-offs 50 70

1825 1800


60

RATIO ANALYSIS

Current Ratio

The current ratio is a measure of the firm’s short-term solvency. It indicates the

availability of current assets in rupees for every one rupee of current liability. A ratio

of greater than one means that the firm has more current assets than current liability to

meet short-term requirements. The current ratio of 2:1 is considered satisfactory.

Current Assets

Current Ratio = ---------------------------

Current Liabilities

Years Current Assets Current Liabilities Ratio(Intimes)

2009-10 3,50,00,000 75,00,000 4.66: 1

2008-09 3,25,00,000 75,00,000 4.33: 1

Interpretation

Company’s current ratio is 4.66:1 in year 2009-10 and in the year 2008-09, We

are know that ideal current ratio is 4.33:1. Company’s current ratio as compare to ideal

ratio is low. So company’s current ratio is satisfactory.


61

Proprietary ratio

Proprietary ratio relates the shareholder’s funds to total assets. It is a variant of

the debt equity ratio. This ratio shows the long term or future solvency of the business. The

acceptable norm of the ratio is 1:3.

Proprietary Ratio = Shareholders’ fund

Total assets

Years Shareholders’ fund* Total Assets Ratio

(In

times)

2009-10 13,25,00,000 18,25,00,000 0.72:1

2008-09 10,50,00,000 18,00,00,000 0.58:1

* shareholders’ fund= share capital+ share application money + Reserve & Surplus

Interpretation:-

The acceptable norm of the ratio is 1:3.the ratio indicates a secure position to

creditors an low ratio indicates greater risk to creditors. The proprietary ratio of the company in

2009-010 is 0.25 which indicates greater risk to the creditors.


62

Fixed asset to proprietary ratio

This shows the relationship between fixed assets to

proprietor’s funds. The purpose of this ratio is calculating the percentage of the owners

funds invested in fixed assets.

Fixed asset to proprietary ratio = fixed assets

Proprietary fund

Years Fixed assets Proprietor’s

fund

Ratio

(In

times)

2009-10 12,50,00,000 13,25,00,000 0.94:1

2008-09 11,00,00,000 10,50,00,000 1.04:1

Interpretation:

Here, the ratio is less than one; it means the creditors obligation has

not been used to acquire a part of fixed assets.

Debt-Equity Ratio

The financing of total asset is done by owner’s equity (internal) as well

as outside equity (external). The relationship between this two is so popular measure

of the long term financial solvency of a firm and this is shown by the Debt Equity

ratio.

Debt-Equity Ratio = Total Long Term Debt

Shareholder’s fund


63

Years Long Term Debt Proprietor’s fund Ratio

(In

times)

2009-10 5,00,00,000 13,25,00,000 0.37:1

2008-09 7,50,00,000 10,50,00,000 0.71:1

Interpretation;

The acceptable norm for this ratio is 2:1. It means ratio is high, so that the higher

ratio allowed in the case capital intensive industries.

Cost of goods sold, in the case of manufacturing concern, is the sum of cost

of raw material used, wages and all manufacturing exp., net sales means total sales

minus sales return

Gross Profit Ratio

This ratio is useful as a test of profitability and management efficiency.

Gross Profit Ratio = Gross Profit x 100

Net sales

Sales-Cogs x 100

Net sales

Years Sales Gross Profit Ratio (%)

2009-10 13,50,00,000 1,50,00,000 11.11%


64

Interpretation;

A Ratio of 25 to 30% may be considered good. But here, ratio is 11.11%

so it is indicated that the company has to improve the situation.

Net Profit Ratio

This ratio also called Net profit to sales ratio (= profit margin). This

ratio is used to measure the overall profitability and hence it is very useful proprietors.

Net Profit Ratio = Net profit x 100

Net sales

Years Sales Net Profit Ratio (%)

2009-10 13,50,00,000 90,50,000 6.70%

INVENTORY (STOCK) TURNOVER RATIO:

This ratio is also known as stock velocity. This ratio is calculated to considers the

adequacy of the quantum of capital and its justification for investing in inventory.

INVENTORY TURNOVER RATIO = COGS

AVE. INVENTORY

Years COGS

AVE INVENTORY

Ratio

(Time)

2009-10 12,00,00,000 50,00,000 24

Interpretation;

It is seen from the above calculation that there is a continuous increase in

inventory ratio. There is a good progress in respect of sales policy.


65

Trend analysis

particulars Current year

value

Previous

year value

Increase/

decrease

Percentage

change

Sales 1350 1230 120 9.76 %

raw material

cosumed

800 720 80 11.11 %

Cash and

bank

105 100 5 5 %

Inventory 50 45 5 11.11 %

Debtorts 125 100 25 25 %

Creditors 55 50 5 10 %

capital 750 1000 (-)250 (-) 25 %

Net profit

after tax

90 78 12 15.38 %


66

Common size statement of profit and loss a\c for the year ended on 31 st march 2010

particulars 2010-09 (values in % ) 2008-09

Net sales 90 91.11

other 10 8.89

total 100 100

Expenses

Staf cost 5 5.56

Other 15 14.44

Depericiation 3.33 3.33

Cost of raw material

consumed

53.33 53.33

Cost of bullion 2.5 2.59

Increas/decreas in stock

trade

3.34 3.52

Interest 7 7.04

Other expenses 0.5 0.56

total 90 90.37

Profit before tax 10 9.63

Less : tax @40% 4 3.85

Net profit after tax 6 5.78


67

Common size statement of balance sheet for the year 31 st march 2010

Sources of funds 2009-10 (values in % ) 2008-09

Capital 52.62 46.16

Reserve and surplus 17.11 18.46

total 69.74 64.6

Secured 26.32 15.38

unsecured 15.38

total 26.32 30.76

Current liabilities

Creditors 2.63 3.38

Provision 1.32 1.24

total 3.95 4.62

TOTAL 100 100

Applications for funds

Fixed assets 65.79 67.69

Investment in govt.

securities

13.16 6.15

total 78.95 73.84

Current assets and loans

Inventory 2.63 2.77

Debtors 5.26 7.69

Cash and bank 5.26 6.46

Other 3.95 3.08

Loan 1.32 1.85

Misc. 2.63 4.31

total 21.05 26.16

TOTAL 100 100


Human Resourcedepartment

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5.1) INTRODUCTION

As one author has rightly said 1 + 1 makes an organization, i.e. where there are

two or more persons there is in effect an organization.

According to French “Personnel management is the recruitment selection,

development, utilization of and accommodation to human resources by organization. The

human resources of an organization activities.”

This definitions states that personnel management is planning, coordinating and

controlling system pertaining to the human resources. The sub processes comprise the

mast vital aspects of personnel management, leadership justice determination, appraisal,

training and development.

The institute of personnel management, London U.K. state that it is that part of

management concern with people at work and with their relationship within an

organisation. Its aim is to bring together and develop in to an effective.

Organisation the men & women who make up an enterprise and having regard for

the well being of the individual of working group of contribution to its success.

Personnel management is concern with managing people at work. It not only

concern with rank & file of employees or unionized labor. But it concern with each &

every employee of firm. If focused on blue –collared employees as well as white collared

employees.

It focus on individual as well as a group by giving them best aim to will get best

of the best work from people who are at work including workmen & women.


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5.2) H.R DEPARTMENT STRUCTURE

5.3) HUMAN RESOURCEN PLANING PROCESS


DIRECTOR

Manager Personnel &

Administration

Manager Perfomance

Apprisal

SubordinateSubordinate

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PROCESS OF HRP

How to have the right number of people which are with right skill at right time? The

process of HRP helps in this regard.

1.1 Organization Objective

The process of Human Resource Planning being with analyzing the overall plan

and objective of the organization. HR Plans needs to be based on organization’ objective.

Specifically requirement in term of number of characteristics of employees should be

derived from organization’ objectives. Organization’ objectives are defined by the top

management and the role of HRP is to sub-serve. Sub-serves the overall objectives by

ensuring the availability and utilization of human resources.

1.2 Demand Forecast

Demand forecasting is the process of estimating the future quantity and quality of

people required. The basic the forecast must be annual budget and long term corporate

plan Translated into activity level for each function and department.

1.2.1 Managerial Judgments

1.2.2 Work study Method

1.2.3 Ratio-trend Analysis

1.2.4 Delfy Method/Technique

1.2.5 Flow model

1.2.6 Mathematical model

1.3 Estimating supply of HR

Forecast of HR supply gives quantity and quality of people available from

internal and external sources of manpower supply. After making you allowances for


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absenteeism, transfer, promotion, change in work hours and other condition of works.

Forecasting of Human Resources begin with current human Resources Inventory also

called Human Resource Audit. Human Resource inventory contains information about

present human resources in the organization. It reveals what is available in the stock of

manpower and what can be expected in future.

1.4 HR Programming Policy

Once an organization personnel demand and supply are forecast this two must be

reconsolelised and balanced in order that vacancies can be filled by right employees at

right time so HR programming held grates importance.

1.5 Implementation

Implementation requires converting HR plan into Action. A series of action

programme are entitled as the part of HR plan implementation. Some such programmers

are recruitment, selection, placement, training and development, retaining and

redeployment, succession plans etc.

1.6 Evaluation and Control

The final step involve in HR planning is evaluation and control. Once the action

plans are implemented. This need to be revived, regulated and monitored against set

standards. Monitoring of action plan and programmers help to reveal the deficiency.


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5.4) RECRUITMENT & SELECTION

Recruitment

“It is the process of finding and attracting capable applicants for employment. The

process begins when new recruiters are sought and ends when ends when their applications are

submitted. The results is a pool of applicants from which new employees are selected.”

Selection

“It is process of differentiating between applicants in order to identifying those

with greater likelihood of success in a job.”

PROCESS OF RECRUITMENT

Recruitment Planning:

In the SANGAM ELE , first of all it will decide that how many no. of

personnel are to be contacted and what type of personnel to be contacted. Some times

they demand for the engineers, managers, supervisors, helpers. So type of personnel is

also determined in first step.

Strategy Development:

After deciding the planning for recruitment they decide the order from

where they will get their employees. They will get their professionals, regional or local

for technical workers and local market for blue collar employees.

How to look:-

Internal Recruitment

Present employees

Employees referred

Former employees

Previous applicants


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External Recruitment:

Professional association

Advertisement

Employment exchange

Campus recruitment

Walk ins, write ins, talk ins.

Consultants

Contractors

Radio & television

Acquisition & mergers

Competitors

When to look:-

They start finding the employees before two months ago from their

required time. Because 10 days for advertise to beging producing resumes. Four days

invitation for interviews issued, 7 days for arranging the interviews, 4 days for org. to

make up its mind, 10 days for the applicants offered jobs to make up their minds and 21

more days for those accepting offers to report for work. This suggests that vacancies must

be advertised two months before they expected to occur.

Screening :-

In this step they screen the employees, whether they are capable to do the

job or not from this step, they remove many applicants from recruitment process.

Evaluation & Control:-

Salaries for recruiters.


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Mgt. & professional time spent

Administrative Exp.

So control on these costs & whether we found the capable applicants or nor. It checked in

this evaluation step

PROCESS OF SELECTION

Preliminary interview:-

In this interview the general question is asked and checks the capability of

the applicant. The objective of this step is to select good applicants for the test.

Selection test:-

Jobseekers who pass the preliminary interview are called for tests. Different

types of tests may be administered depending on the job the company. Generally testes

are used to determine the applicant’s ability. Attitude & personality. Personality tests are

given to measure a prospective employee’s motivation to fun. In a particular working

environment.

Employment interview:-

Interview is a formal, in depth conversation conducted to evaluate the

applicant’s acceptability. It is considered to be an excellent selection device. It allows a

two applicant and applicant learns about the employers. In regarding the particular job

and general knowledge questions are asked to the applicants. The obj. of the interviews

ate to obtain additional information from the applicant. To give general information to

applicant such as company policies, job, products manufactured and the like and to build

the company’s image among the applicants.

Reference & Background checks:-

In SANGAM, after taking the interview the reference & the background of the

applicant is checked. SANGAM, normally seek letters of reference or telephone

references. References are a formatting seldom verified by the employers.


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Selection decision::-

After taking information through the preceding steps, selection decision is made in

the SANGAM ELE CO the final decision has to be made from the pool of individuals

who pass the testes, interviews and references checks. The HR manager plays a crucial

role in the final selection.

Job offer:-

In SANGAM, job offer is given to those applicants who have crossed all the

previous hurdles. Job offer is made through a letter of appointment. Such a letter

generally contains date by which the appointee must report on duty.

Contracts of employment:-

After offering the job to the applicant the contract or file of employment is made

in SANGAM. In case of engineers they are dealing them as a trainee engineers for 5-6

months and then they are permanent employees for the company. Generally SANGAM

makes the contract of employment for 3 years. These 3 years divided in two parts. One

and half years for training and one and half years for regular work.


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5.5) JOB DESCRIPTION & JOB SATISFACTION

JOB ANALYSIS

In simple terms, job analysis may be understood as a process of collecting

information about a job. The process of job analysis results in two sets of data.

Job analysis is the process of studying and collecting information relating

to the operations & responsibilities of a specific job.

In the case of Himson the process is very clear. All employees are become

very familiar with their jobs.

A job specification Himson is very clear they want hi-skill education &

expense. The immediate products of analysis are job description & job specification.

Job Description

(It containing items which is given

below)

Job specification

(It containing items which is given

below)

Job title

Location

Job summary

Duties

Machines tools

Materials

Supervision

Education

Experience

Training

Judgment

Initiative

Physical efforts

Physical skill


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Working conditions

Hazards

Responsibilities

Commutation skill

Emotional char.

5.6) PERFORMANCE APPRISAL

“Performance Appraisal is systematic, periodic and impartial rating of an employee’s

excellence in mater of the training his present job and potential for better job”


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1. Setting Performance

standards

5. Discussing Corrective Action

6. Taking Corrective Actions

4. Comparing with Standards

3. Measuring Performance

2. Communicating Standards

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Grade system in SANGAM CO plant site SURAT

A Managing Director

B Director [Operations/ Marketing/ finance]

B1 Executive Director

C senior general manager/ General Manager

D Joint general manager / Chief Manager

E senior manager/ CMO

F Manager

F1 Deputy Manager/ senior M.O.

G Sr. Assistant manager/ Sr. area manager/ Sr. engineer/ foreman

G1 Assistant manager/ Engineer/ Assistant foreman

G2 Assistant Engineer/ Assistant manager

H Joint manager/ P.S.

5.7) PROMOTION & TRANSFER


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(A). TRANSFER:-

Yoder and associates have defined transfer as “a lateral shift causing

movement of individuals from one position to another usually without involving any

marked changes in details responsibilities skills needed or compensation.

In the case of SANGAM there is no more transfer because all other branch

of SANGAM is running smooth and done nice job. Many rare transfers done in the

history of SANGAM.

(B). PROMOTIONS:-

“Promotion is a term which covers a change and call for grater

responsibilities and usually involves higher pay and better terms and conditions of service

and there fore a higher status or rank.

Purpose of promotions in SANGAM:-

I. To put the worker in a position where he will be of greater value to the company

and where he may derive increased personal satisfaction & income from has work.

II. To increase an employee’s organizational effectiveness.

III. To recognize and individual’s performance and reward him for his work so that he

may have an incentive to forge ahead.

IV. To conserve proved skill training & ability.

V. To attract suitable and competent workers.

In the SANGAM if workers are done good work then they will get

promotions and incrementing along. They get promotions in within two or three years.

5.8) DIIFFERRENT WELFER ACTIVITY


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SANGAM Electronics provides some facilities for its employee’s comfort

and satisfaction. These facilities and activities are know as welfare activities. These

facilities are considered very important because it keeps the employees satisfied.

Following are the welfare activities provides by SANGAM to its employees:

1) A proper canteen facility is provided to its employees and executives. It provides

morning break fast, tea at noon, etc. the outsiders can also use this facility by

paying a very normal cost.

2) Traveling allowance and dearness allowances are provided to every employee and

executive.

3) 1 causal leave and 2 permissible leave in four months is given to each employees

and executives.

4) Safety devices are provided to each and every employees (who are in production

area) so that they can work safely.

5) First aid box is provided to all departments for the treatment of minor injuries.

5.9) EMPLOYEE RECORD KEPT

Employee Record Kept:-

Personal Factors

Name………….. Sex…………… Address ……….

Age…………… Marital Status……. Telephone…

Education and Training

High School … Post-Graduation …… Training ………

Graduation ………………. Professional Qualifications ….

Experience and Skills

Job Areas…………….. Years of Experience ………… Employers……

Job Titles……………………….. Pay Drawn ………………

Additional Information

Grade………… Attendance Record ……. Performance

Rating ………

Salary ….. Disciplinary Record … Career Plans ..

Designation …………………… Department …………………..


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5.10) Training & Development

Organizations become dynamic and grow through zeal, caliber and vision of

their Human Recourses. “SANGAM CO” has always considered development of Human

Resources as its most important responsibility because this alone ensures the well being

and growth of the origination. Training and development activities of society from a part

of continuous process in integrating the organizational needs and the needs of individuals,

“willingness to change” for betterment is the pre-requisite for moving towards excellence.

Training forms the most important function in the development of the human resources

training is giving at there different phases:

1) Individual Phase

2) Management Development Phase

3) Organization Development Phase

The adjectives of training program at “SANGAM CO.” have a very wide

scope, which is as follows:

To minimize the time gap in learning new development.

To equip the participants with requisition ability so that they can work with

minimum supervision.

To enable employees to update their knowledge and increase the level of

performance on their present job assignment as well as canalize their inherent

potential, in order to make him Holistic Person.

To foster initiative, self confidence and to overcome manpower obsolescence

occurring due to age, temperament, lack of motivation or inability of person to

adapt to changes.

To impart training to new entrants to enable them to take up their assignment

effectively.

To create an environment of “We feeling” and enhance accountability of people.

Identification of Training Needs:-


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A committee has been constituted at Head Office for identification and

assessment of training needs of each employee posted at HO/ CMO/ SMOs. On the basis

of specific recommendation of Head of departments, employees the committee would

nominate employees for various seminar / Training Programs / Conferences etc, either in

India or abroad to meet the development needs.

Training Program:-

HRD Department at “SANGAM CO” is conducting various programs for

two categories of persons.

1) Non-Employees

2) Employees of SANGAM CO.

1. Non-Employees:-

HRD Department of SANGAM is dealing with training apprentices under

Apprentice Act, 1926 for the categories such as ITI and Diploma, Graduate Engineers

and Science Graduate in the following Trades:

i. Electronic Engineers

ii. Computer Applications

iii. Machinist

iv. Wireman

v. Electrician

vi. Tool and Dye

vii. mechanic

viii. Electronics

Vocational Training Programs :-


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This is also another training program conducted by HRD Department. This

is normally organized for students coming for practical training in industrial

organization that is a part of their academic curriculum.

Training is provided to student of different course like MLW,

MHRD, BBA, MBA, DCA,IT, M.SC, ITI, and Engineering Graduate during their

vacation. During this training they are exposed to the activities of various departments

and the practical work. They also called apprentices for 1 year from . They pay

stipend of Rs. 3600/- to every apprentices per month

Employee:-

To sustain the healthy work culture and maximize the utilization of human

potential in achieving organizational objectives, SANGAM CO. management has

been giving continuous thrust on the following HRD sub-system.

In-house training:-

After the identification of the training needs of employee and keeping in

view the requirement of the society, the in-house training programs are organized. In

such training programs, faculties are drawn from within the organization and from

outside also.

The infrastructure facilities for in-house training at surat plant include:

I. An qualification with a capacity for 50 persons.

II. Two air-condition lecture hales to accommodate 15 persons each.

III. Full fledged library.

Induction training:-


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New appointees are imparted Induction training covering SANGAM

CO. s aim objective and achievement, work culture, office. Normally internal faculty

is drawn for such training. New appointees are put on the job only after necessary

induction training.

Similarly, special programs are being designed and the employees who

have been provided to officer category from the workmen category in the recent past.

5.11) WAGES & SALARY ADMINISTRATION

Wage & Salary Administration refers to the establishment and

implementation of sound policies and practices of employee compensation. Generally, the

remuneration paid to the workers known as wage while the payment made to office staff

known as salary.

Wage is the remuneration paid for service of labour in production, skilled

and unskilled person or employer, worker technicians. Salary refers to the monthly paid

to clerical administrative and professional employees.

A sound wage & salary administration tries to achieve these objectives:

a) For employees:

Employees are paid according to requirement of their job. This eliminates

inequalities.

The changes of favoritism are greatly minimized.

Employee’s morale & motivation are increased because wage program can

be explained & based upon facts.

b) To Employer:

A wage & salary Administration reduces the likelihood of friction &

grievance over wage inequities.

It enhances an employee’s morale & motivation because adequate and

fairly administered wage are basic to his wants and needs.

It attracts qualified employees ensuring an adequate payment for all the

jobs.


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The information about employees, presentation and absence provided by

the tine keeping system is directly linked with computer section. Then after pay slip is

preferred with the Master-Date. Finally after all additions and deductions, pay is paid to

the employees. The productivity linked bonus and incentive schemes also introduced by

the SANGAM CO. The employees of SANGAM CO. have been paid bonus linked with

productivity.

In SANGAM CO. calculation of wage and salary is done by establishment

section in Finance & Account Department. In this section, wage and salary is calculated

on computers. It is the responsibility of personnel department which has to handle wages

and salary distribution together with account department.

Salary are payable on the last but on working day of every month. In this

organization for the wage and salary administration, first prepared the Master-Date under

the personnel department. In this Master-Date there are various column like grade,

employee number, pay scale, code, P.P. Account, number, name, basic-pay, living-pay,

house rent, over-time pay, medical allowance and other facilities rate etc.

Provident fund:

Company gives 12% provident fund on Employee Basic Salary.(8.% family

pension + 4% F.P.F.)

Bonus:

Company gives 11% bonus on Basic and Special

If company get lose then company enable to pay bonus then it carry forward next

year.

If any accident made in the unit. Then the employee has to give one copy

of certificate to the hospital and other is given to the unit. Then some medical

facilities are given to the employee under this scheme.

In this accident case it may happen that worker may loss his efficiency of

performing a present job. In such cases company makes number of the employee

and if he is not able to work at all, unit pay reward to him.


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Sagar [ Sangam Electronic ]

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