Project Report VE Commercial Vehicle Ltd Spares

August 17, 2017 | Author: kapilpgdm | Category: Vehicles, Business, Automotive Equipment, Economies, Transport
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SUMMER TRAINING PROJECT REPORT

VE COMMERCIAL VEHICLES LTD

TRAINING SUPERVISOR

SUBMITTED BY

Mr. SUMIT DEWAN

KAPIL YADAV

Mr. PRADEEP NAIR

ENROLLMENT NO: 1-23953361

FACULTY OF MANAGEMENT, JB KNOWLEDGE FARIDABAD, HARYANA (AFFILIATED TO AICTE)

PARK,

PREFACE As a part of course curriculum of Post Graduate Diploma in Management (PGDM) we were asked to undergo 8 weeks summer training in any organisation so as to give us exposure to practical management to get us familiar with various activities taking place in the organisation.

I have put my sincere efforts to accomplish my objectives within the stipulated time. Despite all limitations, obstructs, hurdles and hindrances, I have toiled and worked to my optimum potential to achieve desired goals. Being newbie in the highly competitive world of business. I came across some difficulties to make my objective a reality. Anyhow with the kind of help and genuine interest and the guidance of my supervisor, I’m presenting this hand carved effort. I tried my level best to conduct a research to gain a thorough knowledge about the project on topic, “Potential mapping of top five hundred Spare parts”. I put the best of my efforts and have also tried to be justice with available.

ACKNOWLEDGEMENT I would like to thank VE Commercial Vehicles, for constant guidance to conduct the present arduous project and untiring cooperation which they extended to me throughout the duration of my summer training and helped to expand my base of knowledge.

Getting a project ready requires the work and effort of many people. I would like to thank all those who have contributed in completing this project especially Mr. Sumit Dewan, Mr. Pradeep Nair, Esteemed distributor Patel Motors, without their valuable guidance this project would have not been possible.

I hope this study will prove to be a valuable input to the spare parts division of VE Commercial Vehicles and helps to attain the desired objective and to set new standards and landmarks.

INDICANT

CHAPTER 1 2

CONTENTS Profile of the organisation Objective and Relevancy

3 4 5 6 7

Overview of Market Process and Methodology SWOT Analysis Findings and Limitations Recommendations

8

Conclusion

CHAPTER – 1 PROFILE OF THE ORGANIZATION

EICHER MOTORS LIMITED Eicher Group established in 1959 with the roll out of India’s first tractor. Diversified company engaged directly and through subsidiary in the business of commercial vehicles, motorcycles, automotive gears and components, engineering solutions. Significant player in automobile sector having consolidated turnover of more than 25000 MINR for the year ended 31st March 2008. State of the art manufacturing facilities and lean management systems. EML sold its Tractors and Allied Divisions in FY 2005-06 to focus on current businesses. Entered into a Joint Venture with AB Volvo, Sweden in July 2008, transferring its CV business to VE Commercial Vehicles Ltd, the Joint Venture Company. Eicher Motor is one of the prominent commercial vehicle manufacturers in India. The companies’ origins date back to 1948, when Goodearth Company was established for the distribution and service of imported tractors. In 1959 the Eicher Tractor Corporation of India Private Ltd. was established, jointly with the Gebr. Eicher company, a German tractor manufacturer. In 1960 the first tractor ever produced in India was put on the market. Since 1965 Eicher in India has been completely owned by Indian shareholders. The German Eicher tractor being part of Massey-Ferguson from 1970 when they bought 30% before buying the German company out in 1973. In 2005, Eicher Motors Ltd sold the Tractors & Engines business to TAFE, (Tractors And Farm Equipment Ltd), of Chennai, India, the Indian licensee of Massey Ferguson tractors. German car manufacturer Daimler is holding a 20% stake in Eicher Motors. Eicher Motors began its business operations in 1959 in India with the roll out of India’s first tractor. Today the Eicher Group is a significant player in the Indian auto mobile industry with a gross sales turnover of over INR 19,000 million ($424 million (US)) in the year 2005-06.

Truck maker VE Commercial Vehicles Ltd, a 50:50 joint venture between Volvo Group and Eicher Motors Ltd, aims to boost sales by up to 50% in the year to December from the previous year on the back of robust economic growth, new products and an improved aftermarket network. VE Commercial Vehicles sold 25,500 units in the year to December 2009. This year, it plans to sell 35,700-38,250 units, said Somnath Bhattacharjee, executive vice-president for sales, marketing and aftermarket. Aftermarket refers to the supply of accessories, spare parts, second-hand equipment and other goods and services used in repair and maintenance. The Rs2,500 crore company, which started operations in April 2008, sells the mass market, light, medium- and heavy-duty trucks and buses from Eicher and premium, heavy-duty trucks from Volvo. VE Commercial Vehicles will grow 40-50% on the back of the improved economic activity and the improved customer value proposition, said Bhattacherjee. The company launched the heavy duty VE series Eicher trucks in January and plans to launch tippers and rear engine low-floor buses this year. Over the next five years, the company also aims to double its aftermarket sales and service network from the current network of 215 locations for Eicher and more than 100 for Volvo. Brief Background Eicher Motors Ltd. is one of the leading engineering companies in India engaged in the following businesses:  Commercial Vehicles  Engineering Components  Engineering Services  Motorcycles

CV PRODUCTS

CHAPTER – 2 OBJECTIVE & RELEVANCY

RELEVANCY OF THE STUDY The project completed is an attempt to understand and learn kinetics present in the market and the highly competitive environment provided by the local vendors in accordance with the price of the parts, in which the business of spare parts engages and arrive at ways to attain the market share of the genuine parts of EML. The need of this project was generated as to eliminate the possibility of the errors on the information collected for the potential mapping of spare parts on the basis of the vehicle sales as the sales of spare parts can be easily correlated with the sales of trucks and buses that EML sells. The scope of this project is limited to the central region covering the distributor Patel Motors as far as the reason for the downturn of the quantity billed of the top 500 spare parts is concerned. So the findings do not necessarily reflect on what the reasons could be in other regions of the country.

OBJECTIVE  To map the market potential for the top 500 spare parts.  To study the nature of the spare parts market in the presence of the competition provided by the local vendors.  To map the percentage growth or downturn of the top 500 spare parts for all the distributors of EML.  To study the reasons for the downturn in the sales of the spare parts in the calendar year 2010 (till June 2010) on the basis of 2009 and give valuable suggestions to rectify the reasons in order to generate sales.

CHAPTER – 3 OVERVIEW OF MARKET

ENVIRONMENTAL SCANNING • Structural changes in the underlying economy such as improvement in the road infrastructure, and strong growth in the Indian economy have fueled and expected to continue to drive growth in the CV Industry owing to: – Increased freight availability aided by investment surge in key sectors manufacturing, construction, mining & increased foreign trade boosting containerized freight movement – Strong growth in non-bulk commodities which is leading to an increased share of freight transportation by road which is the preferred mode for non-bulk commodities • Improved profitability of fleet operators will boost overall CV demand: – Decline in diesel prices as well as rising freight rates have mo re than compensated for the incumbent cost pressures owing to increases in vehicle prices by OEMs, rising tyre prices and rising interest rates resulting in increased operator profitability • Increased replacement demand as well as shift towards heavy tonnage CVs owing to: – Strong freight availability, changes in emission norms, introduction of more economical and fuel –efficient vehicles, the Supreme Court ban on overloading and strict restrictions imposed by cities on vehicle age. – The proportion of trucks under five years of age rose from about 34% in FY 2002 to nearly 45%. • Significant improvement in road infrastructure will allow more efficient Cargo movement thereby boosting CV demand – Indian Railways has proposed several initiatives to arrest its steady decline in market share. However, these initiatives would likely take at least five years to get

implemented and hence do not offer any significant threat to the fleet operators in the medium term. • Passenger vehicles are also expected to show significant growth with increasing demand due to rise in consumers ’ affordability resulting from strong growth in disposable income, increasing urbanization, improved road infrastructure and consumer preference for comfortable rides

On comparing the Network Distribution of all three major players: TATA, Eicher, Ashok Leyland Eicher has 142 dealers and TATA and Ashok Leyland 176 and 178 resp.

MARKET SHARE IN HCV

MARKET SHARE OF EICHER IN LCV & MCV

BUSINESS OPPORTUNITIES IN MADHYA PRADESH Madhya Pradesh is an emerging industrial powerhouse, home to around 1,800 companies and 19 industrial growth centres (located across 7,147 ha) that are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute significantly to the economy. MNCs like Cadbury, Bridgestone, Unilever, Coca Cola and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymond’s, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej and HEG have their presence in Madhya Pradesh. These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.

ATTRACTIVE SECTOR AUTO AND AUTO COMPONENTS The size of the auto component industry in the state is $306 million. Sixty per cent of the auto industry in Madhya Pradesh is dominated by auto component players. The state has developed a 5,000-ha industrial cluster at Pithampur, which provides readily available infrastructure for companies willing to set up manufacturing facilities. The Government of India has sanctioned $11 million for an auto cluster in the Pithampur industrial area. VE COMMERICAL VEHICLES LIMITED IN MADHYA PRADESH Eicher Motors, part of the $355 million Eicher Group, is a significant player in the Indian automobile industry. It manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehicles. The company has a 72-acre manufacturing facility in Pithampur; it has top-of-the line equipment, a robust infrastructure and an annual production capacity of 30,000 vehicles. The company has a world-class R&D centre that has helped it successfully develop a wide range of commercial vehicles including trucks and buses. The company recently invested $22 million for manufacturing heavy commercial vehicles at its Pithampur plant.

CHAPTER – 4 PROCESS AND METHODOLOGY

PROCESS The survey covered the distributor of the central region. Central Region: Indore (Madhya Pradesh)

The project focused on exploring the spare market of this area and to discover the potential. The objective to do this project was to map the sales data of top 500 spare parts and to find the increase and decrease in H-1 2010, as it could have been done on the basis of sales data of vehicles which was having probability of misleading information, so to rectify the possibility of faults this survey was conducted. Keeping the objectives in mind the process and methodology was designed to achieve the accurate results

STEPS INVOLVED IN PROCESS  Collection of the sales data of spares from SAP for the colander year 2009 and H-1 2010 for top 500 spare parts.  Sorting of the data was done according to the requirements of the project.  Average sales of the top 500 spare parts were mapped for both the years.  On the basis of the average sales the percentage increase/decrease was calculated for all the esteemed distributors of EML.  Further analysis and data crunching was done followed by finding the reasons for the downturn of various spares among the list of top 500 parts especially for central region.

METHODOLOGY  Information collected during the survey was based on primary data.  Questions asked by the distributor as follows. a) What are the reasons for the fall in quantity billed in H-1 2010 as compared to previous year? b) Why there is less number of orders being placed for the running items.

CHAPTER – 5 SWOT ANALYSIS

STRENGTHS  Most of the customers engaged in farming profession generally demand for the LCV’s of VE Commercial Vehicles, which can lead to increase in sale of the spare parts.  LCV parts are mostly demanded by the retailers and customers as most of them showed good percentage increase among the top 500 spare parts

WEAKNESSES  Very weak presence of HVC’s in this market due to that the demand of the HCV spare parts is experiencing downturn.  Compared to the competitors supply of the parts falls short.  VOR placed by distributors are not being timely executed by CSPD.  Distributors and retailers are not taking pain to inform the customers about the effective usage of VECV genuine parts.

OPPURTUNITES  There are lots small territories which come under central region as it covers two states Madhya Pradesh and Chhattisgarh, so there is a possibility of finding efficient retailers for VECV.  The penetration into this market can provide with good opportunities for business of spares as most of the territories in Chhattisgarh are untapped which involves mining industry and engages good number of HVC and LVC of VECV.  The heavy-duty trucks of 16-49 tonnage, sold largely to the mining and construction industry, grow with industrial production. Light- and mediumduty trucks of 5-12 tonnage sold for freight transport trace the gross domestic product (GDP) growth trajectory. Both macroeconomic indicators are looking robust. The Index of Industrial Production grew 13.5% in March on a year-onyear basis, marking the sixth consecutive month of double-digit growth. The government expects GDP growth of 8.5% in the 2010-11 fiscal, up from 7.2% in the year ended 31 March.

THREATS  If measures not taken to improve bad image of company for supplying genuine spare parts, this market can be overtook by the upcoming local vendors.  Supply chain for the items by CSPD is not working properly as it creating threat to loyal customers shifting to the local vendor’s items.

CHAPTER – 6 FINDINGS AND LIMITATIONS

FINDINGS & LIMITATIONS The analysis made above represents a micro picture about the region. Apart from these inputs there are some points which were discovered while getting inputs from the distributors, these findings are represented below.  Local vendor parts provide very high margin ranging more than 50% because of which retailers interest in doing business of genuine VECV spare parts is getting diluted. As he is getting good amount of margin in selling the local vendors parts. (List attached)  The price difference lead to the decrease in the demand by the customer and above that the delay in supply of the genuine parts act as a spark to ignite the fire in the house, which means delay in supply plus high price in comparison with vendor parts force customer to shift on the vendors product.  TVS the authorized supplier to VECV for part number IA201790 and IA211328 has directly stepped into the local market for same item but at much lower price which means it is cutting the business of the concerned item supplied by CSPD.  Warranty for various parts is not being given by VECV that means no replacements within the period is being provided, but on the counterpart the vendor are proving on desk replacement and repair for the same item in case of damage during fixing the part, that is why retailers are losing interest in selling those concerned part number (e.g. IA201790).  Customers are not aware about the effectiveness and efficiency of the genuine parts of VECV as compared to vendor parts. (E.g. In case of air filter, VECV air filter is good in quality and has operating life in comparison with vendor air filter then too because of the lack of awareness and less price customer prefers buying item by vendor).  According to the distributors more than 60% parts which covered under top 500 spare parts are workshop items, rather retail and some are asked generally in accidental cases.

 Supply of the ordered material from CSPD to distributor is not as on demanded or ordered (no timely supply). So this leads to dumping of the ordered material to the distributor when not in demand by any by this distributor loses interest.  As the distributor plays with zero inventory for few of LCV and most of HCV so they falls short when there is urgent requirement of the part then they prefer buying it from the retailer that is Fairdale which is taking over the business of VECV for those concerned parts.  Business of the HCV spare parts is nil as the vehicle population is very less in this market. The HCV is having its market in Rewa region of MP.  Distributor suggested that owing to the non-availability and incomplete supplies from VECV and presence of small vendors, lots of sales are lost. They expressed anger about not even getting VOR complaint sorted out in time which is creating bad impression about the company, measures to increase the speed of operations at our end are suggested.  In case running item quantity billed was less as the material was not supplied as on demanded or required.  At time of packing at CSPD by mistake materials are packed in wrong package. (E.g. part of 10.60 packed under 11.10) Apart from these comments there are various reasons lead to the fall in quantity billed in H-1 2010 in comparison with 2009 which can be made by going though the spread sheet attached.

CHAPTER – 7 RECOMENDATIONS

On the basis of the findings, some recommendations to curb the image and the market share of VECV genuine parts are being made below.  As company’s brand image is experiencing bad downturn customer losing interest to buy genuine parts of VECV, as there are many reasons responsible for decrease in spare sales, till some extent they can be corrected by providing some personal incentives in monetary terms not as in discount as they are the last people in the supply chain of inventory and directly associated with the customers so they should prefer selling VECV genuine parts rather vendor parts and could be able to motivate customer to buy VECV spares and give them knowledge about the recognition of the genuine packing as one of the vendor is supplying the part same as VECV on the part but not on package by which customer tends to purchase it, so retailer can tell them about VECV genuine logo and package.

 The communication gap between distributor and CSPD and distributor and retailer should be minimized by arraigning some formal and informal meet in order to allow them sharing light moments, and to make them feel like a team, and make them feel as a part of VECV family by this they can get motivated enough to do good business for us.

 Distributors are caring angry nature because of the shortage in supply, so they need to motivated enough to do the business and it could be done by arranging some motivational training for them.  As company is losing sales by 20% to 30% and the reason for this is the warranty and replacement options provided by the vendors that too on desk replacement, so VECV must look forward to this issue and could start providing training to the mechanics at the retailers end and lend them some certification so that part fitted by the certified mechanic could be replaced. 

One sincere suggestion to the company is that if possible try to supply and make the spare parts available to the distributor before the launch of new model, this could help to curb the brand image of company and sales of spares and vehicles respectively.

 The most important issue to be checked is the system made by us for supply of inventory. CSPD is only able to provide 60% of the order placed by the distributor. Why CSPD falls short in supply of inventory is question of worry? According to company policy it being decided that the VOR order will be dispatched in 72 hours but on the ground reality it is possible for 10 % times and in 80% case order is dispatched after 72 hours which leads to delay and rest 10% cases it could take more than 10 days to be dispatched.  It is expected that if the price of the VECV genuine spare parts will be placed 25% to 30 % above the price of the vendor part then customer will prefer buying genuine parts.  Tokens should be introduced for mechanics so that they should get motivated and ask the customer to purchase VECV genuine material. They could be any gift items or can be points e.g. after collection 1000 points or so he could be eligible to get Rs 1000 and it could be landed to the distributors. (E.g. Rimula is providing lunch box to mechanics and allied giving Rs 50 coupon in package).

 Surveyor of supervisor should be appointed by CSPD so that he could be available for the queries coming in case of warranty replacements.  In order to increase the workshop demand for the parts which specially demanded or replaced in workshop and showing downfall we could introduce some Mechanic scheme to promote the sale of workshop requirement.

CHAPTER – 8 CONCLUSION

With the conclusion of study we find that there is a possibility of gaining market share of VECV genuine parts in this region and other too associated with it but several problems are waiting to be figured out mainly the cause of short supply and the price difference. In this study we observed that to gain the lost market of spare parts, the distributors has to work passionately to tap the market demand by joining hands with retailer. The business of spare parts is correlated with the business of selling trucks and buses as the expectation of this fiscal year the commercial vehicle market to grow by 25% in the current fiscal. The domestic commercial vehicle sales stood at over 530,000 units in the last fiscal. Market leaders Ashok Leyland Ltd and Tata Motors Ltd have traditionally cornered around 70% of the market. But new players such as Mahindra Navistar Automotives Ltd, Daimler Trucks and Volvo-Eicher are set to challenge market share. It is expected Asia to overtake Europe as its largest market by 2015, led by the robust demand in India and China. The company is gearing up for the growth. Over the next three years, VE Commercial Vehicles plans to invest Rs500 crore to double its monthly production to 8,000 units at its Eicher plant in Pithampur, Madhya Pradesh.

Health is Wealth”. A healthy truck reaps healthy profits for your business. Spurious parts are injurious to the health of your precious vehicle which in turn adversely affect its working efficiency and hence your business.

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