SUMMER TRAINING PROJECT REPORT - DOC

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SUMMER TRAINING PROJECT REPORT - DOC Powered By Docstoc
					    I N D E X




1. ACKNOWLEDGEMENT

2. VISION, MISSION AND VALUES OF EICHER

3. ABOUT EICHER

    a. Introduction and History
    b. Strengths of EMI
    c. Product Range
    d. About Finance and Accounts Department
    e. Finance and Accounts Dept Structure Chart
    f. Commercial Vehicles.
    g. Billing Process
    h. GR Process


4. RECEIVABLES MANAGEMENT

    a. Discounting
    b. Sales
    c. Debit Note & Credit Note
    d. Collection
    e. Channel Financing
    f. Receivables Monitoring System
    g. Channel Financing Limit    V/S   SAP Credit Check For
      Billing.
5. FIXED ASSETS MANAGEMENT

    a. Process of Acquiring Fixed Assets

    b. CIJ: Capital Item Justification

    c. Writing-off assets.

    d. Rate of depreciation used in EML.

    e. Physical Verification of assets.

6. DATA ANALYSIS

7. SWOT ANALYSIS
           The Eicher way…



Eicher Mission

 To provide competitive commercial vehicles and related services of
  quality exceeding customer expectations.


 To be innovative in all that we do and be responsive to our internal
  and external customer needs.



Eicher Vision


 To be one of the top three commercial vehicle manufacturers in India
  meeting customer needs anywhere anytime.

 To be a prosperous company with a commitment to invest in the
  development of our engineering capabilities and our future growth.

 To be seen as a value driven organization caring for its employees
  and all other stakeholders.




Eicher Values

 Ethical Practices
Legal, social, personal, conscience framework.
 Fairness
No bias against any of the stakeholders.

 Human approach
Encourage people to take risks, tolerate mistakes and learn from them.

 Openness
Transparency of action and thought.

 Empowerment
Encourage people to take risks, tolerate mistakes and learn from them

 Customer satisfaction
Awareness that every transaction has a customer, then to recognize his
needs and to delight them.

 Total quality
Excellence in everything we do and to enable self-actualization.

 Secular
Without any bias against those with different o r certain belief.

 Apolitical
Keeping away from political influences.

 Trust
Relationship which allows openness and sharing of true inner feelings
                         BACKGROUND

Eicher Motors Limited (EML) is a leading Commercial Vehicle
manufacturer of India. IT was incorporated in 1982 and introduced its
first product, the Canter, a 6-ton GVW truck manufactured at its state of
the art plant at Pithampur, Indore in collaboration with Mitsubishi Motors
Corporation, Japan, in 1986. The company has fully absorbed the
technology and has successfully indigenised the vehicles.

From a single 6 Ton GVW truck in 1986, our range today extends from
5T to 16T GVW trucks and the Skyline and Voila range of Buses. All
our products are now been offered in BS I & II compatible options. We
also have arguably the best CNG technology in the world in our CNG
Buses. Pioneering the concept of Built Up vehicles in the country, we
make products that consistently deliver high value to our customers and
are increasingly becoming the preferred option for all CV users, not only
in India but overseas too. Eicher CVs today have significant presence in
more than 20 countries across the world.
In India, Eicher Motors has consistently outperformed the industry in
terms of growth and currently holds over 30% market share in the 6T-
11T GVW segments. In the 9T GVW segments, Eicher Motors
continues to be the leader with more than 50% market share. Our well-
equipped workshops result in faster turnaround of service. A network of
more than 4500 Eicher trained private mechanics, over 133 authorized
sales and service centers, and easy availability of genuine parts across
more than 300 authorized spares outlets means less downtime and
increased opportunities for our customers to earn.

Eicher Motors is now poised to further consolidate its position in the CV
industry by entering into the Medium & Heavy Commercial Vehicle
segments. Strategic plans are in place to ensure necessary
investments in technology and training to constantly sharpen our
development and manufacturing edge. EML is totally committed to
fulfilling the vision of being one of the top 3 CV manufacturers in the
country by giving customers what they want: vehicles that are safe, fuel
efficient, easy to maintain, enhance driver comfort and in turn
productivity. Vehicles that deliver value by providing lower cost of
ownership and increased profitability to our customers.

The excellent manufacturing and design capabilities of the group comes
as a result of the Engineering Services Center of Excellence which has
been set up as part of Eicher's major initiative to focus on product
development and engineering. This Center functions as an autonomous
unit catering to high-end CAD/ CAM requirements of all Eicher
businesses


                    EML ADVANTAGES:

Technological Expertise
Their products are manufactured at the Company's plant in Pithampur,
near Indore, Madhya Pradesh, and India. The company has absorbed
the technology and has successfully indigenised the vehicles.
To ensure that we continue to create products that offer unique
advantages and benefits to our customers, Eicher Motors Limited has
set up a Product Development group, consisting of competent
engineers. The team has developed several successful vehicles and
variants, an achievement made possible by the use of the latest
Computer Aided Design and Computer Aided Engineering (CAD-CAE)
software like NASTRAN and FEM analysis packages.

Extensive Network
Eicher Motors Limited provides its customers the benefit of an
extensive sale and service network, customized solutions and an
efficient             cost              of                ownership.
Our manufacturing capabilities are backed by a sales and service
network of over 133 EML authorized sales & service centers and more
than         300           authorized        spares          outlets.
                        PRODUCT RANGE


 Eicher 10.50                   :    5.40 ton GVW
 Eicher10.59                    :    5.90 ton GVW
 Eicher 10.75                   :    7.45 ton GVW
 Eicher 10.90                   :    8.80 ton GVW
 Eicher 11.10                   :    10.50 ton GVW
 Eicher Jumbo 20.16             :    16.20 ton GVW
 Eicher Galaxy 30.25             :   25.00 ton GVW
(* GVW = Gross Vehicle Weight)



 Skyline and Cruiser range of Buses (in Standard, HHR & Push Back
  Seats option)

 Skyline School Buses.

 A wide range of ready to use built-up vehicles: Ambulances,
  Aluminum Container Vans, Tippers, Water Tankers, Fire Tenders,
  Postal Vans, Troop Carriers, Garbage Tippers, Dumper-placers,
  Rear Drop Tippers, Cash Vans etc.




                EICHER MOTORS NETWORK
 4 Regional Offices and 12 Area offices
 150 Authorized contact points inclusive of 78 Dealers, 30 Branches,
  28 Authorized Service Centers, 14 Spare Parts Distributors/dealers
  and 748 Spares/service Outlets
 Over 6000 company trained mechanics on National and State
  highways, spread all over the country
 325 Material Vendors
 A young and energetic work force comprising of 911 employees




         ABOUT FINANCE AND ACCOUNTS
                 DEPARTMENT
The Finance and Accounts department in EML handles accounts for the
various kinds of money matter related transactions. The financial
matters are categorized under six main categories. They are:
.
 Accounts Payables
 Accounts Receivables.
 General Ledgers.
 Assets.
 Excise.
 Controlling




Under these categories there are different roles to be performed. We
have following roles/functions under the above categories:
   Payer                                Receivables
   Payroll                              Banker
   Assets                               MIS/ABP
   Material Accounting                  Purchaser
   Excise                               Expenses


Given below is a detailed description about the six categories in the
Finance department:

1. Accounts Payables
    Payables has the following main functions:

 LC payment                             Purchase accounting
 Import clearing                        Cheque payment
 TT payment                             Domestic clearing
 Vendor clearing                        Travelling loan deduction
 Service entry

2. Accounts Receivables

    Receivables has the following main functions:

       Delivery maintenance
       Invoicing (Customer Billing, Dealer Billing, etc)
       Price master maintenance
       Collection Accounts
       Receivable reporting
       Advance adjusting
       Credit note printing



3. General Ledgers
  The main functions are:

     Report    generation         for  Report generation for Profit
      Balance sheet                      and Loss accounts
                                        Bank reconciliation
   Bank charges accounting             Cost analysis
   MIS                                 Insurance
   Sales analysis


4. Assets
  The main functions of assets are:

      Internal order                   Sales or deletion of assets
      Purchase of assets               Asset accounting
      Capitalization                   GL Master maintenance
      Monthly depreciation

  5. Excise
  The main functions are:

      Modvat Clearing Accounts.          Stock record
      Availment.                         PLR accounting
      Job Work                           RG23 records
      Reversal of excise                 Export formalities
      Capital assets                     Evaluation for excise purpose
      Excise duty payment                 (finished goods)


6. Controlling
   Controlling includes the following key function:

      Cost Center accounting
      Internal Order Accounting
      Project Tracking
      Product cost Accounting
      Activity-based Accounting
      Profit Center/Profit Analysis
      Finance & Accounts Departments Structure

                                                 The Head of Finance
                                                     Department

                                       Legal
Indirect Taxation (Excise, sales Tax), Accounts Payable (Bill Passing & payroll)/FIRE IT, Material Acct, Audits, Fix
                                                                      MIS, Company
 Banking, Insurance, AFC Operations, AR




                                           Vendor reco and hundi payments                    PO activation, PLR reco, TDS certificates, All de
      All liasoning work from Indore Office



      BRS of all bank A/C s, interest computation & provisioning, treasury MIS, DLR generation
                                       Material bill passing (including GRIR review & clearing) Tax fixed asset
                                                                         Payroll, tax audits, Income



      Banking, & Insurance Fund management
                                      Material & Expense Vendor Payments, Cheque printing, freight outward bill pas
                                                                       MIS, Budget and AFC


                                                   Expense/ Marketing/ Depot bill passing and freight inward bill passing
      Attending appeal, SCN and custom refund                                                Material accounts and Audit



                                                                     Employee’s related payments
      Depot sales tax assessments Tax (Plant & Depot)), VAT preparedness



      Plant sales tax assessments



      Record maintenance for Excise, MODVAT availments, Export documentation, GP preparation, excise returns




      Junior Assistant Excise record maintenance


      Sales, MR, CNR, dealer payments, dealer reconciliation, depot FG reconciliation (W, C & E regions) transfer price for
      exports.




      Sales, MR, CNR, dealer payments, dealer reconciliation, depot FG reconciliation (N1 & 2), marketing A/C s MIS




                                                                                                              EICHER
                  INDUSTRIES COMPETITORS

This industry of commercial vehicles comprises of very many players having
a big name and fame in market, not only in this segment but in other
industries too.
Though there are many players in which competition is there in the industry
but here to compare the data we take Eicher motors and few very close
competitors of its in the industry. The competitors are:


 Eicher Motors

 Ashok Leyland

 Tata Motors

 Swaraj Mazda


To compare and make an analysis we do need to have its financial reports
i.e. profit & loss account and balance sheets here are the profit & loss
account and balance sheet for all the above companies for the past 15 years
that is from 1989-90 to 2003-04.




                                                             EICHER
                      Commercial Vehicles

The Commercial Vehicle (CV) industry grew by 26% during the financial
year 2004-2005. Most of the segment of CV industry grew, though at
different rates, spurred by Government investments in road infrastructure,
lowest ever interest rates and good business environment.

The Company sold 23004 vehicles as compared to 15885 vehicles in the
immediately preceding year – a growth of 45% outperforming the industry
growth. The company’s entry into the Heavy Commercial Vehicle (HCV)
segment has gained momentum and during the year Company sold 4451
HCVs as compared to 1676 HCVs during the previous financial year

The turnover of CVs grew by 56% to RS. 1419 crores during the financial
year 2004-05 from RS. 909 crores in the previous year.
It has launched Multi Axle Model Eicher Galaxy (30.25 and 33.25) during
the year and sold 715 vehicles in the market in the very first year itself. A
15T GVW Cowl and chassis for inter city passenger segment has also
been introduced in select markets during the year.

The Company has tested and successfully piloted a few vehicles of its
indigenously developed 42 Tipper model during the year and is planning
to commence mass production during the current financial year. The
Company is also in the processes of development and testing of its new
variants like 62 Tipper and 35 and 40 tones Tractor trailer to improve
competitiveness in the market. This backed by development of new
dealers in identified areas, would further help in increasing the companies
sale in the short and medium term.


                     Auto Finance operations
739 Commercial Vehicles and 99 tractors were financed during the year.
Overall portfolio quality continues to be healthy with minimal
delinquencies. Encouraged by the overall performance of auto- financing
operations, generating significant revenues and also enabling incremental



                                                              EICHER
sales, this company has set the significant growth targets of retail
financing of commercial vehicles in the current financial year.


                         Billing Process
1. Purchase order no. Is prepared by the company’s person authorized for
   this purpose. There are three types of “purchase order” i.e.

  45 series for General purchases
  55 series for Scheduling agreement for production items
  655 series for amortization

2. Authorized person of the company signs purchase order and a copy is
   send to the vendor.

3. The Vendor prepares the ASN i.e. Advance shipment notice in which he
   include the following details that are
   Invoice no.
   Invoice date
   Excise detail
   Total amount
   Quantity
   Material description

4. When the material is dispatched from the vendor’s end for the company
   then at the company’s gate, Gate Entry is made.

5. After Gate Entry process GR (Goods Receipt) is made which is of three
   type i.e.

 Original for buyer
 Duplicate for transporter
 Triplicate (extra copy)

6. GR Entry no. is made after that physical quantity verification is done
   where the item is unloading for that only GR no. is made.




                                                             EICHER
                                Format of GR
ASN No      Invoice   Invoice   GR no     Purchasing   Actual Unload
            NO.       Date.               No.            NO
                                                         .




                                 GR- Process
1. Inventory RM Dr

              GR/IR (Goods Received Invoice not Received Provision) Cr.

2. GR/IR.       Dr

             Vendors A/c Cr.

 On spares excise is not imposed, from 1st June 2006 spares also subject
  to excise

 CST (central sales tax is 4% when raw material is purchased out of M.P.

 VAT (Madhya Pradesh Value Added Tax) = 12.5%

 QC (Quality Control) In this if there is found that some material is defective
  then invoice is prepared of no. of items remained after rejection.

 RDA (Rejection dispatch advice) this is done on line.




                                                                  EICHER
EICHER
RECEIVABLES MANAGEMENT




                  EICHER
                 RECEIVABLES MANAGEMENT
The following heads are covered in receivable management :-

     DISCOUNTING
     SALES
     DEBIT NOTE AND CREDIT NOTE.
     COLLECTION
     CHANNEL FINANCING
     RECEIVABLES MONITORING SYSTEM
     CHANNEL FINANCING LIMIT V/S SAP CREDIT CHECK FOR BILLING.




                            DISCOUNTING
The company according to the schemes gives discounts to its dealers.
Schemes are different in different regions or branches. Sometimes dealers
are given certain amount of discount limit to be maintained on a particular
vehicle i.e. called Kitty.

For Ex:- For 10 vehicles the limit sanctioned to dealer is RS. 4,00,000 i.e.
RS. 40,000 per vehicle.


CASE:- Let’s take an example that a Dealer in West Region has been
sanctioned a discounting limit of 40,000 per vehicle. But what it does is he
gives Rs.30,000 discount on sale of 1st vehicle, on sale of 2nd vehicle it gives
discount of RS. 30,000 to the customer. So for maintaining balance of
discount per vehicle he can give discount of RS. 60,000 on the sale of its 3rd
vehicle.

In case if the discount limits exceeds due to some reason then first the dealer
have to get the exceeding limit approved from Finance Department.



                                                                 EICHER
For Ex. :- As the dealer is given discounting limit of RS. 4,00,000 but due to
competition prevailing in the market or some other reason, the dealer has to
give some additional discount to its customers, so for that additional discount
the dealer has to get approval from Finance Department.



                                   SALES
For the sale of a vehicle the first and foremost procedure is to take out the
Inquiry about the demand of a vehicle in the market. And this Inquiry is
carried out by the Marketing Personnel / Dealer because they have the best
knowledge of the market and its segments. The Inquiry is of two types :-

 HOT INQUIRY

 COLD INQUIRY

Here, HOT INQUIRY means that there is immediate demand of a particular
vehicle, and it has to be manufactured as soon as possible.

And COLD INQUIRY means that the demand is there in the market but its not
of urgency.

      After knowing the demand the Dispatch Advice has been given. Then
this advice is procured by the DCD for further processing. After procurement
the vehicle is manufactured as per due date. As the vehicle is manufactured,
it is moved to Depot of a particular region.

    Then the dealer is informed about the vehicle and is asked for payment,
as per the rules of the company the vehicle is not billed to a dealer without
receiving the payment. There are two ways of receiving the payment i.e.
directly through Cash or through Channel Funding (Procedure is Explained
further).

Sometimes the vehicle is issued on credit to the dealer but for certain time
period say, for 30 days and interest is charged to them from the 1st day itself.




                                                                 EICHER
            DEBIT NOTES AND CREDIT NOTES


Debit notes and Credit notes are the Financial Instruments, which are
basically issued on Trade Discounts.




DEBIT NOTE
As the dealers are given discounts on invoice, but as stated in the rules of the
company the amount of discount is restricted on invoice so for balance
discount, the dealers account is credited by receiving the Debit note from
them.

For Ex:- Suppose the dealer is sanctioned discount of Rs. 40,000. But on
invoice he has been given discount of Rs.15000 only. So, for remaining
25000 the dealer will give a debit note, so that his account gets debited and
the company’s account gets credited with Rs. 25000.




CREDIT NOTE
In case if the discounts given to them are more than required, then the Credit
note is received from the dealers and there account is debited and company’s
account is credited.

For Ex:- Suppose the dealer is sanctioned discount of Rs. 40,000. But the
dealers requirement is only Rs. 15000, so for balance 25000 the Credit Note
is received from dealer, therefore the company’s account is credited and
dealers account is debited.




                                                                 EICHER
                              COLLECTION

Collection is the amount received by the company from the dealers for
clearing the dealers outstanding accounts.

             Whatever collection received by the company from the particular
dealer, it is credited/cleared in the books according to FIFO (First in First out)
basis only.


For Ex:- Suppose a dealer in South, have 3 outstanding bills :-

           INV. NO.           DATE          AMOUNT
             123             21/02/06        100000
             138             10/04/06        200000    Now      the     total
             216             15/05/06        200000    outstanding is Rs.
                                             500000    500000.           The
                                                       company receives rs.
400000 from a dealer so for clearing the outstanding, company will not clear
inv. no. 138 and 216, rather it will clear 100000 from inv. No. 123, 200000
from inv. No.138 and balance 100000 from inv. No. 216. So the balance
100000 will be the dealer outstanding of inv. No.216. This is because of
FIFO (First In First Out) basis.


Here, the fund can be collected either directly through cash or through
channel financing. (Guidelines for operating channel financing are explained
further).




                                                                   EICHER
                   CHANNEL FINANCING

 Guidelines for operating Channel Financing in EICHER MOTORS LTD.:
  -

A).
1. Dealer should keep rotate his channel financing a/c balance so that
    there should not be overdue in his a/c (>30 days due to ICICI by dealer
    treats as overdue).

2. Interest will be applicable on utilization from the 1St day (by ICICI to
   dealer).

3. If any due >45 days category, ICICI will put “COH” on his account. It
   means even if positive balance in OTB, ICICI will not allow for funding
   until dealer clears >45 days due.

4. Every day morning ICICI will send OTB (order to buy) report by 11-12
   o’clock, based on that accounts will prepare proposal list for funding the
   C.O. for confirmation. Co to confirm by next half an hour. The correct
   figure will be forwarded to ICICI by 2 P.M daily, Ro to do receipt a/c
   immediately.

5. Same system would be followed for the other channel financing scheme
   also (centurion/cifco).

6. A dealer can have maximum of two channel financing a/c and total limit
   should not exceed the paid stock limits.

7. In case dealer is opting two channel financing a/c, the credit limit would
   be total of OTB limits of two a/c’s.

8. If two channel financing a/c is in operation, take most favorable bank
   from dealer at the beginning itself.

9. We cant take disbursement, if the billing date is > 3 days of request.




                                                               EICHER
B). For the dealer who is having AFC (auto finance) cases too,
    Procedure will be as under:-

1. AFC finance to the end customer and we have channel financing for
   funding to dealer’s stock hence after billing to dealer, we will forward the
   daily billing to channel financing partner as we do for normal cases.

2. As soon as the case funded by AFC, the same amount may be refund to
   dealer or deposit to his channel financing a/c or can be adjusted against
   other due.




           RECEIVABLES MONITORING SYSTEM

                                                                 EICHER
 GUIDELINES FOLLOWED FOR RECEIVABLES MONITORING SYSTEM
  IN EICHER MOTORS LIMITED IS AS FOLLOWS: -

1. Adjustment of payment and reporting will be based on FIFO, i.e. first
   received payment will be treated against older bill.

2. Receipt a/c can be done with reference to DA number or without DA no.

3. Channel financing collection and CIFCO float advance receipt a/c may be
   done with reference to DA number.

4. Advances under this system will be net balances of customer a/c only.

5. No change for Institutional Receivables, it will be monitored DA wise only
   and receipt a/c should also be DA wise.

6. Benefits of system: -
    Easy system, no complicity, hence easy for vehicle a/c reconciliation.
    No unwanted transfer entries in the books.
    Clear hang on customer advances.
    Transparent vehicle a/c ledgers of dealers.

7. Cash Discount applicability under FIFO system:- Here we don’t have
   DA wise collection cutting, CD will be treated applicable when billing is
   done against actual credit balance.

8. AFC DO credit:- Credit entry against DO in dealer a/c. It will be treated
   just like a collection entry.

9. SRN cases: - If any DA is appearing in outstanding list but actually got
   SRN, in that case you need to clear it manually, as for FIFO system SRN
   entry will be just like a normal credit entry.




                                                                  EICHER
    CHANNEL FINANCING LIMIT v/s SAP CREDIT
              CHECK FOR BILLING

1. Daily basis, as soon as ICICI/CENTURION sends available limit for
   utilization, the same will update as credit limit of that particular dealer.
   “COH”/”Debit Freeze” will be treated as NIL balance. In case any dealer is
   not in channel financing its limit will always being Zero.

2. Dealer can be billed upto this credit limit i.e. 100% billing will be against
   money available in ICICI/CENTURION bank which mean secured.

3. In vehicle allocation process treatment of advances is “ Net credit balance
   of customer code + limit available in ICICI/Centurion bank channel
   financing a/c” it is because upto the available balance he can be billed.

4. Receipt a/c of channel funding: - it will be done centrally at accounts after
   getting credit confirmation from bank.

5. ICICI channel financing is like a CC a/c of dealer at bank, from their
   withdrawal can be taken be EML against vehicle billing. By taking, funding
   limit is getting reduced and by depositing it will be increased.

6. Interest will start from day 1 on all withdrawal hence dealer has to deposit
   money as soon as he gets from retailing.

7. For dues to bank by dealer, automatic aging also getting made at bank
   that should not be >30 days, on >30 days due, bank charges penal
   interest and if any outstanding >45 days the bank will put “COH” on his
   a/c. And COH a/c is not funded further until it gets cleared.

8. Adhoc limit: -

 For taking adhoc limit proposal must be through EML a/c to bank.
 If found OK by bank they will issue a sanctioned letter to dealer.
 For activation of Adhoc limit dealer acceptance to bank on sanctioned
  letter is must.




                                                                 EICHER
FIXED ASSETS MANAGEMENT




                  EICHER
                            FIXED ASSETS

Fixed assets such as plant, machinery, land, building, furniture etc.
represent that part of a firm’s capital that is blocked on a permanent or fixed
basis.

Fixed assets are to be retained in business for carrying out regular operations
and without them the business of the concern cannot be carried out.

To acquire assets, first a budget is prepared of all the assets that would e
required in the coming financial year. This budget is sent to top management
and after their approval and amendments, it becomes a finalized budget. But
many a times it happens that some assets are required urgently. In such
cases, the entire process of budgeting is skipped.


CIJ: Capital item Justification

A CIJ document is prepared to justify the need of purchasing the asset. Every
CIJ has a unique number. It contains a purchase order number, a GRN
number, the quantity to be purchased, and the estimated cost of assets.
Once the CIJ entry is made, the asset can be purchased and the vendor can
be paid. Without a CIJ entry, no asset can be purchased.

NOTE: The personnel in accounts department will not pass the CIJ entry in
SAP until and unless he receives the copy of CIJ from a specific person.

After the CIJ entry is made, the asset goes into CWIP that is capital work in
progress. This means that the asset is in the process of becoming a capital
item.

If the item is of such a nature that it needs to be installed, then a completion
certificate is required after installing the asset.
This process concludes that the asset has been capitalized and is part of the
fixed asset of the company.


                                                                 EICHER
Writing-off assets:

When assets get obsolete or inappropriate to use, they are either sold or
dumped.
If the assets are dumped, they do not produce any vale, except for the scrap
metal value.
If assets are to be sold, the selling price is the residual price after
depreciation. Depreciation is calculated through the written down value
method and in some assets straight-line method is used.
Temporary Assets are depreciated at 100%.



       Rate of Depreciation used in Eicher Motors Limited:

      Sr. No.         Particulars          Method              Rate
        1.          ADMN. Building         *ST. line          1.63%
        2.            Computers            *ST. line         16.21%
        3.          Factory Building       *ST. line          3.34%
        4.           P&M/F&F/Off.
                     Equip/M&Dies            ----             100%
                         (<5000)
         5.          Moulds & dies         *ST. line         11.31%
                         (>5000)
         6.         Off. Equipments        *ST. line          6.33%
         7.          Plant & mach.         *ST. line          4.75%
         8.           Cars (ICICI)         *ST. line           20%
         9.                Cars            *ST. line          9.5%
        10.             Design &           *ST. line          7.42%
                        Drawings
        11.          P&M General           *ST. line           10%
        12.         Factory Building        **WDV              10%

* Straight Line Method.




                                                              EICHER
** Written Down Value Method.




In the balance sheet, assets are clubbed under the head Gross block.
A Gross block would contain the following sub heads:

   Purchase and matrerials
   Factory and furnishings
   Building
   Office equipment
   Test vehicles
   Cars / 2 wheelers
   Intangibles


Gross block - Depreciation = Net block

The net block is the value of assets at the end of the year.

Once capitalized, these assets are moved to the department where they are
required. Each such department is called a cost center and has a unique
code called the CCN. This CCN would contain the list of assets present within
that department. Thus a CCN no. helps us to locate any asset in the
company.



PHYSICAL VERIFICATION:

Physical verification is very important function in EML. This is done to know
the actual working condition of the assets. This function is performed every 3
years. Based on this the assets are replaced and the one in bad condition are
either dumped off or sale as scrap to get the residual value. This process also
helps us in knowing the authenticity and reliability of the Asset. It is useful for
knowing the actual value of assets available with the company, and the total
number of assets with the company.


                                                                    EICHER
FORMAT OF PHYSICAL VERIFICATION OF ASSETS:


Asset CCN Cap. Assets Aquis.           %    Avail   condition Change
no.       Date Descri value                                   of CCN
               ption

Reason Asset plate Machine/equipment Name of                   Remarks
for    Affixed (y/n) no.             manufacturer
write
off


      According to this format the Assets are verified. When assets are
capitalized they have been allotted a no. i.e. called Assets No. These assets
are placed in the place required which is called CCN no. The date on which
the Asset got capitalized is also taken into account. Acquisition value is the
amount paid to utilize the asset. The percentage sign let us know the high
value Assets.

      After taking all this necessary information, the personnel from accounts
department goes for physical verification in a particular department and
checks the availability of the asset. If the asset is available, the next process
comes is to check the condition of the asset i.e. Good/Moderate/Bad. After
that it checks whether the asset is of particular department or acquired from
other department. While verifying, the personnel has to keep in mind to check
whether the asset plate is fixed or not, the machine/ equipment no. and also
the name of manufacturer.

    If the Asset is not available then the personnel has to mention the reason
for write off of asset with the help of the personnel of concerned department.




                                                                  EICHER
CAPITAL ASSET MANAGEMENT
     Budget for fixed assets



       Verification of the
      budget and approval

     Allotment of CIJ no. in
     SAP and handover to
           concerned

        Bill/exp. booking
       pertaining to CIJ in
             CWIP a/c

     Monthly review of CIJ
      value and CWIP a/c
        &follow up with
      concerned dept. for
     completion certificate

     Capitalization on the
        basis of work
     completion certificate

     Creation of asset’s no.
       and details in SAP

                                Disposal of scrap &
      Depreciation runs on
                               sale of assets in SAP
         monthly basis
                               as and when required

      Preparation of fixed
      assets schedule on       Physical verification
      quat.basis for audit     and confirmation of
                                     assets

                                                 EICHER
                        7.SWOT Analysis




       STRENGTH                          WEAKNESS




     OPPORTUNITY                         THREAT




7.1 Strengths

 In the 9T segment, Eicher Motors is the leader with more than 50%
  market share.

 Very strong dealer network.

   A network of more than 4500 Eicher trained private mechanics.

 Research and Development.

 The best CNG technology in the world for the CNG Buses.

 Ability to customize designs to suit the requirement of the client.



                                                                 EICHER
7.2 Weaknesses

 Lack of presence in the HCV segment.

 Brand Equity

 Low Economies of scale when compared to the competitors.



7.3 Opportunities

 A revival in the CV market in the India due to revival of the Industry in
  2003.

 Booming Auto Export market.

 High replacement demand due to low interest rates.



7.4 Threats

 High competitive environment with large and very powerful competitors.

 Foreign players setting up shop in India




                                                             EICHER

				
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