Quality of work life

PART- A

1. INDUSTRY PROFILE:
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Quality of work life

CONSTRUCTION AND MINING EQUIPMENT INDUSTRY

Construction and mining equipments industry covers a variety of machinery such as hydraulic excavators, wheel loaders, backhoe loaders, bull dozers, dump trucks, tippers, graders, pavers, asphalt drum / wet mix plants, breakers, vibratory compactors, cranes, fork lifts, dozers, off-highway dumpers, drills, scrapers, motor graders, rope shovels etc. They perform a variety of functions like preparation of ground excavation, haulage of material, dumping/laying in specified manner, material handling, road construction etc. These equipments are required for both construction and mining activity. Exporters of construction machineries are riding the boom wave with many bigger orders from west Asian African countries. Most of them have managed to get huge profits with many registering as high as a threefold increase. Domestic production began in INDIA in 1964 with the setting up of Bharat Earth Movers Ltd (BEML), a public sector unit of the Ministry of Defence, at Kolar in South India to manufacture bull dozers, dumpers, graders, scrapers, etc. for defence requirements. In the private sector, the Hindustan Motors Earthmoving Equipment Division was established in 1969 at Tiruvallur, near Chennai with technical collaboration from Terex, UK for manufacture of wheel loaders, dozers & dumpers... In 1974, L&T started manufacturing hydraulic excavators under license from Poclain, France. In 1980 and 1981, two more units, Telcon and Escorts JCB commenced manufacturing of hydraulic excavators (under license from Hitachi, Japan) and backhoe loaders (under license from JCB, UK) respectively. -2-

Quality of work life The construction and mining equipment industry is dominated by a few large manufacturers in each product segment. BEML supplies to nearly half the total market. BEML and Caterpillar lead in dumpers and dozers while L&T Komatsu and Telcon lead in excavators, JCB India in backhoe loaders and Escorts Construction Equipment Ltd. in Mobile Cranes. Indias construction equipment sector has a market size of 1.49billion, a fraction of the global market of over 56.17billion. The global industry is growing at a 5% rate, while Indian construction equipments sector is growing at the rate of 30% annually. The Indian capital equipment industry has: The advantage of high technical talent base. Established component vendor base. Low labor rates, all ingredients for a competitive product.

The appreciable increase in real estate construction activities has resulted in a surge of demand for transit concrete mixers, bar bending and cutting machines, excavator and backhoes and earth rammers. For the construction equipment sector, which has adapted rapidly to the changed scenario, this is indeed good news, as it paves the way for an exciting future. The opening of the Indian economy and the booming infrastruction and real estate sectors attracted international giants including Telco, JCB, VOLVO, TEREX, CATERPILLAR and HITACHL. State Government development authorities and even companies have begun investing in infrastructure development projects. Present market condition is very competitive and there are five to six global players (Telco, JCB, VOLVO, TEREX, CATERPILLAR and HITACHL.) for excavators in India, only those companies, which can supply quality machines at lowest price, can be successful. This requires substantial improvement in productivity levels by more effective utilization of fixed assets of the company. -3-

Quality of work life The success depends upon the companys ability to meet the challenges of price, increasing value to customers & investors and retaining the powerful brand image. And L&T Komatsu is one such company which steps forward for success of the company. L&T Komatsu is a firm under construction and mining equipment industry which has established itself to the fullest and competitive as well. L&T Komatsu is a premium manufactures of various types of earth moving equipments like hydraulic excavators, wheel loaders, backhoe loaders, bull dozers, dump trucks, tippers, graders, pavers, asphalt drum / wet mix plants etc.., L&TK is known as NO.1 Company in maintaining quality of its products and has 66 acres of wide campus for manufacturing their products. L&T K has upgraded itself with advanced technology; they have advanced equipments for the movement of spare parts, paint spray machines for the purpose of painting and 2 world class robots for welding purpose. L&TK has an advantage of strong technical base workers and recognizes the best workers by rewarding them.

2. COMPANY PROFILE:
(a) BACKGROUND AND INCEPTION OF L&T-KOMATSU ABOUT LARSEN & TURBO

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Quality of work life The evolution of Larsen & turbo Ltd (L&T) into the countrys largest engineering and construction organization is among the remarkable success stories in old Indian Industry. L&T, a partnership firm founded in 1938 by two Danish Engineers, Henning Hock-Larsen and Soren Kristian Toubro- both of whom were strongly committed to developing Indias engineering talent and enabling it to meet the demands of industry. Beginning with the import of machinery from Europe, L&T rapidly took on Engineering and Construction assignments of increasing sophistication.

In 1938, the two friends decided to forgo the comforts of working in Europe, and started their own operation in India. All they had was a dream. Their first office in Mumbai (Bombay) was so small that only one of the partners could use the office at a time. In the early years, they represented Danish manufacturers of dairy equipment for a modest retainer. But with the start of the Second World War in 1939, imports were restricted, compelling them to start a small work-shop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products, this crisis forced the partners to stand on their own feet and innovate. They started manufacturing dairy equipment indigenously. These products proved to be a success, and L&T came to be recognized as a reliable fabricator with high standards. The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started two repair and fabrication shops - the Company had begun to expand. Larsen & Toubro group started in 1975 to manufacture Hydraulic Excavators. L&T is a technology driven engineering and construction organization, and one of the largest companies in Indias private sector.

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Quality of work life A strong customer-focused approach and the constant quest for quality enabled the company to attain & sustain leadership in its major lines of business across seven decades in infrastructure segment with factories and office located across seven the country, further supplemented by a wide marketing and distribution network, L&Ts image and equity extends to virtually every district of India. L&T believes that progress must necessarily be achieved in harmony with the environment. A commitment to community welfare and environmental protection constitute an integral part of the corporate vision. L&T embraces corporate sustainability reporting as per GRI 2006 (G3) guidelines. L&Ts registered office and the first manufacturing unit is located in Mumbai, because of constraints of place, power, transport etc and to create employment opportunities to all sections of the society at different locations, company started one of its manufacturing units at Bangalore in 1974.

L&T KOMATSU LTD

L&T Komatsu Limited was establishes in Feb. 1998 as an equal participation (50:50) joint venture between Larsen & Tourbo limited and Komatsu Asia Pacific Pte limited, Singapore, a wholly owned subsidiary of Komatsu Limited, Japan. LTK BW (Larsen and toubro komatsu Bangalore works) is the largest manufacturer of Hydraulic Excavators and high-pressure Hydraulic systems and components. The JV was formed to bring together the manufacturing expertise, marketing and service reach of Larsen & Tourbo ltd with superior product design and engineering capability of Komatsu Limited for the manufacture of hydraulic excavators in India. L&T markets & Provides service support for hydraulic excavators manufactured by L&T-K. L&T (Bangalore works) pioneered in manufacture of Hydraulic Excavators in the country in 1975 in collaboration with Poclain, SA of France with the opening up of the Indian economy; it has become imperative that the company become globally competitive so that it can efficiently -6-

Quality of work life tackle International competition and provide best quality products at competitive prices and establish the leadership in the Indian market and export its products to other countries. Hence M/s KOMATSU Asia Pacific Private Limited, the Worlds NO.1 Excavator manufacturer with the widest range and reach and L&T formed a joint venture company and its Bangalore Works is now known and called as L&T-KOMATSU LIMITED, BANGALORE WORKS. HIGHLIGHTS OF L&T KOMATSU: The Plant is located on national highway NH7 connecting Bangalore and Hyderabad. It is spread on an area of 65.7 acres. The estate is lush green with well laid lawns and about 3750 trees. The Plant has captive power generation of 2760 KVA capacity. Currently L & T Komatsu, Bangalore works Ltd is in the first place in manufacturing

excavator and Caterpillar holds the second place.

(b) NATURE OF BUSINESS CARRIED:

L&T-Komatsu's manufacturing facility - Bangalore works - comprises two manufacturing divisions they are the Machinery Works and the Hydraulics Works. The Machinery Works manufactures various Hydraulic Equipments required for the manufacture of Hydraulic Excavators by the Hydraulic Works. They also supply customized Hydraulic Systems to Komatsu Ltd. Japan. The various products of Hydraulic works are Hydraulic Motors, Pumps, Turning Joints, Hydraulic Cylinders, Hoses, Valve bank, Power packs of different varieties. These are the various activities undertaken by L&T Komatsu. Engineering and construction projects: 1. Petrochemical projects. -7-

Quality of work life 2. Oil and gas for projects. 3. Nuclear power and allied business. Construction 1. Building-factories, parks, hotels, public buildings. 2. Transportation- roads and expressways, bridges, stations, underpass. 3. Civil- infrastructure, ports, harbors. Minerals & Metals 1. Electrical, Instrumentation and Communication. 2. Electrification works in power, steel, metallurgical, glass, fertilizer. 3. Transmission Lines and Electrification. Heavy Engineering 1. Heat Transfer Equipment. 2. Refinery & Cracker Plant equipment. 3. Equipment & Systems for power plant. Electrical & Electronics 1. Control Power Grade Projects. 2. Motor Starters. 3. Energy Meters.

(c) VISION:

We shall be a world-class company with high standards of governance, dedicated to

excellence in Products, Processes and People.

We shall be a company delighting customers by delivering on time, highly reliable

producers, which enable them to succeed. -8-

Quality of work life We shall be a company with very high safety standards, caring for safety of people, committed to social responsibility and environment protection.

Our people shall have the passion to continual learning and engage themselves to

the highest level of involvements. We shall embrace an inclusive culture that incorporates a strong and well-

articulated set of values and behavioral expectation. Our supply chain shall be of world class standard with highest level of seamless

integration bringing in quality, cost and volume flexibility. Our business model shall drive entrepreneurial zeal, growth with scale and speed.

Our financial performance shall reward our stakeholders.

MISSION:
We shall manufacture a premium range of globally competitive hydraulic excavators

and hydraulic system for the domestic market.

Our focus is to attain market leadership through sustained growth, quality through

products, reliability and on- time delivery of our products to our customers. We shall be committed to provide a safe working environment, promote team

working and improve employee engagement.

We shall embrace the lean manufacturing philosophy in our operations and improve

our operating profit margins.

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Quality of work life

QUALITY POLICY: QUALITY IS OUR MOST VALUABLE ASSEST AT L&T KOMATSU

ISO certified quality management system backed by inspection facilities that include: Non- destruction testing laboratory approved by Bhabha Atomic Research Center,

Mumbai. Equipment and qualified inspectors to carry X-Ray, gamma ray, and ultrasonic tests

to ensure internal soundness of welded structures and castings.

Modern metrology laboratory for inspection of precision components and calibration

of equipment and whether conditions. Provide resources to maintain & continually improve the quality management system

with a view to deliver quality products and services.

Operate under the framework of quality, cost and delivery objectives. Train and build our entire employee to enhance, customer satisfaction on a

continuous basis.

QUALITY CERTIFICATION:
In 2009-2010 the company is certified by BUREAU VERITAS for its quality

management system at machinery works (MW) in line with ISO 9001 which is valid up to July 2012.

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Quality of work life In respect of the ISO 9001 certification of hydraulics works (HW) awarded in Jan 2003, recertification was done in May 2008 and surveillance audit was carried out at HW during 2009.

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Quality of work life

ORGANISATION STRUCTURE:

(d) PRODUCT PROFILE:

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Quality of work life

LIST OF PRODUCTS:
PRODUCT 1: PC 71 Price: 23 lakhs Type: Crawler mounted Weight: 7.05T Bucket Size: 0.09-0.03 cu.m

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Quality of work life Attachments: Backhoe, Rock Breaker, Dozer Blade PRODUCT 2: PC 130-7 Price: 34 lakhs Type: Crawler mounted Horse power: 88 Weight: 12.6T Bucket Size: 0.64 cu.m Attachments: Backhoe

PRODUCT 3: PC 72CK Price: 30 lakhs Type: Crawler mounted Horse power: 97 Weight: 13.6T Bucket Size: 0.6-0.7 cu.m Attachments: Backhoe, Rock Breaker, Wood grab, Elevated Cabin, Short Boom For tunnel excavation, Auger. - 14 -

Quality of work life PRODUCT 2: 90CK-3 Price: 39 lakhs Type: Crawler mounted Horse power: 120 Weight: 20T Bucket Size: 0.64 cu.m Attachments: Backhoe, Rock Breaker,

Elevated Cabin, Auger, clamshell, Multiline Grapple, Trenching Long Mount, Ditch Cleaning.

(e) AREA OF OPERATION

L&T has a global presence. A thrust on International Business over the years has seen overseas revenues growing steadily. The company has manufacturing facilities in India, China, Oman and Saudi Arabia. It has a global supply network with offices in 10 locations worldwide, including Houston, London, Milan, Shanghai, and Seoul. Customers include global majors in over 30 countries.

GLOBAL OPERATIONS:
Komatsu designates those production bases with development capabilities around the world as Mother Plants and position them as the core of global production. The Mother plants play an - 15 -

Quality of work life important part in achieving a target cutback on the production cost when a new model is developed or an existing machine model is changed. They are also assigned with a task of strengthening the production competitive edge of their daughter plants that manufacture the same models as well as that of their own. Currently, Komatsu is running as many as 35 spare parts centers in strategic locations around the world, aiming at seamless deliveries of any spare parts that its clients require. The Parts Management System links all centers and is in operation 24 hours 7 days a week. Through this system, we can forecast demand for spare parts, regional and worldwide, make a plan for parts placement and assure quick and secure deliveries of spare parts that are required for repairs and replacement.

REGIONAL/ NATIONAL OPERATIONS:

L&T KOMATSU is carrying on its operations in Bangalore at Bellary road Byatarayanapura Bangalore, Karnataka 560001. They are the importers of Bearings, Hydraulic Equipments, and Capital Equipments Goods. Their major imports are to KOMATSU Japan, they sell around 52 equipments in 6 months.

(f) OWNERSHIP PATTERN:

Ownership Pattern of L&T-Komatsu Limited is 50-50 Joint Venture. In which 60 crores is invested by L&T and 60 crores by Komatsu Limited. L&TK is a joint venture of L&T and KOMATSU to manufacture the construction and mining equipment and L&TK supplies major portion of its equipments to komatsu ltd. L&TK issues only equity shares. TABLE NO. 1 - 16 -

Quality of work life SHARE HOLDERS LARSEN & TOUBRO KOMATSU ASIA PACIFIC PVT LTD TOTAL TABLE NO. 2 Number of Shares held (thousand shares) 48,073 41,614 40,978 38,000 33,290 33,283 21,937 19,294 17,835 17,582 Equity ratio (%) 4.9 4.2 4.2 3.9 3.4 3.4 2.2 1.9 1.8 1.8 NO. OF SHARES 60000000 60000000 120000000 NO. OF SHARES 50% 50% 100%

Name of Shareholders Japan Trustee Services Bank, Ltd. (Trust Account) JPMorgan Chase Bank 380055 The Master Trust Bank of Japan, Ltd. (Trust Account) Taiyo Life Insurance Company State Street Bank and Trust Company Nippon Life Insurance Company The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders SSBT OD05 OMNIBUS ACCOUNT TREATY CLIENTS Sumitomo Mitsui Banking Corporation State Street Bank and Trust

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Quality of work life

(g) COMPETITORS INFORMATION:

L&T- Komatsu Limited has the following competitors: 1. TELCON TELCON Construction Equipment Co. Ltd, the Leader in Construction Equipment in India, enhances the operational performance of its customers, leading to improving their profitability and competitiveness by offering constructive solutions. Telcon is a subsidiary company of TATA motors, which holds 60% share, and Hitachi Construction Machinery Co. Ltd, Japan holding the balance 40%. The company commenced manufacturing of construction equipment in 1961, as a division of TELCON. In 1984, it entered into a technical collaboration with HCM, Japan for manufacturing state of the art hydraulic excavators. Telcon is the largest manufacturer of construction equipment and has two manufacturing plants - at Jamshedpur in Jharkhand and at Dharwad in Karnataka. 2. CATERPILLAR Caterpillar Inc is a United States-based corporation headquartered in Peoria, Illinois. It is "one of the world's largest manufacturers of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines." Famous for their products featuring caterpillar tracks and a distinctive yellow paint scheme, Caterpillar produces a wide range of engineering vehicles, including the range of Caterpillar bulldozers. 3. JCB - 18 -

Quality of work life JCB India is a part of the world renowned and legendary company J C Bamford Excavators Limited (JCB), one of the prominent players in the construction equipment industry and amongst the 3 largest players in the world, producing over 275 different models, which are sold in over 150 countries. JCB India is growing at an enviable pace and surging ahead with ambitious development and expansion plans through launching revolutionary products and adherence to world class JCB corporate identity norms. Today in India, JCB has a park of over 65,000 machines and one out of every two Construction machines sold in India is a JCB. 5. BEML Bharat Earth Movers Limited was established in May 1964 as a Public Sector Undertaking for manufacture of Rail Coaches & Spare Parts and Mining Equipment at its Bangalore Complex. The Company has partially disinvested and presently Government of India owns 54 percent of total equity and rest 46 percent is held by Public, Financial institutions, Foreign Institutional Investors, Banks and Employees. BEML operates on three major business verticals for associated equipment manufacturing:

Mining and construction Defense Rail and metro

INFRASTRUCTURAL FACILITIES:
Design facility supported by CAD-CAM (PRO-E) Finite Element Analysis software (FEM) for Stress measurement and endurance Robotic Welding, CNC machines, State of art Metrology and Metallurgy Labs Modern facility for Polyurethane painting. - 19 -

testing facility.

Quality of work life Computer center with Digital Alpha dual servers for perpetual uptime

FABRICATION TECHNOLOGY:
1. CNC high-speed gas cutting process for consistent quality profiles with good surface finish

Axis Welding Robots for reliable welding and high strength point

3. CNC machines for precision machining of huge structures of high quality

ASSEMBLY OPERATIONS:

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Quality of work life 1. Assembly line operating on the concept of single piece unidirectional flow with equal tart-time

2. Modern assembling tools, jigs, fixtures at each workstation enable foolproof assembly processes

3. Painting in modern paint booth using polyurethane painting process ensures superior wear resistant surface with good gloss luster and finish

(i) AWARDS AND ACHEIVEMENTS

LTK has been certified under ISO 9001 since 1994 and ISO 14001 in 1999.

Domestically, LTK was awarded Golden Peacock National Quality award in 1997, Rajeev Gandhi National Quality Award in 1999 Commendation certificate for CII-Exim business excellence in 2000. - 21 -

Quality of work life Bangalore works won Rajeev Gandhi National Quality Award 1997 instituted by BIS in Machinery works has a modern manufacturing facility with ISO 9001 accreditation for best of all categories. design, manufacture and servicing of earthmoving equipment. Hydraulic works with precision machine shop manufactures the complete range of high-pressure hydraulic components and systems. ISO 9001 certified for hydraulic pumps, motors, cylinders, turning joints. Hose ISO 14001 certification for environmental management system in the year 1999. assemblies, value blocks, hydraulic systems and power drives as well as allied gear boxes

ACHIEVEMENTS:
TABLE NO. 3 Year 1975 Achievement Bangalore work established, L&T pioneered the concept of Hydraulic excavator in India by manufacturing LC 80 / LY 80 models. (In Collaboration with Poclain, France) Introduced 90 CK-E, 300CK-E. TT 900 Vibratory Soil Compactor introduced Recognized as R&D house by GOI Indigenous design & development of 72CK Excavator (first time in India by any manufacturer).

1979

1989

1992

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Quality of work life 1995 Transit mixer developed ISO 14001 Certification Management System for Environmental

1999

2005

ISO 14001:2004 Certification. Greentech Gold Category Safety Award. Certificate for integrated management system of ISO 14001:2004 & OHSAS 18001:1999 (EHS)

2007

(j) WORK FLOW MODEL

STEEL PLATES CUTTING AND WELDING SHOT GROWTH (k) FUTURE BLASTING AND PROSPECTUS:

L&T-Komatsu, Bangalore WorksPAINTING obtaining improved Reliability and Cost Reduction plans for
ASSEMBLING for this year. Following would facilitate achieving this:

1. Resource management: a) Implement TPM and number of equipment under TPM Cycle time (through put time) reduction b) Inventory discrepancy Inventory adjustment budgeted level.

: >30 PRODUCT TESTING : 25% from present : zero : <1%

2. Control Direct Material Cost and Overhead expenses: 3% & 5% respectively less than

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Quality of work life 3. Improve capacity utilization: Try for excavator exports, excavator new applications. Increase hydraulic component exports to Komatsu/PH and sales to OEMs/new applications. 4. Improve quality / reliability levels: (a) First pass yield: 100% (start six sigma projects) (b) MTBF: >900 hrs (no machine less than 500 hrs) (c) MTTR: < 2 days 5. Total employee involvement: (a) Kaizen (b) SGA (c) House keeping (d) Develop new models (e) The company plans to reduce the variable overhead cost, by offering VRS to excess personnel and by adopting in house manufacturing. MTBF: Mean Time between Failures MTTR: Mean Time to Response OEM: Original equipment manufacturer : one person per month. : 10 numbers in each PU/departments. : at least at each level 4

3. MCKINSEYS 7S MODEL:
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Quality of work life

7-S MODEL: A SYSTEMATIC APPROACH FOR THE IMPROVEMENT OF ORGANISATIONS

The 7-S model is a tool for managerial analysis and action that provides a structure with which we have to consider a company as a whole, so that the organization's problems may be diagnosed and a strategy may be developed and implemented. The 7-S diagram illustrates the multiplicity interconnection of elements that define an organization's ability to change. The theory helped to change manager's thinking about how companies could be improved. It says that it is not just a matter of devising a new strategy and following it through, nor is it a matter of setting up new systems and letting them generate improvements.

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Quality of work life Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements are feasible and easy to identify. They can be found in strategy statements, corporate plans, organizational charts and other documentations. The four soft Ss however, are hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they can have a great impact of the hard Structures, Strategies and Systems of the organization.

STRATEGY:
The company has a rolling plan called Strategic Plan which spans a period of 10 years. The strategic plans are dove-tailed to the companys Mission and Vision statements. The plans are reviewed annually and changes / course-corrections carried out in regard to additions of new products to its portfolio, in line with the changing business, economic environment both domestic and international. Strategic plan for 2007-2008 is as follows: SUPPLY CHAIN: To maintain good relation ship with the suppliers to enable them

deliver value in the supply chain based on total cost approach and to be cost competitive with volume flexibility. NEW PRODUCTS: To introduce identified new products and using new promotional PROFITABILITY: Together strive to consistently improve our profitability with activities, marketing to serve customers better with increased product range. focus on reduction on material cost improving ROCE managing the working capital effectively and improving companys cash to cash cycle. - 26 -

Quality of work life PEOPLE: To create an organizational culture that fully engages current and new employees in a safe and enjoyable working environment, enable them to embrace team L&T komatsu. Employees will work together without boundaries creating synergy to enable them scale new heights. QUALITY: Employees will significantly accelerate the pace of quality improvements for current and new products. Employees will strive to achieve this by driving passion for quality and organization wide focus on improving new products introduction process and product improvement process. SCALE AND SPEED: Company will focus on increasing production capacity to enable to meet the customer needs by investing in core manufacturing processes and to maintain close relationship with the major suppliers in their manufacturing and quality processes to ensure timely supplies maintaining quality.

SYSTEMS:
Being a professionally-managed organization since 1938, there are separate Divisional Boards to oversee/supervise the operations of each Operating Division. Further, there are sector wise business meetings to take stock of the business parameters and take corrective action wherever required. L&T has a very strong communication network for propagating companys plans, policies and procedures in order to keep everybody informed. In L&T Komatsu, a number of software applications for different functions are provided by Oracle. They are as follows:

Inventory, Bills of Material, Costing, Purchasing, Receiving. MPS/MRP Planning, Lead Times, Order Management, Invoicing. Attendance Recording system, physical attributes, service, group wise LAN. - 27 -

Quality of work life

STRUCTURE:
Organization has clearly been segmented into different business sectors and the structure is clearly demarcated for empowerment with regard to each product and/or sector of economy which is managed by independent Strategic Business Unit as independent profit / growth centers.

SKILLS:
L&T has a very strong people-oriented process. For assessing the performance of employees they have assessment process. For assessing the availability of future leaders, they have leadership programmes. There are a host of training programmes (both internal and external) covering performance-oriented development programmes, technical competence, personality development etc. which cover the entire gamut of skills required for running the organization effectively and profitably and also develop the individuals as well.

SKILL MATRIX TABLE NO.4

DESCRIPTIO -N MANAGER -IAL SKILLS ANALYTICAL SKILLS PEOPLE ORIENTED COMMUNICATION SKILLS TECHNICA -L SKILLS MOTIVATIONAL SKILLS TEAM WORKIN -G

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Quality of work life

SKILLS MANAGERS SUPERVISORS EXECUTIVES TECHNICIANS SKILLS

STYLE/CULTURE:
Organization culture: It is a set of some shared values, norms and belief systems that controls organization operations and interaction with the members both inside & outside of the company. L&T Komatsu follows a very distinct and insular culture throughout the company. The company incorporates various activities, which help in the betterment of four factors that account for cultural differences among the organization: They are: Organizational ethics, Organization structure, the property right system used by the organization, and the characteristics of people working in the organization. In L&T Komatsu Ltd Company, every employee needs to potray officer like qualities which make them different from their competitors. A unique characteristic of each employee is that they contribute towards production and share the information to each other as and when required. The top managers have right to use organization resources, the work force may be given rights to participate in decision making through various forums so that they can help in achieving the goals of an organization of higher productivity, good quality and cost reduction. The shareholders of the company are given the strongest property rights as they own the resources of the employee and shares from profit.

MANAGEMENT STYLE:
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Quality of work life Its all about the fundamental responsibility of employees in interacting with each department:

Information and data mgmt

Training Resource planning and mgmt Equipment planning

Customer

Marketing and sales Design development and planning

Production plan

Production

Customer

Product service Purchase

Quality assurance

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SHARED VALUES:

STAFF:
TABLE NO. 5

TYPES OF STAFF
T technical category A administrative category

CATEGORY AT L&T KOMATSUnt category

B superior category E executive category

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S skilled category CA chartered accountant, C covenant category

No of employees in each cadre are represented: TABLE NO.6

S, T, AND A CADRE B CADRE- SUPERVISORY E CADRE- EXECUTIVE M CADRE- MANAGERIAL SUPERVISORY TRAINEES TOTAL 416 082 048 100 010 656

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4. SWOT ANALYSIS:

STRENGTHS:

Professionally managed company, Maximum resource utilization. Importing certain prime components, Recognition of performance of workers and rewarding them for the same.

Network of dealership helping in better customer servicing. Construction equipment division measures customer satisfaction by the means of customer satisfaction index and to measure performance. - 33 -

Quality of work life

Quality, technology upgrading in regular intervals, TQM, Effective supervision. ISO 9001, 14000, 18000 Certifications, High productivity. 90% of the components are made in house of key hydraulic components like Cylinders, Motors, Pumps, Swivel joint, Tubes and Hoses which offers the following advantages:

1. Corrective and preventive action (CPA), Extensive testing facility. 2. High capability of product development which has been proved by the development of 12 ton excavator and upgrading 20,30,60 ton class to improve reliability and productivity.

WEAKNESS:

Time is consumed in introduction of new products/models. More formalities are involved in the process of introduction of new product. Growth or the promotion of the employees at L&T Komatsu is time bound. Under utilization of knowledge and less scope for sharing ideas of shop floor workers. Limited scope for growth and monotonous work that is repetitive.

OPPORTUNITIES:
Government projects like river linking, road linking, laying of optical fibers, etc.

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Quality of work life

Mining, Market, Introduction of new model E.g.; PC200 is modified with the

introduction of new attachment like microprocessor control, which reduces vibration and enhances operator comfort.

There is an upward trend in the demand for construction and mining equipments.

The company can capture the untapped market.

THREATS:

Market uncertainty because of sudden government policies.

Increasing steel prices in the market, it is a major threat to the company because

the major raw material used in the equipments is steel.

Limited scope for exporting as there is increased competition.

5. FINANCIAL STATEMENTS ANALYSIS:

BALANCE SHEET FOR THE PAST THREE YEARS:
DESCRIPTION Sources of funds Share holder's funds Share capital Reserves and surplus Loan funds Secured loans Deferred tax liability TOTAL Application of funds Fixed assets Gross block (-) depreciation As at 31-3-2009 1200000000 1316866025 1939423105 66587644 4522876775 2013311599 101366831 As at 31-3-2010 1200000000 1636478497 131350000 69634876 3037463373 205457761 1085784872 As at 31-3-2011 1200000000 1936658056 65675000 68653595 3270986651 2135888222 1151542987 - 35 -

Quality of work life Net block Capital W-I-P Deferred tax asset Current assets Loans and advances Inventories S.Debtors Cash and bank balance Loans and advances Other current assets (-)Current liabilities & prov Liabilities Provisions Net current assets TOTAL 996944768 64307464 1061252232 14810271 2898541865 1273172989 1512611 621868352 0 4795095817 1099537196 248744349 1348281545 3446814272 4522876775 968792729 61328931 1030121660 3122055 2450296814 1839987365 313110868 680473016 0 5283868063 2557902132 721746273 3279648405 2004219658 3037463373 978345235 9446934 987792169 2267182 2156595888 2523946226 254098311 817841559 23671 5752505655 2791272425 680305930 3471578355 2280927300 3270986651

PROFIT AND LOSS A/C FOR THE PAST THREE YEARS

DESCRIPTION Income Sales (-) Excise duty and education cess on sales Other income Total income Exp: Manufacturing & op exps Staff expenses Sale and administration and other expenses Interest Depreciation and obsolescence Profit before tax Provision for current tax RUPEES 2011 14907279126 1390897561 52768754 13569150319 10356292369 431759739 1757148724 27280252 75651643 12648132727 921017592 308392421 RUPEES 2010 11998165921 896752327 139018347 11240431941 8307411285 367101217 1378157368 99363991 74142971 10226176832 1014255109 339031131 RUPEES 2009 12110180588 1370213132 47608741 10787576197 7649341363 378572646 2273257615 105542409 79577071 10486291104 301285093 99721169 - 36 -

Quality of work life Provision for deferred tax Provision for fringe tax Taxes in respect of earlier years Income tax Fringe benefit tax Profit after tax Balance brought forward from previous year Profit available for appropriation (-) transferred to general reserve Profit available for distribution Proposed dividend Additional tax on dividend Balance carried to balance sheet EPS- Basic (in Rs.) Face value/ share -126408 0 5744620 0 607006959 1362430647 1969437606 60700696 1908736910 264000000 42827400 1601909510 5.06 10 14735448 0 5194166 -151308 655445672 1108362742 1763808414 65544567 1698263847 288000000 47833200 1362430647 5.46 10 3393752 0 4905507 107167 189879943 1016758599 1206638542 0 1206638542 84000000 14275800 1108362742 1.58 10

RATIO ANALYSIS:

CURRENT RATIO : TOTAL CURRENT ASSETS / TOTAL CURRENT

LIABILITIES 2009 = 4795095817/ 1348281545 = 3.55 2010 = 5339509313 / 3335289655 = 1.6009 2011 = 5752505655 / 3471578355 = 1.657

INTERPRETATION:
From the above calculations, current ratio indicates the operating efficiency and the standard is 2:1, in the year 2009 CR is above the standards and it proves that the company has enough resources to pay its debts, where as in the year 2010 and 2011 CR is below the standards and proves the company does not have enough resources to pay off its debts. - 37 -

Quality of work life

QUICK RATIO: TOTAL QUICK ASSETS / TOTAL QUICK LIABILITIES

QUICK ASSETS = CURRENT ASSETS STOCK ( INVENTORY) QUICK LIABILITIES = CURRENT LIABILITIES 2009 = 4795095817 2898541865 / 1348281545 = 1.4066 2010 = 5339509313 2450296814 / 3335289655 = 0.866 2011 = 5752505655 - 2156595888 / 3471578355 = 1.0358

INTERPRETATION:
From the above calculations, quick ratio standard is 1:1, so in the year 2009 and 2011 quick ratio higher than 1:1 indicates that the company can meet its current financial obligations with the available quick funds on hand where as in the year 2010 QR is less than the standards so the company cannot meet its current obligations.

DEBT EQUITY RATIO: TOTAL DEBT / EQUITY

2009 = 1939423106 / 1200000000 = 1.616 2010 = 131350000 / 1200000000 = 0.109 2011 = 65675000 / 1200000000 = 0.0547 - 38 -

Quality of work life

INTERPRETATION:
From the above calculations, a standard of debt equity ratio may be 1:1, in the year 2010 and 2011 DER is less than 1 and in the year 2009 it is higher than 1. If the ratio is greater than 1, the majority of the companys assets are financed through debt. If the ratio is less than 1, its assets are primarily financed through equity. The ratio measures how much money a company might safely borrow over long periods of time. But if the company borrows funds through debt earnings will be more, at the same time company should pay interest to debenture holders.

INVENTORY TURNOVER RATIO: COST OF GOODS SOLD / AVERAGE

INVENTORY

COGS = SALES GROSS PROFIT AVG INVENTORY = OP. BAL OF STOCK+ CLO. BAL OF STOCK / 2 2009 = COGS = 12110180588-301285093 = 120800565495 2010 = COGS = 11998165921-1014255109 = 10983910812 2011 = COGS = 14907279126-921017592 = 13986261534 2009 AVG STOCK = 2691768268 2010 AVG STOCK = 2674419340 2011 AVG STOCK = 2303446351 - 39 -

Quality of work life

ITR 2009: 11808898495 / 2691768268 = 4.387 ITR 2010: 10983910812 / 2674419340 = 3.7391 ITR 2011: 13986261534 / 2303446351 = 6.0718

INTERPRETATION:
From the above calculations, Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales. Its purpose is to measure the liquidity of the inventory. A low ITR is a signal of inefficiency, since inventory usually has a rate of return of zero; a high ITR implies either strong sales or ineffective buying, in the year 2009 and 2010 ITR is low than compared to 2011.

EARNINGS PER SHARE: EARNINGS AVAILABLE TO EQUITY

SHAREHOLDERS / NUMBER OF EQUITY SHAREHOLDERS 2009 = 189879943 / 120000000 = 1.58 2010 = 655445672 / 120000000 = 5.46 2011 = 607006959 / 120000000 = 5.06

INTERPRETATION:
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Quality of work life From the above calculations, EPS allows us to compare different companies power to make money. Here as the calculations shows the positive trend year after year, and also shows the companys ability to earn profits and in creating value to shareholders. Though in the year 2011 it has seen a bit downfall in the EPS, it can be said that the company is on the positive pace.

6. LEARNING EXPERIENCE:
It was really a great experience and very informative doing my summer project at L&T KOMATSU. As soon as I entered the company I met Mr. Prakash sir (manager of finance and accounts department ) He introduced me to Mr. Jeevan sir who was external guide. As the time went on Jeevan sir guided me on the so many concepts that were relavent to my topic, I was able to learn online booking of currencies, importance of forward cover rates under his guidence. I had an opportunity to work in several areas like Bill of entry, Procurement of invoice bill, matching the shipment documents, which works under Oracle applications and also checking of despatched materials from suppliers of TVS company, I was taken for the factory visit where - 41 -

Quality of work life was able to have sight on the construction and mining equipments like bull dozers, excavators, PC-71, PC-200 etc, getting assembled and painted. And got the knowledge about the machines at factory that help in the movement of heavy spare parts for assembling purpose. There was mock show conducted through which I even had an experience of what measures has to be taken if there is a fire in the factory, Finally it was a wonderful experience in handful of time to know what is corporate world, and I thank my guide for supporting me and for having shared the knowledge.

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Quality of work life

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