WORKING CAPITAL MANAGEMENT

with reference to
VARUN MOTORS.PVT.LTD
A project report submitted to Andhra University,Visakhapatnam
In partial fulfillment for the award of the degree of

Bachelor of Business Management

Submittedby
D.B.ViswaTeja
(REGD.NO:2012-13090107)

Under the guidance of

Mr.A.NOOKA RAJUM.B.A,M.Com, M.Phill.

Gayatri VidyaParishad College for Degree and PG courses (Autonomous)

Affiliated to Andhra University
(Accredited by NAAC with B++)
Gayatri valley, Rushikonda Campus,
Visakhapatnam-530045
2012-2015

CERTIFICATE

This is to certify that D.B.VISWA TEJA(REGD NO : 2012-1309107) Student of 3rdyear

BBM, Gayatri VidyaParishad College for Degree and P.G. Courses (Autonomous), during
the academic year 2012-2015,has under gone a project work by studying the WORKING
CAPITAL MANAGEMENT AT VARUN MOTORS.
The project has been carried out under my guidance in partial fulfillment of the award of
the Degree of Bachelor of Business Management.

Place: Visakhapatnam

(Mr.A.NookaRaju)

Date:

Assistant Professor

DECLARATION

I hereby declare that the project work entitled A Study on WORKING CAPITAL
MANAGEMENT with reference to Varun Motors submitted to the GVP college for
Degree and PGCourses(Autonomous) Affiliated to Andhra University, is a record of an
original work done by me under the guidance of Mr.A.NOOKA RAJU Asst.prof.GVP
College for Degree and PG courses (Autonomous), and this project work has not
performed the basis for the award of any Degree or Diploma/fellowship and similar project
any time before.

(D.B.VISWA TEJA)
ADMIN NO:-2102-1309107

ACKNOWLEDGEMENT

I sincerely acknowledge my thanks toProf.S.K.V.SuryanarayanaRaju, principal, GVP

Degree College (autonomous) for continuous support and encouragement throughout my
project work.
I sincerely acknowledge my thanks to Prof.S.Rajani, Director, School of Management
studies, GVP College for degree and P.G Courses (Autonomous) for continuous support
and encouragement throughout my project work.
I sincerely acknowledge my thanks to Dr.G.Syamalarao (HOD-BBM Department) Gayatri
VidyaParishad college for Degree and P.G courses(Autonomous) Visakhapatanam, for
permitting me to do this project work.
I sincerely acknowledge my thanks to Mr. A.NookaRaju sir, for guiding methroughout
through the project work.

(D.B.VISWA TEJA)
ADMIN.NO:-2012-1309107

CONTENTS
CHAPTER

TOPIC

CHAPTER-I

PAGE.NO

INTRODUCTION OF THE TOPIC

Introduction

Objectives of the study

Need for the Study

Methodology of the study

10

Limitations

10

CHAPTER II

AN OVERVIEW OF VARUN MOTORS

12-23

Industry Profile

CHAPTER- III

COMPANY PROFILE

25-54

CHAPTER IV

THEORITICAL FRAMEWORKOF THE STUDY

56-79

CHAPTER V

SUMMARY & SUGGETIONS

80-81

Finding and Suggestions

Conclusions
Summary

CHAPTER-1

INTRODUCTION
NEED FOR THE STUDY
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS OF STUDY

INTRODUCTION
WORKINGCAPITAL

Working Capital Management is the process of planning and controlling the level and mix of
current assets of the firm as well as financing these assets. Specifically, Working Capital
Management requires financial managers to decide what quantities of cash, other liquid assets,
accounts receivables and inventories the firm will hold at any point of time.It measures how much
in liquid assets a company has available to build its business.A short term loan which provides

money to buy earning assets.

Positive working capital is required to ensure that a firm is able to continue its operations and that it

has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.
The management of working capital involves managing inventories, accounts receivable and

payable and cash.

Capital is what makes or breaks a business, and no business can run successfully without enough
capital to cover both short- and long-term needs. Maintaining sufficient levels of short-term capital is a
constantly ongoing challenge, and in todays turbulent financial markets and uncertain
business climate external financing has become both harder and more costly to obtain. Companies
are therefore increasingly shifting away from traditional sources of external financing and turning
their eyes towards their own organizations for ways of improving liquidity. One efficient but often
overlooked way of doing so is to reduce the amount of capital tied-up in operations, that is, to
improve the working capital management of the company.
Working capital is a financial metric of operating liquidity which describes the amount of cash
tied up in operations and defines the short term condition of a company. A positive working capital
position is required for the continuous running of a companys operations, i.e. to pay short term
debt obligations and to cover operational expenses. A company with a negative working capital
balance is unable to cover its short-term liabilities with its current assets.
Working capital is calculated with the following formula:
Working Capital = Current Assets - Current Liabilities
The above formula includes three important balance sheet accounts which all have a direct impact
on the business, namely accounts receivable (A/R), accounts payable (A/P) and inventory. These
accounts are often referred to as the three areas of working capital.
Accounts Receivable Money owed to the company for products/services that have been
delivered to customers but not yet paid for.
Inventory The raw materials, work-in-progress goods and finished goods that are ready
or will be ready for sale. Inventory represents a key asset to most businesses as the turnover
of inventory is a primary source of revenue generation and subsequently earnings for the
shareholders/owners of the company.
Accounts Payable Money owed to suppliers for goods and services that the company has
purchased on credit.
7

Clearly, the importance of the above components differs between companies and

NEED FOR THE STUDY

The main aim of any firm is to maximize the wealth of shareholders. This can be achieved only by a
steady flow of profits which in turn depend on successful sales activity. To generate sales, investment of
sufficient funds in current assets is required. The need of current assets should be emphasized, as the sales
dont convert into cash immediately but involved a cycle of operations, namely operating cycle. VARUN
MOTORS is multi product dealing unit with varying cycle for each product. The capital requirement for
each department in an organization of VARUN MOTORS is large which (depends on the product target

for that particular year) calls for an effective working capital management. Monitoring the operation on
cycle duration is an important aspect of working capital

Some prominent issues that are to be addressed are:

Duration of raw material stage (depends on regularity of supply, transactions time).

Duration of work in progress (depends on length of manufacturing cycle, consistency in

capacity

utilization).

Duration at the finished goods state (depends on pattern of production & sale).
Thus a detailed study regarding the working capital management in VARUN MOTORS is to be done to
consider the effectiveness of working capital management, identify the shortcoming in management and to
suggest for improvement in working capital management.

OBJECTIVES OF THE STUDY

To study in general the working capital management procedure in VARUN MOTORS.

To analyze and apply operating cycle concept of working capital in VARUN MOTORS.

To know how the working capital is being financed.

To know the various methods to be followed by VARUN MOTORS for inventories and accounts
receivables.

To give suggestions, if any, for better working capital management in VARUN MOTORS.

RESEARCH METHODOLORY

Research methodology used for study includes both primary& secondary sources of data. However most
of study is conducted based on secondary sources.

Secondary sources of data mainly include annual reports of VARUN MOTORS. Statement of changes in
working capital for the past 5 years is done using the data taken from these financial reports. Similarly

time series analysis of operating cycle and calculations of ratios is done. Apart from this, the website of
VARUN MOTORS is referred to know the products, product facilities, network etc.

The use of primary sources is limited to interviews with some of the employees in finance department.
The reason being, it is against the companys policies & producers to reveal the sensitive financial
information.

LIMITATIONS OF STUDY

Although every effort has been made to study the Working Capital Management in detail, in an
organization of VARUN MOTORS size, it is not possible to make an exhaustive study in a limited
duration of 6weaks.

It is not possible to include data of 2011-12, as the audited financial report has not come yet (at the time
of preparation of this report). However data of 2011-12 is included partially from the unaudited financial
reports of VARUN MOTORS.

Apart from the above constraint, one serious limitation of the study is that it is not possible to reveal some
of the financial data owing to the policies and procedures laid down by VARUN MOTORS. However the
available data is analyzed with great effort to get an insight into Working Capital Management in VARUN
MOTORS.

10

CHAPTER:2
INDUSTRY PROFILE

INDUSTRY SCENARIO
Like many other nations India's highly developed transportation system has played a very important role
in the development of the country's economy over the past to this day. One can say that the automobile
industry in the country has occupied a solid space in the platform of Indian economy. Empowered by its
present growth, today the automobile industry in the country can produce a diverse range of vehicles
under three broad categories namely cars, two-wheelers and heavy vehicles.
11

Today, India is among the world's largest producers of small cars. The New York Times has rated India as
a very strong engineering base with an incomparable expertise in the arena of manufacturing a number of
low-cost, fuel-efficient cars has encouraged the expansion plans of the manufacturing facilities of a
number of automobile leaders like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.
Motor cycles manufacture makes up the major share in the two-wheeler segment of the Indian automobile
industry. About 50% of the motorcycles are manufactured by Hero Honda. While Honda manufactures
about 46% of the scooters, TVS produces 82% of the mopeds running on the Indian roads.
About 40% of the three-wheelers manufactured in India are used for transporting goods with Piaggio
manufacturing 40% of the vehicles sold in the Indian market. On the other hand, Bajaj has emerged as the
leader in manufacturing three-wheelers used for passenger transport. The firm produces about 68%
percent of the three wheelers used for passenger transport in India. The Indian passenger vehicle segment
is dominated by cars which make up about 80% of it. Maruti Suzuki manufactures about 52% of
passenger cars while the firm enjoys a complete monopoly in the manufacture of multi-purpose vehicles.
In the utility vehicles segment Mahindra makes up a 42% share.
FUTURE PROSPECTS
All in all, this bodesbodes very well for the industry outlook over the forthcoming years. As a result, the
job opportunities in this sector are going to remain huge, especially for trained professionals involved in
key production areas. Foreign firms looking to capitalize on the local talent are likely to offer iteration
and provide accelerated growth prospects for ambitious and local firms hoping to grow their footprints are
also likely to step-up iheir hiring and upward movement of staff

GOVERNMENT POLICY
During the early stages, the automobile industry was not accorded much importance by the Indian
Government. However, the attitude changed during the 1990's. A number of reforms were initiated in
1991. Liberal policies affected during this period, proved to be beneficial to the automobile industry. The
fiscal measures, tax reliefs and reforms in equity regulations and foreign exchange led to significant
growth in the automobile sector. A reduction in the percentage of tariffs imposed on exports and a change
in the banking policies was instrumental in the expansion and growth of the banking sector.
12

Prior to the mid

1990's, the Indian automobile sector comprised of indigenous companies. The

automobile market in India was however, opened upto foreign investors in 1996. International names like
Ford, Hyundai, Toyota, Volvo, Daimler Chrysler and GM Honda were thus, able to make their foray into
the Indian automobile sector. Furthermore, the auto emission rules issued by the government in recent
years ensured that the vehicles manufactured in India, catered to international standards. At present, the
automobiles sector contributes 4 % to the GDP. About 9.7 million automobiles were manufactured in
2005-2006. Export figures had crossed the magic figure of one billion during 2003-2004.
A reduction in the tariff imposed on car exports has been effected by the Indian government. There has
also been a removal of the minimum capital investment required from new investors.
The new policy is also in favor of reduction in excise duty for small automobiles and low emission and
multi utility cars. The tariff policy is also to be reviewed on a regular basis in order to affect a balance
between domestic industry and international trade. There has also been a proposal for tax relaxation on
investment of more than Rs.500 Crore.

Tata Safari on display in Poznan, Poland.

In July 2010, the Economic Times reported that PSA Peugeot Citroen was planning to -enter the Indian
market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles,
investing EUR 700M in the operation. PSA's intention to utilize this production facility for export
purposes however remains unclear as of December 2010. In 2009 India (0.23m) surpassed China (0.16m)
as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by
allowing foreign carmakers 100% ownership of factories in India, which China does not allow.
In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the
biggest exporter from the country, now ships more than 250,000 care annually from India. Apart from
13

Maruti Exports' shipments to Suzuki's other markets, Maruti Suzuki also manufactures small cars for
Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line.
Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch
electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost
car the Tata Nano in Europe and in the U.S. Mahindra & Mahindra is preparing to introduce its pickup
trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car or Renault Nissan
the product worldwide. Renault Nissan may also Automotive India, which will market the manufacturer
Ashok Leyland in another small car.
INTERNAL AUDIT
o Information of audit observation of all the divisions under the unit.
o Finalization of audit report after scrutiny of replies submitted by the various divisions against the audit
observations.
o Collection with various divisions under the unit for the collection of replies for annual submission to
government auditor.

FINANCIAL SERVICES DEPARTMENT

This department deals with financial services and therefore it has to invest as well as borrow funds from
different companies. VARUN MOTORS borrows funds from different financial institutions/banks and
invest in different securities. The functions of financial services department are listed below:

Placement of short term funds

Arrangement of funds

For-Ex risk management

14

Lease financing

Funds management.
SWOT ANALYSIS
SWOT is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations,
Opportunities and Threats involved in a business venture.
STRENGTHS:

MarutiUdyog Limited (MUL) is in a leadership position in the market I with a market share of 48.74.
Major strength of MUL is having largest network of dealers and after sales service centers in country.
Strong brand value and loyal customer base are big strength for MUL.
ALTO still beats the small car segment with highest number of sales
MUL as good market share and hence it's after sales service is amajor revenue.
WEAKNESS:

Low interior quality inside the cars.

Government intervention due to having share in MUL.
Younger generation started getting a great affinity towards new foreign brands.
Maruti hasn't proved itself in SUV segment like other players.

OPPORTUNITIES:

MUL has launched it LPG version of Wagon R and it was a good move simultaneously.
MUL can start R & D on electric cars for a much better substitute of the fuel.
Export capacity of the company is giving new hopes in American and UK market.
Maruti'scervo 600 has a huge potential in tapping the middle class segment and act as a strong threat to

Nano.
Economic growth of the country is constantly increasing and the government is working hard to increase
and the government is working hard to increase the GDP to double digit.
THREATS:
MUL recently faced a decline in market share from its 50.09% to 48.09% in the previous year (2011).
15

 Tata motors recent launches like nano 2012, Indigo e-cs are imposing major threats to its respective
competitor's segment.

China may give a good competition as they are also planning to enter into Indian
car segment.
TAXATION
The direct tax department of VARUN MOTORS works as per the income tax act. The tax payment is
made in advance as per the income tax rules. Since the total income of VARUN MOTORS is greater than
40 lakh rupees, an audit u/s 44AB known as Tax audit is done by the external auditors after the statutory
audit. Usually the statutory auditors are the ones who undertake the tax audit.The company prepares all
the documents for the audit. The documents contain details which are more or less the same as prepared
for the statutory audit except for certain changes that are made as per the Income Tax Act. For instance,
depreciation as per the companies act for P&M is say 25%, but as per IT Act it is 15%. So the changes are
accommodated for.
An important concept to be followed in direct taxes is TDS i.e. Tax Deducted at Source. During the
financial year 2010-11, tax to be deducted at source at the following rates.

PROVIDENT FUND TRUST

Provident fund:
A fund built by a contribution made by the employee during his working life and an equal contribution by
his employer @ 12% of his salary at present and is payable back to him all together with interest on exit
from employment. Originally set up to provide monetary security to employees after retirement, it has,
over the years developed into a broad plan for social security which covers the retirement, buying house,
medical/marriage/education expenses etc.
Types of provident fund:

16

1) Statutory provident fund: all industries and establishments whose number of regular employees exceeds
20 or more people are bound to contribute towards these funds. Such provident fund is compulsory for
employees drawing salaries (basic +DA) of up to Rs.6500/- p.m.
2) Voluntary provident fund: in VPF scheme the employee contributes more towards the PF over and
above the 12% as mandated by the government. This additional voluntary contribution enjoys all the
benefits of PF, exceptthat the company does not contribute an equal amount. But still, the interest rate is
equal to the rate of interest for PF and the withdrawal on retirement is tax free. The benefit of such PF is
voluntary and the benefit of provident fund can be extended by setting up a private PF trust and by getting
the same recognized under Income tax act, 1961 or by getting the establishment/employees covered under
the EPF scheme, 1952 on voluntary basis.
Besides these two categories there are various types of provident funds listed as under:
1) Public Provident Fund: this kind of provident fund is designed for self employed people like doctors,
lawyers, businessmen etc.
2) Exempted provident funds: an establishment covered under the EPF&MP Act 1952 is required to
comply with the statutory provisions of the schemes framed under the act. However, the act provides for
grant of exemption from the operation of EPF scheme, 1952 to the establishment, if it fulfills the 31
conditions prescribed in the said act.
3) Unrecognized Provident Funds: it is the provident fund which is not recognized by the commissioner of
income-tax. The employee and the employer both contribute towards this fund. The employees
contribution to URPF is not treated as deductible expenditure
The chairman of the trust is usually the head of the finance function and there is a separate secretary for
each trust.
VARUN MOTORS, New Delhi Employees Provident Fund was formed on 1-10-1981, for the benefit of
employees of the company. Employees of Delhi/Noida based units and their branches/sites, IVP
Goindwal, EMRP Mumbai are members of the fund.

The board of trustees consists of

17

1) 4 representatives of the management

2) 4 representatives of the employees
Management trustees are appointed with approval of CMD and employees trustees are nominated by
elected trade unions. The term of office of trustees is five years.
VARUN MOTORS, New Delhi Employees Provident Fund has been granted relaxation from the
provisions of the Employees Provident Fund Scheme, 1952 and is recognized under fourth schedule to IT
act, 1961.
The group is mainly responsible for matters relating to:

Provident Fund managed by the trust.

Pension under employees pension scheme, 1995, being managed by EPFO.

Provident fund responsibilities:
The responsibilities with respect to PF mainly include:
Management of Funds

Managing of monthly PF contribution from the participating Units/Divisions.

Monitoring timely collection of interest/maturity proceeds of securities.

Timely processing of refundable/ non-refundable withdrawals of members.

Final settlements/transfer-out in respect of persons who cease to be member of the fund.

Attending to the queries of members either in person or in writing.

Ensuring the transfer of PF accumulations of new members/transferee from previous trust/EPFO to avoid
problem at later stage.

Investment of surplus funds:

18

Effective portfolio management of surplus funds on monthly basis ensuring the full compliance of
guidelines/investment pattern issued by the Ministry of Labour.

Bids are called from the empanelled arrangers and funds are placed with the H1 bidder. All the
investments are duly approved by the Board of Trustees.

At present the corpus of the fund is Rs.400 crores

Interest to members:

Interest on members funds is credited to members a/c annually at the statutory rate declared by EPFO
and approved by board of trustees.

Till date the trust has managed to pay interest to its members from its own resources.
Accounts and audit:

Maintenance of accounts of provident fund.

Preparation of annual accounts statements viz. receipt and payment a/c, income and expenditure a/c
and balance sheet of the fund.

Issue of Annual PF statements to members.

Annual audit of PF accounts by statutory auditors.

Compliance of statutory provisions:

Compliance of statutory provisions like returns (monthly/annual) under EPF & MP acts 1952.

Deduction/deposit of TDS, filing of e-TDS return quarterly and issue of TDS certificates.

Timely payment of statutory dues like monthly inspection & EDLI charges to EPFO account.

Submission of audited annual accounts to EPFO

Inspection of PF records by enforcement officers of EPFO and reply of queries raised by them.

19

Meetings of PF trust:

Agenda items for meeting of board of trustees are prepared.

Meeting of board of trustees as per the statutory provisions is held.

Minutes and other related work is recorded.

FUTURE PLANS
On May 11, 2011, Maruti announced its plans to design new car models at its Rohtak Plant in India. The
new car models will be crafted for the next four years for the Indian and International Market.
Maruti is experimenting with new car models in an effort to stay ahead of its competition and will be
responsible for 25 per cent of Suzuki, its parent company's, revenues. In the financial year 2010-2011
Maruti Suzuki reported a net sales figure of 37,522 crore rupees.
Maruti will invest in a new plant in Gujarat which will produce 6 million units a year which is being done
in an effort to make the company the leader in the car market. The company is having a look at different
plants as shown by the Government of India.
In another effort, Maruti will introduce four new cars in the Indian market: The mass-market hatchback, a
utility vehicle, a new and improved Swift, and a unique SX4.
The company plans to release the design of the YE3, the hatchback by June-July 2011 while the car will
actually be shown in the Auto Expo 2012. The company plans to design the YE3 without any involvement
of Suzuki which is a major feat since most of its cars have been designed in collaboration with Suzuki in
the past The YE3 will be a four-door, four seat hatchback and will be available in a 600-800cc engine and
a five speed manual transmission.
The company also plans to launch the Maruti R3 under a different name. The Maruti R3 is a Multi-Utility
Vehicle that will come in a Rs.7 lakhs - Rs.9 lakhs ex-showroom price and is a six-seater compact van
strapped with three rows of seats and rear-hinged rear doors. The car will come in both 1.2 litre K Series
engines and a 1.6 litre Variable Valve Timing engine, each of which have been present in the popular
models of Swift and SSX$. The R3 will compare to an Innova. The company plans to sell it in emerging
20

markets. It will be showcased in the Auto Expo 2012. The company plans to get a diesel engine for the
car from Volkswagen.
The third new model of Maruti, the new Swift will be launched by July 2011 will a 13 litre multi-jet diesel
engine and a 1.2 litre K-Series engine. The new Swift fall in the Rs. 3.5 - 5.5 lakhs bracket depending on
the model and approximately 17,000 units will be produced each year.
Along with coming up with new cars and new plants, Maruti is also expanding its transportation capacity.
The company has forged partnerships for this with the Adani group to set up a mega car terminal at the
Mundra port.
MARUTI INSURANCE:
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of the National
Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram. The service was set up the
company with the inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and
Maruti Insurance Brokers Pvt. Limited.
This service started as a benefit or value addition to customers and was able to ramp up easily. By
December 2005 they were able to sell more than two million insurance policies since its inception.

MARUTI FINANCE:
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002. Prior to the
start of thisservice Maruti Suzuki had started two joint ventures Citicorp Maruti and Maruti Countrywide
with Citi Group and GE Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied
up with ABN AmroBank, HDFC Bank, ICICI Limited. Kotak Mahindra, Standard Chartered Bank,
andSundaram to start this venture including its strategic partners in car finance. Again the company
entered into a strategic partnership with SBI in March 2003. Since March 2003, Maruti has sold over
12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities
across India.
21

"Maruti Finance marks the coming together of the biggest players in the car finance business. They are the
benchmarks in quality and efficiency. Combined with Maruti volumes and networked dealerships, this will
enable Maruti Finance to offer superior service and competitive rates in the marketplace".
ISSUES AND PROBLEMS:
On 24 February 2010, March
Maruti Suzuki India announced recalling of 100,000 A-Star hatchbacks to fix a fuel leakage problem. The
company will replace the gaskets for all 100,000 A-Star cars.
Maruti Suzuki True Value:
Unique Advantages:

India's largest certified used car dealer network.

358 outlets in 210 cities and growing. .
All car related services under one roof.
Professionally trained manpower.
Complete peace of mind.
Maruti true value business expend the family of Maruti customers, providing reassurance to existing
Maruti customers about resale of their cars and further emphasizes Maruti commitment towards enhancing
customer satisfaction by continuous association during the vehicle owne ship life cycle.
No one knows your maruti car better than Maruti-based on this premise, Marutichanalises its expertise to
ensure that transaction in pre owned cars are transparent and fair. Through that company endeavors to
extend the relationship and emotional connect that it enjoys with the customer.
Related :

Warranty
E-Brochure
Don't Take Chances

Quick's:
True Value Certification
22

 Cars Buyer Guide

Dealer Locator
Tips:

Daily Do's and Dont's

Fuel Efficiency
How To Maintain Your Car
Traffic Rule
Good Driving Habits
FAQ's:

Buy
Sell
Exchange

CHAPTER-3
23

COMPANY PROFILE

VARUN GROUP FACT SHEET

MANAGEMENT TEAM

BUSSINESS VERTICAL OF GROUP

BRAND PORTFOLIO

CORPORATE SOCIAL RESPONSIBILITIES

COMPANY OVERVIEW: VARUN MOTORS

Established in the late 50s (VARUN MOTORS) is a name which is recognized across the industrial
world. It is largest manufacturing enterprise in India and one of the leading international companies in the
field of power equipment manufacturer.
VARUN MOTORS offers a wide spectrum of products and services to core sectors of the Indian economy,
viz., power, transportation, oil & gas, renewable energy, defence.etc. A dynamic 45000 strong team
embodies the VARUN MOTORS philosophy of professional excellence to take up future challenges.
24

With corporate headquarters at New Delhi, 14 manufacturing units, one subsidiary, a widespread regional
services network and project sites all over India and abroad, VARUN MOTORS is Indias industrial
ambassador to the world with an export presence in more than 70 countries.
VARUN MOTORS has a consistent track record of growth, performance and profitability. The world bank
in its report on the Indian public sector, has described VARUN MOTORS one of the most efficient
enterprise in the industrial sector at par with international standards of efficiency VARUN MOTORS has
already obtained
ISO-9000 certification for quality management and all major units/divisions of the company including the
corporate office have been upgraded to the latest ISO-9000: 2000 VERSION.VARUN MOTORS has
secured iso-14001 certification for environmental management system and OHSAS-18001 certification
for occupational health & safety management systems, for all its major units.

VALUES

Zeal to excel and zest for change.

Integrity and fairness in all matters.

Respect for dignity and potential of individuals.

Strict adherence to commitments.

Ensure speed of response.

Foster learning, creativity and team work.

Loyalty and pride in the company

MAJOR PLAYERS IN AUTOMOBILE INDUSTRY

25

Indian automotive companies

Chinkara Motors: Beachster, Hammer, Roadster 1.8S, Rockster, JeepsteiSailster
Hindustan Motors: Ambassador ICML: Rhino Rx
Mahindra: Major, Xylo, Scorpio, Bolero, Thar, Verito, Genio Premier Automobiles Limited: Sigma, RiO
San Motors: Storm
Tata Motors: Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo CS, Sumo, Venture, Safari, Xenon,
Aria.
Foreign automotive companies in India:
Vehicles manufactured or assembled in India:
Manufactured only in Chennai, India, the ilO is one of Hyundai's best selling globally exported cars.
Maruti Swift, Maruti Suzuki, a subsidiary of Japan's Suzuki Motor, is the largest automobile manufacturer
in India.

BMW India: 3 Series, 5 Series, XI.

Fiat India(in collaboration with Tata Motors): Grande Punto, Linea.
Ford India: Figo, Ikon, Fiesta, Endeavour.
General Motors India
Chevrolet: Spark, Beat, Aveo U-VA, Aveo, Optra, Cruze, Tavera.
Honda Siel: Jazz, City, Civic, Accord.
Hyundai Motor India: Santro, ilO, i20, Accent, Verna Transform, Sonata
Transform.
Land Rover: Freelander 2
Maruti Suzuki: 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Versa, Eeco,

Gypsy.
Mercedes-Benz India: OClass, E-Class.
Mitsubishi (in collaboration with Hindustan Motors):[81] Lancer, Lancer Cedia, Pajero
Nissan Motor India: Micra, Sunny.
Renault India: Fluence
Toyota Kirloskar: Etios, Corolla, Innova.
I
Volkswagen Group Sales India:
Audi India: A4, A6, Q5.
Skoda Auto India: Fabia, Laura, Superb, Yeti.
Volkswagen India: Polo, Vento, Jetta, Passat.
Hyundai

Daewoo Motors

Eicher Motors

26

Fond

General
Motors

Ind Auto Ltd.

Tata motors

Hindustan Motors

Mahindra

Maruti SUZUKI

Tayota

Honda

BMW

Swaraj Mazda Ltd.

Skoda

Chevorlet

These are the companies that bring to us our dream machines. This is where it all starts from the
bourgeoisie Maruti 800, the up market A-star, the stately Mercedes, the 'Indian* Indica,the racy Hero
Honda, the Tata truck and the rest. Went your way through the automobile companies, their history and
product lines. Find out hitherto unknown facts about the vehicles you use. Did you know that the
Hindustan Motors was the first vehicle manufacturing company to be set up in India? And it is the same
Hindustan Motors which manufactures both the sturdy Ambassador and the elegant Lancer, in association
with Mitsubishi of course.We present information on all the manufacturers that are part of the Indian
automobile industry. Make this your one stop auto info bank.
VARUN GROUP FACT SHEET:
Varun Group is a leading Business conglomeration with business spread across Automobile, Auto
financing, Construction, Hospitality & Entertainment industries for the past 62 yrs with 62 Showrooms &
72 Service centers across Andhra Pradesh. With an employee base of over 6500, and an annual turnover of
over Rs. 1800 Cr. With Automobile sales volume of 90,000 Varun Group has became a household name in
Andhra Pradesh.
1. Varun Finance / Lakshmi Finance
2. Varun Bajaj
3. Varsha Builders Pvt Ltd
4. VarunMaruti
5. Varun JCB
6. Varun Mahindra Navistar
7. Varun Multiplex
8. NovotelVarun Beach
27

9. Varun Bharat Benz

10. Varun Training Institute

PROMOTERS OF THE VARUN GROUP

Mr. PrabhuKishore is a visionary, entrepreneur and a successful businessman.

He is the Chairman and Managing Director of Varun Group which is known across Andhra Pradesh
through their flagship company, Varun Motors Pvt Ltd
Mr. Prabhu Kishore started his business career at the age of 19 yrs, taking care of his family business of
Automobile Dealerships in Vijayawada, M/S. Padmaja Commercial Corporation and soon started his own
Business ventures - Lakshmi Finance and Varsha Builders in 1980s. In 1992, through the establishment of
Varun Motors in Visakhapatnam he spread his automobile dealership business throughout Andhra
Pradesh.Today, Varun Motors is a household name in Andhra Pradesh, serving millions of customers since
its inception, representing automobile brands such as Bajaj Auto, Maruti Suzuki, JCB, Mahindra Navistar
and Bharat Benz. Varun Group, under the leadership of Mr. Prabhu Kishore is fast emerging as the leading
automobile.
28

Mrs. Lakshmi Kishore hails from a business family in Vijayawada, Andhra Pradesh.
Educated with a degree in English Literature, she has been a pillar of support to the
VarunGroup.Balancing the family responsibility with hands on approach to various aspects of the Group
business, Mrs. Lakshmi Kishore is a business woman par excellence.

Mr. VarunDev, holds a Masters degree in Engineering from Warwick University in UK and has worked
with Suzuki in Hungary. He joined the family business in 2007 and is currently taking care of the
automobile business of JCB, Mahindra and Daimler dealerships of the Group.

Ms. Varsha holds an MBA in Hospitality degree from Les Roches School of Hotel Management,
29

Switzerland and a BscHons Management degree from The University of Manchester, United Kingdom.
She is the Owners Representative for the Hospitality Sector in the Group. With a keen eye for Interior
Design, Marketing, Operations and New Projects, she pursues various aspects in the Hospitality &
Entertainment Vertical.
MANAGEMENT TEAM: MANAGEMENT TEAM
Mr. P V SatyanarayanaExecutive Director Varun Motors (Bajaj Division) Varun Finance, Lakshmi
Finance &Varun Leasing. Mr. P V Satyanarayana holds a Bachelors Degree and is associated with Varun
Group for the past 27 years. He held several key positions as Director in VarunBajaj, VarunMaruti and
Varun Finance businesses in Vijayawada region. He currently serves as Executive Director for Bajaj
division & Financing business of the Group across Andhra Pradesh

Mr.T.VinodKumar
ExecutiveDirector
VarunMotors(JCB&MahindraNavistarDivisions)
MrVinod is a Degree holder in Mechanical Engineering and has 25 years of experience in Varun Group.
He has served the Group as CEO and later as Director of Varun Bajaj in Visakhapatnam
He currently serves as Executive Director of Varun JCB and Varun Mahindra Navistar businesses across
Andhra Pradesh

Mr. V Subba Rao

Executive Director
Varun Motors Pvt Ltd (Bharat Benz Division)
Mr. V Subba Rao holds a Bachelors Degree and has served the Group as a Director of VarunMaruti
in Visakhapatnam.
He is now the Executive Director of Varun Bharat Benz division across Andhra Pradesh.
Mr. Raju holds a Bachelors degree and served the Group as a CEO and later as Director of
VarunMaruti in Hyderabad. Mr.Raju was previously associated with HCL and has 10years

30

experience in office Automation. He now serves as Executive Director of VarunMaruti across

Andhra Pradesh
Mr. G V P Raju
Vice President (Finance)
Varun Motors
Mr. G V P Raju is a Bachelors Degree holder and is with the Group since 23 years, leading
Accounts and Finance of Varun Motors.

ACHIEVEMENTS
VARUN MOTORS has put in place a number of initiatives, as follows,
1. Strengthening companys core businesses of Power Generation, Transmission & Distribution,
Transportation and Industrial Systems & Products, through accelerated project completion and consequent
benefits to customers, along with new initiatives in marketing, technology, facility up-gradation and
modernization, enhancing operational effectiveness etc.
2. Business Development efforts in related and allied areas utilizing the organizational strengths and
forming customer focused specialized business groups e.g. formation of Oil Sector R&M Business Group
to address business in Renovation and Modernization of off-shore and on-shore oil platforms, downstream
petroleum refining areas and Power Plant Operational Services Group to provide Operations and
Maintenance (O&M), Services for Power Plants.

31

3. After Market Services being the areas for future growth, spares and R&M services business have been
integrated into one focused group. R&M for hydro sets is an area having major growth opportunity which
VARUN MOTORS is poised to tap.
4. Exploring Business opportunities in areas like Energy Conservation, Water Management, Pollution
Control and Waste Management, Ports, LNG terminals etc.
5. Positioning for Information technology Business leveraging the domain knowledge inPower Sector&
Engineering field to provide IT enabled services for Power Sector and software services for Engineering
Industry. Sustain and Enhance Exports for products and services through multi-pronged approaches like
entering new territories, focus on product sales, entry into IPP segment, offering O&M and LTSA, EPC,
becoming a service center for international Original Equipment Manufacturers (OEMs) and setting up of
manufacturing assembly and repair centers in the regions of demand etc. VARUN MOTORS is also taking
steps to re-position it-self to meet the demands of the new market economy through suitable strategies
keeping in view the ultimate objective of enhancing value for its stakeholders.

BUSINESS VERTICALS OF THE GROUP:

Automobile

Established in 1950s.

20% Year on year growth for the last 7 years.

One of the largest Automobile dealers in the country.

Rs. 1500 cr annual turnover

Auto-Financing

Established in 1980s.

40% YOY growth in the last 5 years.

32

Business penetration in to the remote corners of AP.

Rs. 100 annual disbursement.

Infrastructure

Established in 1980s.

Built over 1.3 million SFT in the last 5 years.

Backward integration to meet infrastructure needs of Group's automobile dealerships.

Hospitality & Entertainment

Established in 1980s.

Built First 5-star hotel - NovotelVarun Beach in Vizag, which was awarded as THE BEST 5-STAR
HOTEL PROJECT - PAN INDIA (2011) - by Zee Businesss& RICS.

Opened First 6-screen multiplex in Vizag..

Govt of AP awarded "Best dealer award for payment of tax (VAT) & Compliance to AP VAT
provisions in "2001-02 and 2006-07".Received "Bajaj Star dealer" award many times from Bajaj Auto
Limited.

Best Emerging JCB dealer for FY 09-10 in the first year of operation.

Best dealer award for "Highest key account generation" by Mahindra Navistar in FY 2011-12.

NovotelVarun Beach awarded "Best Hotel Project Pan India" by Zee Business & RICS in 2011.

NovotelVarun Beach awarded "Best New Hotel" by HICSA in 2012.

Received "Best Employer of the Year" (in the Area of "Corporate Social Responsibility") Award for
the year 2013 by Labour Department, Govt of AP.
RISKS AND CONCERNS

33

1. Since most of the projects in industry are being contemplated on BOO/BOOT basis, various issues viz.
business model of the Project, revenue collection, operation and maintenance etc. would need to be
suitably addressed to gain entry in the business.
2. Railways have indicated 3% growth in 10th plan as against 6% growth during the 9 th plan, which would
result in scanty order flow for Electric locos and dip in demand for electrics for Locos.
3. Collaborators are increasingly restricting export territories under license agreements in order to protect
their market share in territories outside India particularly where VARUN MOTORS has built up references
and strengths.
RECENT ACHIEVEMENTS OF VARUN MOTORS
1. VARUN MOTORS got ShramBhushan Award
2. VARUN MOTORSs Finance got ICWAI Award for Excellence in Cost Management
3. VARUN MOTORS's R&D contributed Rs 50,270 crore turnover in 2007-08
4. VARUN MOTORS manufactured 800 MW thermal sets
5. VARUN MOTORS net profit up 60 pc
Corporate social responsibility in VARUN MOTORS

As part of its corporate social responsibility, during the year VARUN MOTORS undertook socioeconomic and community development programs to promote education, improvement of living conditions
and hygiene in villages and communities located in the vicinity of its manufacturing plants &project sites
spread across the country.

During the year, nine social & welfare projects were completed by various units of VARUN MOTORS.
These include construction of commun ,mity facilities in villages, up gradation of schools, scholarship
schemes for underprivileged children, providing water facilities, organizing eye camps, and creation of
self employment opportunities

Reaching out to the distressed victims in the flood ravaged areas of Andhra Pradesh and Karnataka,
VARUN MOTORS has made a humble contribution to help alleviate their suffering.
34

As part of social commitment, 3626 act apprentices were trained in the company. In addition, 70``
students/trainees from various professional institutions underwent vocational training.

An initiative to serve poor people for diagnosis and medication with nominal charges

The Diagnostic facilities include

There are 6 Consultant doctors (General Physicians, Orthopedic & Pediatrician)

"Sanjivani" a pharmacy providing medication to people at a very low price

The current beneficiaries of the centre are on an average 200 per day
Branches VIPRoad,,,,Siripuram,Visakhapatnam
Gajuwaka,Visakhapatnam
Openning Soon @ Srikakulam, Vizianagaram, Vijayawada

MOU signed by VARUN MOTORS

The Memorandum of Understanding (MoU) for the year 2010-11 between BHARAT Heavy Electrical
Limited (VARUN MOTORS) and the Ministry of Heavy Industries & Public Enterprises was signed by B.
Prasada Rao, CMD (VARUN MOTORS) and Dr. Satyanarayana Dash, Secretary (Department of Heavy
Industry, Ministry of Heavy Industries & Public Enterprises) in the presence of Functional Directors on
the board of VARUN MOTORS and other senior officials of the Ministry.

A MOU has been signed in between VARUN MOTORS and Nuclear Power Corporation of India Ltd. To
form a joint venture to carry out EPC activities for power plants based on atomic energy both within the
country and outside.

Order for largest ever Hydro Project-1,200 MW PunatsangchhuHydro electric projects, Bhutan.

734 MW commissioned overseas a new record.

35

(b) Organisational Profile

Company: Incorporation, Objectives, Nature of Activity and Financial Structure - Initial & Present.

Organization: Departmentalization of Functions, viz., Production, Finance, Marketing, Materials, R&D,

Personnel, etc., and Organization Chart.

Manpower Particulars: Total number of Employees-Category wise; Managerial/Supervisory/Workers;

Skilled/Unskilled; Permanent/Temporary
AUTOMOBILE INDUSTRY INFRASTRUCTURE: Manufacturing Facilities
Automobile industry has world class manufacturing facilities that can fulfill all the requirements of the
clients with precision. It Infrastructure includes special purpose and general purpose CNC turning centers,
CNC vertical turning centers to handle simple and complex machining job to exact requirement. Over the
years, it have acquired skills to built own special purpose machinery such as vertical turning CNC drilling
machine, CNC horizontal turning, CNC turning machine for specific needs.

It has three world class manufacturing units located in the fully developed industrial estate of Sohna, close
to the NCR of Delhi. The combined area of all the units are 75,000 square feet. All the manufacturing
units are equipped with latest technology based advance machines like CNC machining centres,
CAD/CAM facilities, idea.
Best Practices:
The idea of best practices for the company is based on finding - and using - the best ways of working to
achieve business objectives. Applying best practices is viewed as an opportunity for mutual learning and
sharing of the experience. It's highly skilled employee are trained to follow such as practices for
production of the products. Industry actively participates in Total Productive Maintenance (TPM),
Advanced Product Quality Planning (APQP), Failure mode and effects analysis (FMEA), Kaizen, 5S and
more.

36

COMPANY PROFILE OF MARUT1 SUZUKI

Maruti Suzuki is India and Nepal's number one leading automobile manufacturer and the market
leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until
recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of
Japan. The BJP-led government held an initial public offering of 25% of the company in June
2003. As of 10 May 2007, the government of India sold its complete share to Indian financial
institutions and no longer has any stake in MarutiUdyog.

Maruti Suzuki plant in Manesar

MarutiUdyog Limited (MUL) was established in February 1981, though the actual production
commenced in 1983 with the Maruti 800, based on the Suzuki Alto k10 car which at the time was
the only modern car available in India, its only competitors - the Hindustan Ambassador and
Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti
Suzuki has produced over 5 Million vehicles. MarutiSuzukis are sold in India and has produced
over 5 Million vehicles. MarutiSuzukis are sold in India and various several other countries
depending upon export orders. Models similar to

MarutiSuzukis (but not manufactured by

MarutiUdyog) are sold by Suzuki Motor Corporation and manufactured in Pakistan and other
South Asian countries.

37

The company exports more than 50,000 cars annually and has an extremely large domestic market
in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling
compact car ever since it was launched in 1983. More than a million units of this car have been
sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts.
Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly
used to refer to this compact car model. Its manufacturing facilities are located at two facilities
Gurgaon and Manesar south of Delhi.

Manufacturing process in Manesar plant

Maruti Suzuki's Gurgaon facility has an installed capacity of 350,000 units per annum. The
Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity
38

of 100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines
and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over
700,000 units annually. More than half the cars sold in India are Maruti Suzuki cars. The company
is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki.
The rest is owned by public and financial institutions. It is listed on the Bombay Stock Exchange
and National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six
million Maruti Suzuki cars are on Indian roads since the first car was rolled out on 14 December
1983.
Maruti Suzuki offers 15 models, Maruti 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift
DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara, Kizashiand the newly launched Ertiga. Swift,
Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported
from Japan as completely built units (CBU), remaining all models are manufactured in Maruti
Suzukis Gurgaon Plant.
Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for
three decades. Suzuki's technical superiority lies in its f to pack power and performance into a
compact, lightweight engine that is clean and fuel efficient. Nearly 75,000 people are employed
directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among
all car makers in India from 1999 to 2009 by J D Power Asia Pacific.
COMPANY MILESTONES:
1970: The Indian government launched a new car company called Maruti Technical Services
Limited which created competition for the existing Ambassador Car Company.
1971: The government changed the name of the company to Maruti Limited. Indira Gandhi's son,
Sanjay Gandhi became the managing director of the company.
1977: The Company was liquidated as a result of corruption. There was a Maruti Scandal in 1978
where the court issued a notice to Maruti. Sanjay Gandhi passed away.

39

 1981: The Company was re-established when the founders' mother, Indira Gandhi took charge.
The Company was now called MarutiUdyog Limited. After partnership with Japanese giant
Suzuki Motor Corporation in a Joint Venture Agreement, the company was called Maruti Suzuki
Company.
1983: Maruti produced its first car, the Maruti 800. It took the company thirteen months to
produce this car. This changed the landscape of the Indian car market as Maruti 800 was the most
cost-effective and fuel-efficient car in India.
1984: Maruti produced a large mini-van called the Omni that seated up to eight people. This was
an addition to its existing offering of the Maruti 800.
Between 1985 and 1995: Maruti launched the Gypsy, the Maruti 1000, the Zen, the Esteem, and
the Maruti On Road Service, a 24-hour service which gives customers 24 hour access to
technicians and vans who are ready to help with any problem of the car round the clock. In 1987,
the company made its first export sale, selling 500 cars to Hungary.
1996: This was a prominent year for Maruti as five new models of its cars were launched
including the Gypsy (E), Omni (E), Gypsy King (E), the automatic Zen and the Esteem in a 13
liter engine. Gypsy has the engine from the Esteem. The engine had a horsepower of 65 bhp.
2000: Maruti launched India's first call center and the Altrura, a luxury car. It also introduced the
16-Valve MPFI G13BB engine in the Gypsy and the power increased to 80 bhp.
2002: The WagonR Pride, Esteem (diesel version), Alto Spin LXi were introduced. Maruti
Finance was started diversifying the company from its initial product offering of only cars to
finance. Maruti also inaugurated a children's park in Delhi as part of it's Corporate Social

Responsibility Initiative.
2003:Maruti launched the Grand Vitara.
2005:Maruti launched the Swift.
2006:Maruti had produced up to six million cars.
2007:Maruti launched the SX4, Swift Diesel and the company was renamed from MarutiUdyog
Limited to Maruti Suzuki India Limited.
2008: Maruti launched the Swift DZire, the A-Star and inaugurated the K-series engine plant in
Gurgaon.
2009: The Company shipped the first batch of A-Star cars from the Mundra port.
40

FUTURE FOCUS
To explore the luxury segment in automobile division
To undertake more hospitality projects and expand in infrastructure segment
To increase the Auto Financing operations
MAJOR PLAYERS
Automobile

Established in 1950s.

20% Year on year growth for the last 7 years.

One of the largest Automobile dealers in the country.

Rs. 1500crore annual turnover

Divisions
Varun Motors Pvt Ltd Maruti Dealership, Bharat benz Dealership
Varun Motors Bajaj, JCB & Mahindra Navistar Delerships
Auto-Financing

Established in 1980s.

40% YOY growth in the last 5 years.

Business penetration in to the remote corners of AP.

41

Rs. 100 annual disbursement.

Varun Finance, Lakshmi Finance, Varun Leasing
Infrastructure

Established in 1980s.

Built over 1.3 million SFT in the last 5 years.

Backward integration to meet infrastructure needs of Group's automobile dealerships.

Divisions
Varsha Builders Pvt Ltd
Hospitality & Entertainment

Established in 1980s.

Built First 5-star hotel - NovotelVarun Beach in Vizag, which was awarded as THE BEST 5-STAR
HOTEL PROJECT - PAN INDIA (2011) - by Zee Businesss& RICS.

Opened First 6-screen multiplex in Vizag.

Divisions
NovotelVizagVarun Beach

CORPORATE SOCIAL RESPONSIBILITY

Started Navaratnam-kesavarao charitable health centre as a part of CSR Initiative

An initiative to serve poor people for diagnosis and medication with nominal charges
42

The Diagnostic facilities include

Digital X-Ray
Serology
Biochemistry
Hematology

There are 6 Consultant doctors (General Physicians, Orthopedic & Pediatrician)

"Sanjivani" a pharmacy providing medication to people at a very low price

The current beneficiaries of the centre are on an average 200 per day
Branches :
VIP Road, Vizag
Gajuwaka, Vizag
ARTICLES RELATING TO THE COMPANY
THE HINDU (26/08/2009)
VISAKHAPATNAM: Sea Valley Resorts Private Ltd., part of the diversified Varun Group, on Tuesday
announced its entering into a management agreement with Accor Hospitality, one of the worlds largest
hotel operators, to manage hotel Novotel Visakhapatnam Varun Beach which will open next year.
Speaking on the occasion, founder and managing director of Varun Group with interests in automobile
dealership, finance and construction with an annual turnover of Rs.1,000crores,V.Prabhu Kishore, told
media persons that it was a dream fulfilled. The hotel would be opened in June-July next year. This will
give Vizag and Andhra Pradesh one of the most outstanding properties. The largest in Vizag and AP if not
in South India, he said.

THE HINDU (09/09/2004)

Varun Motors' new showroom

43

HYDERABAD: The car market is growing steadily this year, and MarutiUdyog's strategy of vendor
consolidation is also paying off according to Kinji Saito, Director, Marketing and Sales, MarutiUdyog. He
was speaking to reporters after inaugurating Varun Motors' new showroom here at Banjara Hills on
Wednesday. This is the company's 298th showroom. Mr. Saito said during April-August, Marutiregistered
a growth of 20 per cent against 18 per cent by the car industry, and 16 per cent by its competitors.
VALUES
Governance:
We are stewards of our shareholders investments and take that responsibility very seriously. We are
accountable and responsible for delivering superior results that make a difference in the lives of the people
we touch.
Respect:
We value the unique contribution of each individual. We believe in respect for human dignity and we
respect the need to preserve the environment around us.
Excellence:
We are committed to deliver and demonstrate excellence in whatever we do.
Loyalty:
We are loyal to our customers, to our company & to each other.
Integrity:
We work with highest ethical standards and demonstrate a behavior that is honest, decent and fair. We are
dedicated to that highest level of personal and institutional integrity.

Commitment:

44

We set high performance standards for ourselves as individuals and our teams. We honor our
commitments in a finely manner.
Innovation:
We constantly support development of newer technologies, products, improved processes, better
services and management practices.
ORGANIZATION STRUCTURE:

VARUN MOTORS CORPORATION PROFILE:

VARUN MOTORS is the largest engineering and manufacturing enterprise in India in the energy-related /
infrastructure sector, today. VARUN MOTORS was established more than 40 years ago, ushering in the
indigenous Heavy Electrical Equipment industry in India - a dream that has been more than realized with a
45

well-recognized track record of performance. The company has been earning profits continuously since
1971-72 and paying dividends since 1976-77.
VARUN MOTORS manufactures over 180 products under 30 major product groups and caters to core
sectors of the Indian Economy viz., Power Generation & Transmission, Industry, Transportation,
Telecommunication, Renewable Energy, etc. The wide network of VARUN MOTORS's 14 manufacturing
divisions, four Power Sector regional centres, over 100 project sites, eight service centres and 18 regional
offices, enables the

Company to promptly serve its customers and provide them with suitable products, systems and services
-- efficiently and at competitive prices.
The high level of quality & reliability of its products is due to the emphasis on design, engineering and
manufacturing to international standards by acquiring and adapting some of the best technologies from
leading companies in the world, together with technologies developed in its own R&D centres.
VARUN MOTORS has acquired certifications to Quality Management Systems (ISO 9001),
Environmental Management Systems (ISO 14001) and Occupational Health & Safety Management
Systems (OHSAS 18001) and is also well on its journey towards Total Quality Management.

OVERSEAS BUSINESS
VARUN MOTORS has been exporting products and services in power and industry segment for
approximately 40 years. As of June 30, 2011, we have exported our products and services to more than 70
countries. As of June 30, 2011, we had cumulatively installed generating capacity of over 8,500 MW
outside of India in 21 countries, including Malaysia, Iraq, UAE, Egypt and New Zealand, and had
approximately 5,200 MW in 19 countries under various stages of execution. Our international operations
encompass a wide range of our power and industry segment products and services, including thermal,
hydro and gas-based turnkey power projects, substation projects and rehabilitation projects, as well as a
broad range of products (such as transformers, compressors, valves, oil field equipment, electrostatic
precipitators, photovoltaic equipment, insulators, heat exchangers, switchgear equipment, castings and
forgings) and after sales services. We are particularly active in the Middle East, Southeast Asia and Africa
46

and have been executing turnkey contracts since 1980. Our recently completed projects outside of India
include 2x126 MW gas turbine-based Siddhirganj peaking power plant in Bangladesh, 4x126 MW gas
turbine-based Sulaymanniah power project in Iraq, 2x42 MW gas turbine-based Al Ghail power plant in
UAE and 2x26 MW gas turbine generating sets for Oman Refinery Company in Oman.
The Company has been successful in meeting requirements of International markets, in terms of
complexity of work as well as technological, quality and other requirements.

VARUN POLICIES:

Business Policy:
In line with Companys Vision, Mission and Values, we will strive for sustained growth with
profitability to emerge as a customer oriented and technologically competitive leader in supply of products
for Power and Industry sector.

Quality Policy:
In its quite to be world-class, VARUN MOTORS pursues continual improvement in the Quality of its
Products, Services and Performance leading to Total Customers Satisfaction and Business Growth,
through dedication, commitment and team of all companies.

Informational Security Policy:

VARUN MOTORS is committed to ensure Integrity, Confidentiality, Availability and Security of its
Information at all times for serving the needs of the organization in line with its Vision, Mission & Values
while meeting all regulatory requirements.

Energy Management Policy:

VARUN MOTORS is committed to ensure to continuously enhance efficiency in all its activities,
products and services through the use of energy efficient technologies and prevention of energy wastages,
with the full participation of all employees.
47

HSE Policy:
VARUN MOTORS Trichy is committed to being an environment friendly company in all its activities,
products and services and to provide safe and healthy working environment to all persons working for or
on behalf of the organization as an integrated part of business performance through: Compliance with
applicable legislation and other requirements the organization subscribes. Continual improvement in the
HSE Management

Systems performance through identification and prevention of injury, ill health, pollution and conservation
of resources. Providing a framework for setting and conservation of resources.
Providing a framework for setting and reviewing HSE objectives and targets. Communication of this
policy to all persons working for or on behalf of the organization and interested parties

BUSINESS LINE
Visakhapatnam, April 5:
NovotelVarun Beach here has won the best new hotel award at the recent Hotel Investment Conference South Asia in the mid-market segment, according to MrPrabhu Kishore, Chairman He was speaking at a
press meet here on Thursday. He said earlier the hotel had won the best hotel project awarded by Zee
Business.
A supply network to protect the regular and planned course of production against the random disturbance
of running out of materials or goods.
JOINT VENTURE RELATED ISSUES
Suzuki's fifth global car modal, was designed and is made only in India. Maruti Suzuki is also Suzuki's
leading research and development arm outside Japan

48

Relationship between the Government of India, under the United Front (India) coalition and Suzuki Motor
Corporation over the joint venture was a point of heated debate in the Indian media till Suzuki Motor
Corporation gained the controlling stake.
This highly profitable joint venture that had a near monopolistic trade in the Indian automobile market and
the nature of the partnership built up till then was the underlying reason for most issues. The success of the
joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In
1982 both the venture partners had entered into an agreement to nominate their candidate for the post of
Managing Director and every Managing Director will have a tenure of five years.
R.C. Bhargava was the initial managing director of the company since the inception of the joint venture.
Till today he is regarded as instrumental for the success of Maruti Suzuki. Joining in 1982 he held several
key positions in the company before heading the company as Managing Director. Currently he is on the
Board of Directors. After completing his five year tenure, Mr. Bhargava later assumed the office of PartTime Chairman. The Government nominated Mr. S S L.N. Bhaskarudu as the Managing Director on 27
August 1997. Mr. Bhaskarudu had joined Maruti Suzuki in 1983 after spending 21 years in the Public
sector undertaking Bharat Heavy Electricals Limited as General Manager. In 1987 he was promoted as
Chief General Manager. In 1988 he was named Director, Productions and Projects. The next year (1989)
he was named Director of Materials and in 1993 he became Joint Managing Director.

OVERVIEW OF THE VARUN MOTORS CORPORATE FINANCE DEPARTMENT:

Basically the whole set up of the finance department is made so as to cover all the aspects involved in the
financial decisions. VARUN MOTORS is a debt free company and has its own accounting policies. While
to get a project, VARUN MOTORS presents its quote like other participants and the whole procedure is
carried on.
Firstly, we will analyze the various departments of finance at VARUN MOTORS. These can be depicted
as follows:

Cash management

Corporate books
49

Internal audit

Establishment and payroll

Financial services department

Taxation (direct and indirect)

Provident fund trust

Debtors

Budgeting

Administration and insurance

CASH MANAGEMENT

Collections and disbursements are made to the units on the basis of their needs and allocations.

Management of inflow and outflow of cash.

Banking arrangement, cash credit limit, working capital requirements.

Informing other departments about the deficit or surplus of funds.

Making daily, weekly and yearly reports on the basis of data collected from different manufacturing units.
CORPORATEBOOKS

Finalization of accounts of corporate finance.

Reconciliation of balance sheets of various accounts with the units.

Preparation of Annual Report of VARUN MOTORS as a whole after collecting annual reports of various
units, duly certified by chartered accountant.

Government audit of balance sheet

50

ESTABLISHMENT

Preparation of payroll and pay slips.

Check and pass

Medical bills

Entertainment bills & Telephone bills

Conveyance bills
VISION VALUES
Maruti is Indias leader in the automobile industry. I believes that the customer is king.
It is making sure that performance, after sales service and customer support are really good in India. Here
are some key points from Maruti's vision statement:

1.
2.
3.
4.
5.
6.

Modernization of the Indian Automobile Industry

Developing cars faster and selling them for less.
Production of fuel-efficient vehicles to conserve scarce resources.
Production of large number of motor vehicles which was necessary for economic growth.
Market Penetration, Market Development Similarly Product Development and Diversification.
Partner relationship management, Value chain, Value delivery network
Maruti has two values - capability and commitment. Maruti's vision is to appear as a Learning
Organization.
There are three processes that are critical to develop, reinforce and cascade a positive, transparent,
supportive and high performing work culture, systems and practices across the company.

The first process is the top level management's ability to walk the talk -the manager's ability to deliver on
time and at high efficiency levels.

The second is a rewards and recognition program that helps in

assessment.
Each member of the organization from the shop floor level to supervisors
to the managers to the lower staff is recognized and rewarded for their efforts. These include monetary
benefits and in-kind benefits. Employees are given the career development and career growth rewards.
51

 The third process is using communication techniques like the Newsletter and the Monthly magazine to
highlight expectations and achievements of all the team members.
This three-tiered approach of walking the talk, rewards and recognition and communication techniques is
the three-pronged approach Maruti is taking to ensure that it's visions and values are met with the topmost
standards and that there is a high execution quotient in their work.
Maruti defines it vision statement on it's website to include the following five areas:
Customer Obsession: Making sure that the customer gets what he desires.
Fast, Flexible and First Mover: It produces and sells cars as a rapid pace.
Innovation and creativity: It introduces new technologies and new models at a rapid pace
Networking and Partnership: It believes in partnering with various companies from producing parts to
hosting car shows.
Openness and Learning: People working in the company are given a chance to experiment and explore.
COMPANY HISTORY
In 1981, Maruti was launched. The company was started by the Government of India and was initially
called Maruti Technical Services Private Limited. The first Managing Director of the company was Sanjay
Gandhi, late-Indian Prime Minister Indira Gandhi's son.
During the period of 1985 to 1996, a few other significant developments took place including Suzuki
taking up 50% stake in Maruti, leading to a 50-50 joint venture between Maruti and the Government of
India and over 60 per cent of its partsbeing produced in India leading to lower costs of production as the
parts didn't have to be imported from abroad. When asked why Suzuki was chosen as the partner of this
established corporation, the chairman of Maruti, Mr. R. C Bhargava said that the company went to Japan
and none of the companies out of Nissan, Mitsubishi and Daihatsu were ready to bring 40 per cent equity
in India. Suzuki was the only company which agreed to bring 26 per cent equity in India and raise it to 40
per cent thereafter.

52

The first car that the company produced was a four-door Maruti 800 and the second car that the company
produced was a Multi-Utility Vehicle called the Omni.
Between 1994 and 1996 Maruti released the Esteem, the Gypsy, the Omni, the Gypsy King, Zen and
Esteem. It also opened a second plant in Manesar whose capacity at the time of opening was
2,00,000units.

In 2000 Maruti launched a call center. This was the first time a car company had ever launched a call
center in India. In this year, Maruti setup a website for its Wagon-R car, introduced a new model of the
Zen, got the IRTE National Award for its safety initiative, traffic management and environment protection,
launched the Baleno and the Wagon R with electric power steering, joined hands with Sumitomo for
providing after-sales service and introduced the Suzuki Alto. The Gurgaon plant had stopped production
due to a strike by the employees.
Maruti introduced its first CNG car in 2001. In the same year Maruti invested 550 crore rupees in
manufacturing cars.
In 2002 Maruti launched Maruti Finance to offer financial services like extended warranty and finance for
car insurance. It also hiked its car prices and launched the Versa. This was a good year for Maruti in
exports as it produced 16,000 cars for an order to Europe.
In the next few years Maruti got into collaboration with various companies to launch car-selling schemes.
They partnered with State Bank of India to launch a scheme where each branch of the bank would sell a
Maruti car. The company also tied-up with Reliance Industries Limited for lease and fleet management.
This was the same year Kumar Mangalam Birla joined Maruti as an independent director.

53

From 2005-2007 Maruti became the market leader of Indian cars and in 2006 unveiled the new Wagon-R
in Punjab. In 2007, Maruti launched the SX4 sedan.
AWARDS and ACCOLADES
During Final year 2011-2012, the company, its products and services received reputed awards and
accolades instituted by independent expert groups, media houses and research agencies.

To Maruti Suzuki
Ranked No.l in the JD power Customer Satisfaction index for the 12th time in a row Maruti Suzuki wins
the Business world International Business Awards 2012 (Exports Auto and Engineering Category) Ranked
fourth in an index of thought leaders in India published by London-based communication agency-globe
scan.

MARUTI WINS ON CUSTOMER SATISFACTION 12TIMES IN A ROW

Customer satisfaction awards on servicing
ACHIEVEMENTS (AWARDS & RECOGNITION)
As one of the top Indian brands of cars, Maruti Suzuki has won many national and international awards
since it began production.
54

CHAPTER-4
THEORYTICAL AND ANALYTICAL FRAME WORK

55

MARKET CHARACTERISTICS
Market size:
The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on
an average of 17% for last few years. The industry has attained
billion,

(INR

a turnover of USD

$35.8

165,000 crores) and an investment of USD 10.9 billion. The industry has

provided direct and indirect employment

to

13.1

million people.

Automobile industry

is currently contributing about 5% of the total GDP of India. India's current GDP is about $1.4
trillion and is expected to grow to $3.75 trillion by 2020.[18] The projected size in 2016 of the
Indian automotive industry varies between $122 billion and $159 billion including USD 35
billion in exports. This translates into a contribution of 10% to 11% towards India's GDP by
2016, which is more than double the current contribution.
Demand determinants:
Determinants of demand for this industry include vehicle prices (which are determined largely by
wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle
(mainly determined by the price of petrol), income, interest rates, scrapping rates, and product
innovation.
Exchange Rate: Movement in the value of Rupee determines the attractiveness of Indian
products overseas and the price of import for domestic consumption.
Affordability:

Movement in income determined the affordability of new motor vehicles.

Allowing unrestricted Foreign Direct Investment (FDI) led to.

The government has recently proposed for an infrastructure that will provide one stop clearance
for any kind of proposal for foreign direct investment in the automotive sector. This will include
the local clearance system also for the same purpose. There are also plans for imposing a 100 %
tax deduction on export profits. The government has also proposed for a concession in import
duty for the establishment of new manufacturing units and industrial holdings.
56

The Indian government is also urging the state governments to ensure continuous power supply to
the automotive manufacturing units as well as granting them with the preferred plots of land.
Captive Generation for the automobile sector has also been proposed. The auto policy of the
Indian government also includes the promotion of vehicles which are run on alternative energy
resources. Talks are also on for extensive research, development and designing facilities that
would effect modernization in the automotive sector.
The policies adopted by the Indian government for the growth and development of the automobile
sector, has led to a large number of foreign investments. It has also given rise to an increased sales
rate for two wheelers and other automobiles. India is also becoming the ultimate outsourcing
destination for global automobile companies like Ford, Mitsubishi, Toyota, Hyundai etc.
International Markets:

InternationalMarkets Exports
The level of trade export is medium
The level of trade export is increasing
International Markets Imports
The level of trade import is low
The level of trade import is increasing
International Markets Analysis:
TheIndian automotive industry embarked a new journey in 1991 with de-licensing of the sector
and subsequent opening up for 100% foreign direct investment (FD1). Since then almost all global
majors have set up their facilities in Indian taking the level of production from 2 million in 1991
to over 10 million in recent years. The exports in automotive sector have grown on an average
compound annual growth rate of 30% per year for the last seven years. The export earnings from
this sector are over USD 6 billion.
Even with this rapid growth, the Indian automotive industry's contribution in global terms is very
low. This is evident from the fact that even thought passenger and commercial vehicles have
crossed the production figures of 2.3 million in the year 2008, yet India's share is about 3.28% of
57

world production of 70.53 million passenger and commercial vehicles. India's automotive exports
constitute only about 0.3% of global automotive trade.
Basis of Competition:
Competition in this industry is high. Competition in this industry is increasing. Automotive
industry is a volume-driven industry, and certain critical mass is a pre-requisite for attracting the
much-needed investment in research and development and new product design and development.
Research and development investment is needed for innovations which is the lifeline for achieving
and retaining competitiveness in the industry This competitiveness in turn depends on the capacity
and the speed of the industry to innovate and! upgrade. The most important indices of
competitiveness are productivity of both labour and capital.
The concept of attaining competitiveness on the basis of low cost and abundant labour, favourable
exchange rates, low interest rates and concessional duty structure is becoming inadequate and
therefore, not sustainable. A greater emphasis is required on the development of the factors like
innovation which can ensure competitiveness on a long-term basis.
India, with a rapidly growing middle class (450 million in 2007 as per NCAER Report), market
oriented stable economy, availability of trained manpower at competitive cost, fairly well
developed credit and financing facilities and local availability of almost all the raw materials at a
competitive cost, has emerged as one of the favourite investment destinations for the automotive
manufacturers.
These advantages need to be leveraged in a manner to attain the twin objective of ensuring
availability of best quality product at lower cost to the consumers on the one hand and developing
and assimilating the latest technology in the industry on the other hand.
As per Automotive Mission Plan 2006-2016 (2008), the Indian Government recognises its role as
a catalyst and facilitator to encourage the companies to move to higher level of competitive
performance. The Indian Government wants to create a policy environment to help companies

58

gain competitive advantage. The government aims that with its policies its encourage growth,
promote domestic competition and stimulate innovation.
Some of the major accomplishments of Maruti are listed below:
1. Maruti Suzuki Alto received the TNS Voice of Customer Award in 2008. TNS Global is a market research
firm. In the same year Maruti received the CNBC-Auto car India Award in the category Best Value for
Money Car for the SX4. It also received the CNBC-Auto car India Best Mid Size Car Award and the
CNBC-Auto car India Car of the Viewers' Choice Award for the SX4. Maruti Suzuki India Limited
received The Car Manufacturer of the Year Award in 2008.
2. In 2009, Maruti won the JD Power Asia Pacific Customer Satisfaction I
the JD Power Asia Pacific Sales Satisfaction I

Index (CSI) Survey award,

Index (SSI) Survey award, the Most Preferred Car

Brand Award at CNBC AWAAZ Consumer Award, the Golden Peacock Eco-Innovation Award, I

and

the Gold-Award by India Manufacturing Excellence Awards (IMEA).

3. In 2010, Maruti won the CNBC-TV18 Overdrive Manufacturer of the YearAward and the Auto car
Manufacturer of the Year Award.
4. Alto's "Boondon Mein campaign won the Silvermedal of the prestigious Effie Award in 2006 and
2007
5. Alto won the Car of the Year and "Most Exciting New Car of the Year" by India's automobile magazine
in 2000.
Some of the International awards that Maruti has won include the following:
1. Japan - It won the Car of the Year award by the Automotive Researchers & Journalists Conference, the
2005-2006 Car of the Year, the Goof Design Award by Japan Industrial Design Promotion Organization
and the 2005-2006 Car view of the Year Award.
2. Iceland & Ireland Maruti Suzuki won the Car of the year 2006 given out by the BIBD Association of
Automotive Journalists, the Samperit Irish Car of the Year 2006 given out by the Irish Motoring Writers
Association.
3. New Zealand and Australia - Maruti won the Fairfax AMI Small Car of the Year Award by Autocar, the
National Business Review Small Car of the Year Award by The National Business Review and the 2005
Carsguide Car of the Year.
4. Malaysia Maruti Swift was the winner in the NST Mastercard Car of the Year 2005 "Small Car"
category.
5. China - Maruti Swift won the 2005 CTV COTY "Economical Car" by CCTV.
59

NEW MODEL CAR:

India's leading car maker Maruti Suzuki is planning to launch its compact Cervo by the end of this year.
The 5-door car will be equipped with 54bhp 660cc engine. The car is expected to be priced between 2
Lakh to 3 Lakh.

MarutiCervo looks similar to Honda Fit. The car will resemble Swift or SX4 in interior design. Other
features of the car include a K6A DOHC engine with WT. 4-speed auto gearbox and bluetooth capability.
Cervo has already been launched in Japan and has turned out to be a success there.

DEBTORS
Debtors Management System:

60

At present, in VARUN MOTORS business organization, a web based system is in operation for debtors
management at the corporate level encompassing storage, analysis and follow up of debtors which is
wholly based on Excel. As a requirement of top management information sharing, consolidated project
level data for audit, exchange of information with units, business sectors project wise outstanding along
with the provisions, to start with, at the end of each quarter and the end of the year to enable the auditor to
check whether units/regions have created the provisions in line with sector advice and adequacy of the
provisions with reference to total outstanding amount. As the existing system was not able to cater these
needs, VARUN MOTORS introduced an oracle based system with the help of CIT.
The following requirements are fulfilled by the system:

Sector wise outstanding along with provisions.

Account code wise outstanding.

Generation of standard MIRs through system.

Generation of customized reports.

Reports for company as a whole as well as for units also.

Unit-wise and customer/project wise provisions with outstanding.

Provisions counter checked with sectors advice.

Accurate reporting through standard formats to management committee (MCM)

Strengthening the business sectors efforts in cash collection.

Ultimate liquidation of customer outstanding.

Faster liquidation of withheld amount.

UPCOMING CARS:

61

Maruti MR Wagon PALETTE:

Maruti showcased the mini hatchback, the MR Wagon, from the Suzuki stable, at the 2012 Auto Expo.
The company is known for its range of small cars and Maruti showcased the mini hatchback, the MR
Wagon, from the Suzuki stable, at the 2012 Auto Expo. The company is known for its range of small cars
and we feel this one too will make it to India in petrol, diesel and CNG engine options. The MR Wagon
was displayed at the Auto Expo to gauge customer reaction to it. Maruti intends to launch it in the future.
From the looks of it is a typical Japanese hatchback with boxy proportions, but that boxy stylings lends
immense practicality to the car in form of a roomy cabin.

Wagon PALETTE
The MR Wagon is a Kei car, a class of cars very popular in Japan. These cars are very popular there
because of their size and ease of use. The MR Wagon might look small from outside but from the inside its
spacious despite being a small car. The rear seats have good headroom and legroom. The interior has lots
of features but the design is squarish with an eye for practicality over anything else.
Maruti Regina:
This is Suzuki's special concept car for the 2011 Tokyo Motor Show - the Regina. Now, Maruti and
Suzuki have a close relationship and almost every small car from Suzuki has always made it to the Indian
market and this is where the Regina holds importance for the Indian market. So, will we see Maruti
Regina selling in India is the big question
62

suzuki's concept car for the 2011 Tokyo Motor Show is this - the Regina. It is also a known fact that most
of the affordable and small models from the Maruti Suzuki.

Regina

Suzuki says that OK concept show the companys aim of making a next generation and modern compact
car, one that can be sold globally. It will have excellent fuel efficiency and low emissions due to a light
body structure and ness and superior aerodynamics. The company also adds that Regina will use a highly
sophisticated petrol engine that will make it deliver fuel economy in the region of 25-30kmpl. The Suzuki
Regina, as of now, its a concept that seats four, weighs 730kg, is 1630mm wide, 1430mm tall with a
2425mm wheelbase. As seen in the picture here, the styling of the cabin is minimal and very futuristic. It
wears a green theme to signify the high economy and low emissions.

Modern Mode lest Low Price Car:

63

XA Alpha:
XA (XA Alpha) a concept for a compact SUV, was unveiled at the Maruti Suzuki pavilion at Auto Expo
2012 here today. Maruti Suzuki XA Alpha is new small SUV with 5-seating capacity and powered by
petrol and diesel engine @ attractive price. Maruti XA Alpha will compete with Ford Ecosport and
Renault duster sompact SUVs, XA Alpha SUV is designed for young and targeted as first time SUV buyer.

Maruti XA Alpha Features & Specifications:

Powered by K-Series Diesel enfine with good mileage
Fiat Multijet Diesel Engine option
sub-10 lakh rupee SUV market to explode
Monocoque structure
4 x 2 and All wheel drive (AWD) variants
Seating capacity: 5
Wheelbase: 2500 mm
Length: 4000 mm
Width: 1900 mm
Height: 1600 mm
Maruti Suzuki XA Alpha Price in India - Approx 10,00,000/- INR

64

65

66

The debtors in VARUN MOTORS are classified as follows:

1) Collectible debtors:
2) Deferred debtors: Debts which are collectible on the basis of certain punch points are known as deferred
debts. Certain punch points are given below:a) MRC (material receipt certificate): Debts which are to be paid within three months from the month of
issuing the certificate of material receipt.
b) Milestone: part of debtors certain on some events or time as mentioned in the contract. E.g. trial operation,
boiler lifting etc.
c) Final payment: Due after conducting say the performance guarantee test (PG test) i.e. after the customer
checks the performance of the product, a time period is specified in the contract in which the debtors must
be paid.
3) Accrued revenue: debtors under this section are classified into two parts:
a) GDPB i.e. goods dispatched pending billing which are to be ideally paid within 6 months after billing.
b) PVC i.e. Price Variation Clause which are the debtors that are a result of certain impacts. There may be a
variation or increase in price that need to be accounted for accordingly as per the contracting rules.
Submission of data by units/regions:
The debtors data from each unit is required in the form of eight files:
Reports:
Top management is likely to assess the status and movement of sundry debtors from time to time. This
web based system enables retrieving different types of reports for information at the end of each reporting
month. Generally, customer wise, project wise, business sector wise, unit/region wise, account code wise
etc. debtors analysis with verification and liquidation plan are required for review.
The report modules in the web based debtors management system provide the facility to generate the
above mentioned reports. The reports can be generated using various selection criteria.

67

CALCULATION OF WORKING CAPITAL OF VARUN MOTORS

2014

2013

2012

2011

2010

1,766.2

1,666.8

1,395.8

782.64

555.78

Total Current Assets

Total Current Liabilities

498.82

621.28

778.77

154.69

37.20

NET W/CAPITAL ( CA

1267.4

1045.5

627.9

518.5

- CL )

617.05

500000
450000
400000
350000
300000

Total current assets

Total current liabilities

250000

NET W/C(CA-CL)

200000
150000
100000
50000
0
1

68

INCOME STATEMENT OF VARUN MOTORS

Income

201

2013

2012

2011

2010

Sales Turnover

4
168.03

3,179.5

2,941.2

1,559.4

1,220.4

Excise Duty
Net Sales

0.00
168.03

8
0.00
3,179.5

9
0.00
2,941.2

3
0.00
1,559.4

3
-0.27
1,220.7

188.08
-47.40
308.71

8
-137.89
-13.10
3,028.5

9
14.14
4.91
2,960.3

3
-18.51
15.14
1,556.0

0
-27.33
-19.95
1,173.4

Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials

82.81

2,974.9

2,734.1

1,370.2

1,023.5

Power & Fuel Cost

Employee Cost
Other Manufacturing

1.81
7.90
4.78

6
0.51
18.05
17.63

0
0.52
16.04
13.98

5
0.43
13.42
9.97

4
0.00
10.57
13.72

Expenses
Selling and Admin

0.00

0.00

23.78

23.58

36.93

Expenses
Miscellaneous

14.71

39.93

2.10

3.27

2.44

Expenses
Preoperative

0.00

0.00

0.00

0.00

0.00

ExpCapitalised
Total Expenses

112.01

3,051.0

2,790.5

1,420.9

1,087.2

Operating Profit
PBDIT

8.62
196.70

8
115.40
-22.49

2
155.68
169.82

2
153.65
135.14

0
113.55
86.22

Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord

214.64
-17.94
17.77
0.00
-35.71
0.00
-35.71

116.08
-138.57
19.18
0.00
-157.75
0.00
-157.75

91.21
78.61
19.05
0.00
59.56
0.00
59.56

80.86
54.28
18.45
0.00
35.83
0.00
35.83

55.11
31.11
11.05
0.00
20.06
-0.19
19.87

Items)
Tax
Reported Net Profit
Total Value Addition
Preference Dividend

-1.24
-34.48
29.20
0.00

0.04
-157.80
76.12
0.00

20.22
39.34
56.43
0.00

12.02
23.82
50.67
0.00

7.06
12.82
63.65
0.00

69

Equity Dividend
Corporate Dividend

0.00
0.00

0.00
0.00

5.24
0.85

3.32
0.55

2.21
0.38

Tax
Per share data (annualised)
Shares in issue
291.14

291.14

291.14

221.14

221.14

(lakhs)
Earning Per Share

-11.84

-54.20

13.51

10.77

5.80

(Rs)
Equity Dividend (%)
Book Value (Rs)

0.00
88.37

0.00
102.20

18.00
81.06

15.00
78.01

10.00
79.52

FINANCIAL RATIOS:
CURRENT RATIO= CURRENT ASSETS /CURRENT LIABILITY
YEARS

2009-

2010-2011

2010
CURRENT

14.94

5.05

2011-

2012-

2012

2013

1.79

2.68

2013-2014
3.54

RATIO
From the above table and graph it is observed that,the current ratio is high that is 14.94:1 in the year 20092010 and there by drastically decreased to 5.05:1 in the year 2010-2011 and still declined in the year
2011-2012.But from the year 2011-2012 it started recovery in the current ratio and recorded 2.68:1 in the
year 2012-2013 and during the current year 2013-3014 it similarly increased to 3.54:1.
From the analysis it is found that the company has statisfactory liquid position in the current year.

QUICK RATIO = LIQUID ASSETS / CURRENT LIABILITY

YEARS

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

QUICK

11.84

4.36

1.64

2.36

3.29

RATIO
70

QUICK RATIO
QUICK RATIO
11.84

4.36
2.36

1.64

2009-2010

2010-2011

2011-2012

2012-2013

3.29

2013-2014

From the above table and graph it is observed that,the current ratio is high that is 11.84:1 in the year 20092010 and they drastically decreased to 4.36:1 in the year 2010-2011 and still declined in the year 20112012.But from the year 2011-2012 it started recovers in the quick ratio and recorded 2.36:1 in the year
2012-2013 and during the current year 2013-3014 it similarly increased to 3.29:1.
From the analysis it is found that the company has statisfactory liquid position in the current year.

CASH RATIO = CASH / CURRENT LIABILITIES

YEARS

2009-2010

2010-2011

71

2011-2012

2012-2013

2013-2014

DEBTOR

0.17

0.005

0.001

0.15

0.016

TURNOVER
RATIO

Cash Ratio
Cash Ratio
0.17
0.15

2009-2010

0.02

0.01

2010-2011

2011-2012

2012-2013

2013-2014

From the above table and graph it is observed that,theCash ratio is 0.17:1 in the year 2009-2010 and they
drastically decreased to 0.005:1 in the year 2010-2011 and still declined in the year 2011-2012.But from
the year 2012-2013 it started recovery in the Cash Ratio and recorded 0.15:1 in the year 2012-2013 and
during the current year 2013-3014 it similarly decreased to 0.016:1.
From the analysis it is found that the cash ratio of the firm is less than 0.5:1 during the nentire period of
study.

DEBTOR TURNOVER RATIO = GROSS SALES / TOTAL DEBTORS

YEARS

2009-

2010-2011

2010
72

2011-2012

2012-

2013-

2013

2014

DEBTOR

2.72

2.29

2.28

2.14

0.097

TURNOVER
RATIO

Debtors Turnover Ratio

Debtors Turnover Ratio

2.72

2009-2010

2.29

2.28

2.14

2010-2011

2011-2012

2012-2013

0.1
2013-2014

From the above table and graph it is observed that,theDebtors Turnover ratio is high that is 2.72:1 in the
year 2009-2010 and they drastically decreased to 2.29:1 in the year 2010-2011 and still declined in the
year 2011-2012 and in the year 2011-2012 it started reduces still in the Debtors Turnover Ratio and
recorded 2.28:1 in the year 2012-2013 and during the current year 2013-3014 it similarly decreased to
0.097:1.
From the above it is found that during the current year the debt turnover ratio is at least (or) we can say
there is lots of lapse in recovery of money from debtors.

INVENTORY TURNOVER RATIO = GROSS TURNOVER / INVENTORIES

73

YEARS

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INVENTORY

3.87

4.44

3.73

3.57

3.70

TURNOVER
RATIO

INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO

3.87

2009-2010

4.44

2010-2011

3.73

3.57

3.7

2011-2012

2012-2013

2013-2014

From the above table and graph it is observed that,theTurnover Ratio is high that is 3.87:1 in the year
2009-2010 and they drastically decreased to 4.44:1 in the year 2010-2011 and still declined in the year
2011-2012.But from the year 2011-2012 it started recovers in the Inventory Turnover Ratio and recorded
3.57:1 in the year 2012-2013 and during the current year 2013-3014 it similarly increased to 3.7:1.

DEBT EQUITY RATIO= TOTAL DEBT / TOTAL EQUITY

74

YEARS

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

DEBT

0.07

0.01

0.01

0.01

0.01

EQUITY
RATIO

DEBT EQUITY RATIO

DEBT EQUITY RATIO

0.07

2009-2010

0.01

0.01

0.01

0.01

2010-2011

2011-2012

2012-2013

2013-2014

From the above table and graph it is observed that,the Debt equity Ratio is high that is 0.07:1 in the year
2009-2010 and they drastically decreased to 0.01:1 in the year 2010-2011 and maintained same ratio in
the years from 2011-2014.

COMPARISON OF CURRENT AND QUICK RATIO

75

1.8
1.6
1.4
1.2
1

CURRENT RATIO

0.8

QUICK RATIO

0.6
0.4
0.2
0
2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

BALANCE SHEET OF VARUN MOTORS

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Total Share Capital

Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans

29.11
29.11
15.55
0.00
228.16
0.00
272.82
1,357.7

29.11
29.11
0.00
0.00
268.43
0.00
297.54
1,083.8

29.11
29.11
0.00
0.00
206.88
225.63
461.62
906.77

22.11
22.11
7.56
0.00
150.39
232.46
412.52
741.85

22.11
22.11
0.00
0.00
153.73
204.06
379.90
594.47

Unsecured Loans
Total Debt

7
104.88
1,462.6

3
147.84
1,231.6

25.28
932.05

88.13
829.98

77.66
672.13

Total Liabilities

5
1,735.4

7
1,529.2

1,393.6

1,242.5

1,052.0

506.27
125.57
380.70
1.35

515.75
107.14
408.61
1.25

472.68
82.21
390.47
5.17

441.94
56.60
385.34
3.40

346.67
31.61
315.06
49.32

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress

76

Investments
Inventories

17.01
34.11

17.01
86.78

10.87
107.53

7.43
99.93

7.32
101.27

Sundry Debtors

1,723.8

1,483.9

1,287.4

681.93

448.05

Cash and Bank Balance

Total Current Assets

7
8.30
1,766.2

9
96.09
1,666.8

2
0.87
1,395.8

0.78
782.64

6.46
555.78

Loans and Advances

Fixed Deposits
Total CA, Loans & Advances

8
70.92
0.00
1,837.2

6
58.98
0.00
1,725.8

2
39.02
339.42
1,774.2

163.37
60.14
1,006.1

117.56
47.17
720.51

Deffered Credit
Total Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets

0
0.00
498.82
1.96
500.78
1,336.4

4
0.00
621.28
2.22
623.50
1,102.3

6
0.00
778.77
8.31
787.08
987.18

5
0.00
154.69
5.11
159.80
846.35

0.00
37.20
2.99
40.19
680.32

Miscellaneous Expenses
Total Assets

2
0.00
1,735.4

4
0.00
1,529.2

0.00
1,393.6

0.00
1,242.5

0.00
1,052.0

Contingent Liabilities
Book Value (Rs)

8
260.67
88.37

1
310.44
102.20

9
207.60
81.06

2
145.10
78.01

2
96.49
79.52

77

CHAPTER-5
FINDINGS
SUGGESTIONS
CONCLUSSION

78

FINDINGS

Varun motors established in 1992 with Bajaj Auto Dealership at Visakhapatnam in 1992.
The sales turnover is 168.03 cr in the year 2013-2014.
Working capital position has been gradually decreased but though the total current assets can observed
a little increment compared to total current liabilities due to which we can identify the decrease in

working capital.
The profitability of the varun motors company is 88.37cr(Book Value) in the year 2013-2014.
Through the Current ratio and Quick ratio it is found that company has a satisfactory liquidity position

in the year 2013-2014 than the previous years.

It is found that the cash ratio of the firm isless than 0.5:1 during the entire period of study.
Debtors turnover ratio: It is found that during the current year the debt turnover ratio is at least (or) we
can say that there is lots of lapse in recovery of money from debtors.

SUGGESTIONS

There is a great need for effective management of working capital in this firm.
There is no precise way to determine the exact amount of gross or net working capital for the firm.
There is a fluctuation in liquidity position of than firm which has be corrected to stablise this

liquidity position.
The collection from debtors has to be improved or it has to be speeded up in collection.
There is no specific rule as to how current assets should be financed.
It is not feasible in practice to finance current assets by short-term sources only.

79

Keeping in view the constraints of the company, a judicious mix of short and long term finances
should be invested in current assets. Since current assets involve cost of funds, they should be put
to productive use.

CONCLUSION
VARUN MOTORS(VARUN MOTORS) is a public sector giant of NAVRATNA status. It is the largest
engineering and manufacturing enterprise in India in the energy related infrastructure sector. Today
VARUN MOTORS caters to the core sectors of Indian economy viz. power generation and transmission,
industry, transportation, telecommunication, renewable energy, defense, etc.
My summer training at VARUN MOTORS has been a truly learning experience. The wide exposure has
really helped me to understand VARUN MOTORS in a better perspective especially regarding its financial
performance. I understood the workings of various sections of VARUN MOTORS corporate finance. My
study was mainly inclined to Working capital procedure as followed in VARUN MOTORS. The study
reveals that VARUN MOTORS has a strong system relating to implementation of the Company Policy and
procedure. These techniques followed are well planned and structured and same are reflected in the
Company Manuals.
The basic purpose of preparing this project report was to make a detailed study of various procedures and
concepts that are implemented in the industry with special focus to VARUN MOTORS.
The summer training at VARUN MOTORS gave me a better understanding and overview of the industry.
The on job training gave a practical bend to my theoretical concepts of finance.
It was great to experience the work culture and environment in VARUN MOTORS. My association with
VARUN MOTORS taught me the values and ethics that are adopted in such a large Public Sector
Undertaking.

REFERENCES

WWW.VARUNMOTORS.COM

VARUN MOTORS annual reports 2008-14

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WORKING CAPITAL manual of VARUN MOTORS

Flash Results 2009-2014

WWW.WIKIPEDIA.COM

WWW.VALUESEARCHONLINE.COM

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