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INTRODUCTION:

      Lucas Indian Service Ltd commenced its operations way back in 1930 with
      its base in Bombay as a sterling company under Joseph Lucas, Birmingham,
      U.K. The company steadily grew, meeting the entire needs of diverse
      imported automobiles for auto electrical, diesel injection pumps, brakes etc.
      In order to cope up with the growing demand from Eastern India, it opened a
      branch in Calcutta in 1936. Simultaneously, it also created a country wide
      dealer network in those early days to provide services.


HISTORY OF THE COMPANY

               The onset of the Second World War led to the total stoppage of
supplies from U.K. And LIS rose to the challenge to keep the war efforts going by
the ingenious and improvised methods of reconditioning worn out equipment for
defence. In fact, LIS, Calcutta became a major base for reconditioning. By the time
the war ended in 1943, LIS acquired sufficient expertise in sales and service which
led to the opening of its 3rd branch in Madras in 1946.

LIS, Madras also set a plant in the early 60's to manufacture ignition coils for 2
wheelers/ 4 wheelers to cater to O E manufactures / replace markets. It has been
highly successful not only in meeting the demands of domestic market but also in
exporting to other countries.

      The post-independence period saw a proliferation of automobile
manufactures for country's self-reliance and economic growth which in turn led to
the development and manufacture of components for auto industry.

       Joseph Lucas joined hands with TVS – another pioneering institution in
India in 1962 to manufacture Auto Electricals for a wide range of applications for
2 wheelers, cars, trucks, tractors, buses, marine / stationary engines. The product
range is very comprehensive consisting of starters, alternators, dynamos,
regulators, distributors, wiper motors, lamps, horns .    Due to new legislation
brought out the Govt. on import restrictions, LIS had to curtail the imports from
U.K. and heavily depend on Lucas-TVS for its support to market /service their
indigenous products and thus LIS became a fully owned subsidiary of Lucas-TVS
Ltd. on 1.8.1968.

      LIS started expanding its network of branches starting from Delhi in 1972 to
meet the country's huge demands and presently it has 25 branches in all
metropolitan cities and major state capitals or major commercial centres of states.
Apart from branch outlets for distribution and service, LIS has a dedicated dealer
network of over 500 centres which in turn cater to about 20,000 retail outlets all
over India to meet the end user needs. Besides the Lucas-TVS range of products,
LIS has also been distributing and marketing 'LUCAS' batteries as a basic product
for auto electrical system right from the inception.

LIS took up diversification in marketing a host of quality products under the brand
name 'LISPART' during 1975. The product range covers fan belts, auto cables,
bulbs, switches, relays for head lamps and horn and dash board instruments which
are basic akin auto electrical in any automobile.

Apart from marketing of Lucas-TVS auto electrical and 'LISPART' spares, LIS has
been also a role to play in servicing this equipment and it has been successful in
developing and marketing highly accurate and precise test equipment / special
tools. With the commencement of the production of Rotary Type of diesel fuel
injection pumps for cars and LCV's by Lucas-TVS Ltd., LIS is also active in
providing country wide sales and service through its branch operations and
upgrading the service points.

As part of its service to India's automotive industry, LIS conducts training courses
for personnel from O E manufactures, Defence Establishments, Nationalised
Transport Undertakings, Fleet Operators, and Auto Electricians.              LIS has
employee strength of over 350 spread all over India, and has never lost a man day
as industrial relationships has been always cordial.

With a turnover of over Rs.325 crores, LIS has come to be acknowledged as a
unique automobile institution of this country and the day is not far in it becoming a
Rs.400 crore company.

COMPANY PROFILE:
            22nd March 1877 marked the dawn of industrialisation of Southern
India with the birth of the doyen Shri T V SundaramIyengar. The TVS Group was
formed in 1911 by T V SundaramIyengar, one of the pioneers of Indian industry.
He was a visionary, whose ideas were years ahead of their times, and a man of
principles. Both these things combined to make him a legend in his own life time
all over Southern India. Three years before World War I, when the automobile was
still seen as some kind of intimidating “horseless carriage”, he had the vision to set
up South India's first ever rural bus service. And, over the years, this transport
company became the largest of its kind in the country – legendary for its
punctuality and service. In fact, the rules and regulations our Founder laid down
for himself later became the blueprint for the Motor Vehicles Act.

During the war years, TVS set up a service station for reconditioning vehicles and
a tyre re-treading unit. The shortage of petrol was overcome through the
manufacture of conversion kits which allowed the use of charcoal gas in
automobiles as a substitute for petrol.

T V SundaramIyengar's philosophy of business reflected the kind of man he was:
simple, but stern. It was based rigidly on four concepts-quality, service, reliability
and a sense of ethics. It is this personal philosophy that has formed the cornerstone
of our corporate culture as, over the past 90 years, we have evolved into one of
India's leading industrial houses.

TVS believes that the success of any enterprise is built on the solid foundation of
customer satisfaction. Continuous innovation and close customer interaction have
enabled TVS companies to stay ahead of competition. The group endeavours to be
competitive without compromising on Quality. And quality at TVS determines not
only the end product but the systems, processes and operations at all levels.

The rise of India's automotive industry after Independence saw TVS enter
components manufacture, the Group's next major milestone. For two decades,
beginning in 1960, the TVS Group formed alliances with many world leaders for
manufacture of critical automotive components, and later, of two-wheelers.

These years of steady growth, expansion and diversification, repeatedly proved the
Group's unique ability to sense a sunrise industry in the Indian environment and to
build it up to maturity. This was not restricted to the automotive industry alone.
Today the TVS Group has a leading presence in computer peripherals and
consumer durables.

TVS Group is surging ahead towards attaining further heights in the industrial
hemisphere of India, with the devotion and dedication of the multi-skilled work
force behind.
INDUSTRIAL PROFILE

      TVS Group is one of India's oldest business groups. It is a giant conglomerate
with presence in diverse fields like automotive component manufacturing, automotive
dealerships and electronics. Today, there are over thirty companies in the TVS Group,
employing more than 40,000 people worldwide and with a turnover in excess of USD
2.2 billion.

       TVS Group originated as a transport company in 1911. TV SundaramIyengar and
       Sons Limited is the parent and holding company of the TVS Group. TV
       SundramIyengar and Sons Limited has the following three divisions:


       TVS and Sons: TVS and Sons is the largest automobile distribution company in
       India. It distributes Heavy Duty Commercial Vehicles, Jeeps and Cars. TVS and
       Sons represents premier automotive companies like Ashok Leyland, Mahindra
       and Mahindra Ltd., and Honda. The company is also one of the leading logistics
       solution providers and has set up state-of-the-art warehouses all over the country.
       TVS and Sons has also diversified into distributing a range of Garage equipments.


       Sundaram Motors:Sundaram Motors distributes Heavy Duty Commercial
       Vehicles, Cars, and auto spare parts for several leading manufacturers. The
       company is also the dealer for Ashok Leyland, Honda, Fiat, Ford and Mercedes
       Benz.
Madras Auto Service: Madras Auto Service distributes automotive spare parts
      for                 all                   leading            manufacturers.




      Other major companies of TVS Group are:


      TVS - Motor Company Limited: TVS Motor Company Limited is one of the
largest two-wheeler manufacturers in India. It manufactures Motorcycles, Mopeds,
Scooters.



  TVS Electronics Limited: TVS Electronics was incorporated in 1986 in collaboration
  with Citizen Watch Co. of Japan. The company manufactures a complete range of
  computer peripherals.

  Axles India Limited: Axles India was promoted by Sundaram Finance, Wheels India
  and Eaton Corporation for the manufacture of axles for medium and heavy duty
  commercial vehicles in India.

  Brakes India Limited: Brakes India is a joint venture between TV SundramIyengar and
  Sons Ltd. and Lucas Industries Plc., UK. The company manufactures braking equipment
  for automotive and non-automotive applications.

  Sundaram Polymers Division:Sundaram Polymers Division manufactures Engineering
  Plastic compounds for various applications.
Harita Finance Limited:Harita Finance Ltd is a finance company under the TVS Group.
It deals in retail finance, hire purchase, leasing and bill discounting.

Harita Finance Limited:Harita Finance Ltd is a finance company under the TVS Group.
It deals in retail finance, hire purchase, leasing and bill discounting.

India Motor Parts and Accessories Limited: It is engaged in the distribution of
automobile spare parts.



India Nippon Electricals Limited: It is a joint venture between Lucas Indian Service
and Kokusan Denki Co Ltd., Japan. The company manufactures Electronic Ignition
Systems for two wheelers and portable gensets.

IRIZAR TVS (P) Ltd: IRIZAR TVS (P) Ltd. is a joint venture between Sundaram
Industries Ltd, Ashok Leyland Ltd and IRIZAR S. Coop of Spain. The company builds
bus bodies for export and domestic market.

Lakshmi Auto Components Limited: The company is a subsidiary of TVS-Suzuki. It
manufactures gears, crankshafts and connecting rods for TVS-Suzuki motorbikes and
mopeds.

Lucas Indian Service: Lucas Indian Service is a wholly owned subsidiary of Lucas-TVS
Ltd., engaged in the sales and service of auto-electricals and fuel injection equipment.


Lucas - TVS Limited: Lucas-TVS, a joint venture between Lucas Varity group, UK and
TVS Group, is a leading manufacturer of auto electrical products and diesel fuel injection
equipment in India.

Sundaram Brake Linings Limited:Sundaram Brake Linings is the leading manufacturer
of brake linings in India

Sundaram-Clayton Limited:Sundaram - Clayton Ltd manufactures complete range of
air brake actuation system - compressors, actuators, valves, brake chambers, spring
brakes, slack adjusters, couplings, hoses, switches and vacuum boosters for light/medium
and heavy commercial vehicles and trailers. Foundry Division manufactures aluminum,
gravity                     and                   pressure                       die-castings.




      LUCAS INDIAN SERVICE VISION
 Lucas Indian Service will become India's dominant and most respected service
provider (Parts and after service) in its areas of specialization by 2015-2016

  LUCAS INDIAN SERVICE will expand overseas with focus on SAARC,
ASEAN and Middle East

LUCAS INDIAN SERVICE MISSION

The mission of LUCAS INDIAN SERVICE is to provide proactive and high
quality after sales and service to vehicle makers and users in its areas of
specialization (electrical and diesel systems).

LUCAS INDIAN SERVICE will continuously expand the scope of its sales and
service offering for vehicle and non-vehicular applications in anticipation of
customer needs.

LUCAS INDIAN SERVICE will continuously enhance the technical skill of its
people and expand its network through use of contemporary technology.
OBJECTIVES OF THE COMPANY:

:

    Maintain leadership in the domestic market and presence in export markets.

    Ensure customer satisfaction through timely delivery of quality products and
    services, at competitive prices.

    Continuously improve & innovative product design, process technology and
    work environment to offer better products.

    Bring about involvement of all employees in achieving the above objectives.
THE INDIAN COMPANIES ACT (ACT VII OF 1913)

    COMPANY LIMITED BY SHARES
    MEMORANDUM OF ASSOCIATION
    OF
    LUCAS INDIAN SERVICE LIMITED


    1. NAME CLAUSE:
      The name of the company is LUCAS INDIAN SERVICE LIMITED.


    2. REGISTRATION CLAUSE:
      The registered office of the company will be situated in state of Tamil
      Nadu.


    3. OBJECT CLAUSE:
The objects for which the company is established are:


 To carry on the business of manufacturers, importers and dealers in all their
   branches of and in every form of mechanically-propelled vehicle or vessels
   and of all parts thereof and accessories thereto whatever the motive power of
   such vehicle may be.
 To carry on the business of proprietors of garages ,service stations and
   mechanical engineers .
 To buy ,sell, manufacture, repair ,alter, improve, exchange, let out on hire,
   import,       export        and         deal        in       all       works
   ,plant,machinery,tools,utensils,appliances,apparatus,products,materials,petl
   and things capable of being used in any every such business as afore side or
   required by any customers of or persons having dealings with the company
   or commonly dealt in by persons engaged in such business or which may
   seem or capable of being profitably dealt in connection any of the said
   business.
 To expend money in experimenting on and testing and improving or seeking
   to improve any patents , rights inventions, discoveries or information of the
   company or which the company may acquire or propose acquire.
 Generally to carry on any other trade or business whether manufacturing or
   otherwise subsidiary or auxiliary to ,or which can be conveniently carried on
   in connection with any of the companies objects; and to establish and to
   maintain agencies in any part of the world for the conduct of the business of
   the company or for the sale of any materials or things for the time being at
   the disposal of the company for the sale ;and to advertise and adopt any
   means of making known all of any of the manufacture products or goods of
the company or any articles or goods traded or dealt in by the company in
   any way that may be thought advisable including the posting of bills in
   relation there to and the issue of circulars ,books ,pamplets and price lists
   and the conducting of competitions and the giving of prizes and donations .
 To acquire by purchase amalgamation grant concession lease license barter
   or otherwise either absolutely or conditionally and either solely or jointly
   with others any real or personal immovable or movable property rights or
   privileges including any land, building, rights of way , easements , licenses,
   utensils, stock in trade.
 To build , construct, maintain ,alter enlarge pull down and remove or
   replace any buildings factories offices works machinery engines walls or
   fences and to clear sites for the same and to work or control the same.
 To transact and carry on all kinds of agency business .
 The other objects for which the Company is established are:
 To enter into partnership or into any arrangement for sharing profits with
   any person , firm or company engaged in or about to engage in any business
   which may seen capable of being carried on directly or indirectly the benefit
   of the company.
 To amalgamate with any company or companies having objects altogether or
   in part similar to those of the company .
 To promote ,form, be interested in and take hold and dispose of share in
   other companies having all or any of the objects of the company and take up
   debentures or otherwise subsidise or assist such companies .
 To procure the incorporation, registeration or other recognition of the
   company in country ,state or place or any of the company‟s agencies.
 To draw ,accept and make and to endorse ,discount and negotiate promissory
      notes ,hundies, bills of exchange and other negotiable instruments connected
      with the business of the company.
    To sell or in any other manner deal with or dispose of the undertaking or
      property of the company, or any part thereof for such consideration of the
      company may think fit.
    To create depreciation, reserve or sinking or insurance funds or any other
      special fund for the benefit of the company.
    To provide for the welfare of the employees of the company by creating and
      contributing to any provident fund or otherwise the company shall see fit.
    To distribute any of the property of the company amongst the members in
      specie or kind.
    To pay all legal and other expenses connected with the formation of the
      company.
    To do all such other things as are incidental or conductive to the attainment
      of the above objects or any of them.
      4. LIABILITY CLAUSE:
The liability of the members is limited.

      5. CAPITAL CLAUSE:
           The share capital of the company will be rupees ten crores, divided into
one crore equity shares of rupees ten each with power to increase and with
power from time to time to issue any shares of the original or new capital with any
preference or priority in the payment of dividends or the distribution of assets or
otherwise with any other shares whether ordinary or preference and whether issued
or not to vary the regulations of the company as far as necessary to give effect to
any such preference or priority and upon the sub-division of a share to apportion
the right to participate in profits or surplus assets with special rights priorities and
privileges to any of the undivided shares of the right to vote in any manner as
between the shares resulting from such division.

6. ASSOCIATION CLAUSE:

               We, the several persons, whose names and addresses are subscribed,
are desirous of being formed into a company in pursuance of this Memorandum of
Association, and we respectively agree to take the number of shares in the capital
of the Company set opposite our respective names.




THE INDIAN COMPANIES ACT (ACT VII OF 1913)

COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

OF

LUCAS INDIAN SERVICE LIMITED



The regulations contained in table „A‟ in the first schedule to the companies
act1956 shall apply to this company subject as hereinafter provided. The following
regulations of table „A‟ shall not apply for the management of the company, that is
to say, 9, 21 to 24, 40 to 43, 65, 66, 74, 79(2) and 99. The remaining regulations of
table „A‟ and these articles shall constitute the articles of association of the
company.



   1. SHARE CAPITAL :
           The share capital of the company shall be Rs.10, 00, 00,000 (Rupees
ten crores) divided into 1, 00, 00,000 (one crore) equity shares of Rs 10 each.

   2. COMPANY’S LIEN ON SHARES:
The company shall have a first and paramount lien upon all the shares registered in
the name of each member (whether solely or jointly with others) upon the proceeds
of sale thereof, for his debts, liabilities and engagements. Solely , or jointly , with
any other person , to or with the company , whether the period for the payment
,fulfillment , or discharge thereof shall have actually arrived or not . and no
equitable interest in any share shall be created except upon the footing and
condition that regulation of table „A‟is to have full effect any such lien shall extend
to all dividends from time to time declared in respect of such shares. Unless
otherwise agreed, the registration of a transfer of shares shall operate as a waiver of
the company‟s lien, if any, on such shares.

   3. CLOSURE OF REGISTER OF MEMBERS IN WHICH ITS
      REGISTERED OFFICE IS SITUATED :
The board shall have power on giving not less than seven days previous notice by
advertisement in a newspaper circulating in the state of Tamilnadu to close the
transfer books, the register of members at such time or times and for such period or
periods, not exceeding 30 days at a time and not exceeding in the aggregate 45
days in each year, as it may deem expedient.




   4. DIRECTORS MAY REFUSE TO REGISTER TRANSFERS :
Subject to the provisions of section 111 of the act and subject as herein after
mentioned, the board may, at its own absolute and uncontrolled discretion and
without assigning any reasons , decline to register or acknowledge the transfer of
any share to any person whom it shall not approve as transferee , ( notwithstanding
that the proposed transferee be already a member ) , but in such case it shall, within
two months from the date on which the instrument of transfer was lodged with the
company , send to the transferee and the transferor notice of the refusal to register
such transfer.




   5. NOTICE OF APPLICATION WHEN TO BE GIVEN:
Where in case of partly paid shares an application for registration, is made by the
transferor , the company shall give notice of the application to the transferee in
accordance with the provisions of section 110 of the act.

   6. NUMBER OF DIRECTORS :
       Unless and otherwise determined by a general meeting, the number of
directors shall not be less than three or not more than seven. As per the special
resolution passed at the extraordinary general meeting held on 31-10-1958, The
present directors of the company are:
1.JOHN MASTERTON

2.CLAUDE HENRY MARTIN

                3. A.G.WOZENCROFT




   7. APPOINTMENT OF ALTERNATE DIRECTOR :
             The board may, appoint an alternate director to act for a director (here
in after called the “the original director “) during his absence for a period of not
less than 3 months from the state in which the meetings of the board are originally
held. An alternate director appointed under these articles shall not hold office as
such for a period longer than that permitted to the original director returns to the
state in which the meetings of the board are ordinarily held. If the term of office of
the original director is determined before he so returns to the said state, any
provision in the act or in these articles for the automatic re-appointment of retiring
directors in default of another appointment shall apply to the original director and
not to the alternate director.

8. QUALIFICATION OF DIRECTORS:

No share qualification shall be necessary for any director.                         9.
REMUNERATION OF DIRECTOR:

                            Every director shall be paid a sitting fees for every
                            meeting of the board or the committee of the board
                            attended by him and this amount will be fixed by the
                            board of directors within the maximum permissible
amount under the companies act and rules that are in
                           force at that time.

                           Every director shall be entitled to be paid all travelling,
                           hotel and other expenses properly incurred by him in
                           attending and returning from meetings of the board of
                           directors or any committee thereof or general meetings of
                           the company or in connection with the business of the
                           company.



10. QUESTIONS AT BOARD MEETINGS HOW DECIDED:

        Action resulting from the questions arising at any meeting of the board or a
committee of the board shall require a unanimous decision.




11. DIRECTORS AND OTHERS RIGHT TO INDEMNITY:

          Save and expect so far as the provision of this article shall be avoided by
section 201 of the act , the board , auditors , secretary , general manager ,
asst.secretary and other officers or servants for the time being of the company and
the trustees (if any) for the time being acting in relation to any of the affairs of the
company , and every one of them ,their hiers, executors and administrators shall be
indemnified and secured harmless out of the assets and profits of the expenses
which they or any of them , their or any of their or any of their executors or
administrators , shall or may incur or sustain by or by reason of any act done ,
concurred in or the execution of their duty or supposed duty in their respective
offices or trusts , except such (if any) as shall incur , or sustain through or by their
own willful neglect or default respectively , and none of them shall be answerable
for the acts, receipts neglects or defaults of the other or others of them , or for
joining in any receipt for the sake of conformity , or for any bankers or other
persons with whom any monies or effects belonging to the company shall or may
be lodged or deposited for safe custody , or for any other loss, misfortune trusts or
in relation thereto except when the same shall happen by through their own neglect
or default respectively.

12. SECRECY CLAUSE:

No member shall be entitled to visit or inspect any works of the company without
the permission of the board or to enquire discovery of any information respecting
any detail of the company‟s trading , or any matter which is or may be in nature of
a any matter which may relate to the conduct of the business of the company and
which , in the opinion of the board, it would be inexpedient in the interest of the
company to disclose.




ORGANISATION STRUCTURE

AND

DEPARTMENTATION

ORGANISATION:
Organization is the process of combing the work which individuals or
group has to perform with facilities necessary for its execution, that the duties so
performed provided the best channels for the efficient, systematic, and positive and
co-ordinate application of the available efforts.

           The term organization is also used as a function of management or as a
process carried out for arranging the task into manageable units and defining the
formal relationship among people working on different tasks. It is a series of
activities rather than a function.

ORGANISATION STRUCTURE:
              It is a kind of information structure which says the relationship
between the different departments, divisions and units of an organisation as well as
the functional relationship between the different departments, divisions and union
of an organisation as well as the functional relationship between employees,
executives, etc… it enables each executive and employee to understand what is his
position in the organisation.

            Organisation Structure is indispensable because a wrong structure will
seriously impair business performances and may even destroy it. The organisation
Structure must be designed so as to make possible the attainment of the objective
of the business.




ORGANISATIONAL CHART:
Diagrammatic presentation of the organisation structure is what is
known as an “Organisational Chart”. It may show the names, designation and
functions of the personnel in an organisation.


          Chairman is the top most official in LIS.The overall administration is
vested with the Chairman. He is been assisted by the Managing Directors. The
chairman delegates his authority to the Managing Director. There are two Directors
in the company whose functions are delegated by the Managing Director. They are,
Director Operation and Director Technical.


          The Director of Operation has three subordinates working under him
named General Manager. Manufacturing G.M, Maintenance G.M and G.M Human
Resource (HR).
CHAIRMAN




                     MANAGING DIRECTOR




          DIRECTOR                       DIRECTOR

      OPERATION                          TECHNICAL




GENERAL                  MANUFACT              MAINTENA   H.R
MANAGER                  URING G.M             NCE G.M
                                                          G.M
DEPARTMENTATION:
Departmentation means the process by which similar activities of business are
grouped into units for the purpose of facilitating smooth administration at all
levels. It is a process of dividing the large functional organisation into small and
flexible administrative units.

      It increases the operating efficiency of the employees.

      It makes the executive alert and responsible in his duties.

It helps in better co-ordination among the managerial personnel.

DEPARTMENTAL ACTIVITY:
            There are many departments functioning successfully at LIS.



VARIOUS DEPARTMENTS
                   Every organisation is made up of different department. Each
department contributes to the running of the business. The most common
departments are:
      Production department
      Human resource department
      Marketing department
      Finance department
      Occupational health services department`
      Fire and safety.
      Projects department
Administration department




PRODUCTION DEPARTMENT


                     The production department is responsible for converting inputs
into outputs through the stages of production processes. The Production Manager
is responsible for making sure that raw materials are provided and made into
finished goods effectively. He or she must make sure that work is carried out
smoothly, and must supervise procedures for making work more efficient and more
enjoyable.


FUNCTIONS
There are five production sub-functions.

      Production and planning.

          They will set the standards and targets at each stage of the production
process. The quantity and quality of products coming off a production line will be
closely monitored.

      Purchase


        This department will provide the materials, components and equipment
required. An essential part of this responsibility is to ensure that stocks arrive on
time and are of good quality

       stores
The stores department are responsible for stocking all the necessary
tools, raw materials and equipment required to service the manufacturing process.




      Design, technical and support
            They are responsible for the design and testing of new product processes
and product types, together with the development of prototypes through to the final
product.



      works


           This department is concerned with the manufacture of products. This will
include the maintenance of the production line and other necessary repairs. The
works department may also have responsibility for quality control and inspection.


HUMAN RESOURCE DEPARTMENT

The role of Human resource department is in charge of recruiting, training, and the
dismissal of employees in an organisation.


FUNCTIONS

      Recruitment and selection

      Training programs
Training programs are held by the HRD to improve the employee‟s skills, as
well                 as              to                  motivate               them.




There are three main types of training :
1. Induction training
2. On-the- job training
3. Off-the-job training


         Manpower Planning

               The   HR   department       needs   to   think   ahead   and   establish
the number and skills of the workforce required by the business in the future.
Failure to do this could lead to too few or too many staff or staff with inappropriate
needs.


         Dismissal and Redundancy (retrenchment)

                Dismissal is where a worker is told to leave their job due to
unsatisfactory work or behaviour. Redundancy is when the business needs to
reduce the number of employees either because it is closing down a branch or
needs to reduce costs due to falling profits. It may also be due to technological
improvements, and the workers are no longer needed.


MARKETING DEPARTMENT
These are the main section of the market departments:

      Sales
    Sales department is responsible for the sales and distribution of the products to
the different regions.




      Research
  Research department is responsible for market research and testing new products
to make sure that they are suitable to be sold.

      Promotion
 Promotion department decides on the type of promotion method for the products,
arranges advertisements and the advertising media used.

      Distribution
 Distribution department transports the products to the market.




FINANCE DEPARTMENT

FUNCTIONS

      Book                            keeping                          procedures
Keeping records of the purchases and sales made by a business as well as capital
spending.
Preparing                          Final                         Accounts
        Profit and loss account and Balance Sheets

      Providing                    management                       information
      Managers require ongoing financial information to enable them to make
      better decisions.
      Management                               of                          wages
      The wages section of the finance department will be responsible for
      calculating the wages and salaries of employees and organising the
      collection of income tax and national insurance for the Inland Revenue.
      Raising                                                           Finance
      The finance department will also be responsible for the technical details of
      how a business raises finance e.g. through loans, and the repayment of
      interest on that finance. In addition it will supervise the payment of
      dividends to shareholders.



OCCUPATIONAL HEALTH SERVICES:
          This department periodically carries out the health checkup of its
employees, contract labours and maintains the records. It also looks after the
emergence condition during accident.


FIRE AND SAFETY:
           This is most important department in the refinery because all petroleum
products are highly inflammable. A separate crew is stationed inside the refinery
premises to combat the firefighting activities in case of fire. Many fire trucks,
fomenters and fire extinguishers are adequately placed to put out the fire. A
separate fire water pipeline runs throughout the refinery.



PROJECTS DEPARTMENT:
           This department looks after the expansion of refineries ongoing projects
and also plan for future projects. The important sections in project department are
engineering, inspection and planning.




ADMINISTRATION DEPARTMENT:
           The key function of this department to procure office equipment,
stationery, transportation, canteen facility, employee attendance, leave, garden
maintenance, office repair work and arrangement of meeting etc,.




OFFICE LAYOUT

            An office is a place of management business. In other words, an office
is a place where an administrative work or management works are carried on.
Office means a place to manage or administer the company‟s work. In office,
machines are operated for the management to save time and for the smooth
functioning of the company.

           Office layout refers to the arrangement and placing of men and
equipment within each department or section of the office with a view to make the
best policy utilization of the available space or accommodation. It has been defined
as “The arrangement of office equipment within the available floor space”.

           The office layout is scientifically planned and organized. The office is
divided into departments and sections in such a way that it helps in carrying inter-
department transactions, easily and smoothly.

           The departments are situated in such a way that accessibility to
different departments is most convenient. The departments are provided with
separate cabins which help them to maintain privacy.

           The office layout of LIS has been very spaciously organized. The
office layout of the company has an important bearing on the efficiency of the
employees. The furniture is also properly maintained here.



Office productivity is influenced by a number of factors, one of which is office
layout because office layout influences the entire white collar employee segment of
the organisation, its importance to organisational productivity should never be
underestimated. Office layout is based on the inter-relationships among three
Office Layout Primary factors:

      Employees

      Flow of work through various units

      Equipment
ADVANTAGES OF GOOD OFFICE LAYOUT:
A good office layout offers the following advantages:

Increase in Efficiency:

         A properly laid out office promotes efficiency as it follows the flow of
work. The moment of employees and paper follow the shortest route and this
allows for smooth flow of work.

Reduction in Cost:

         A good layout aims at making the most economic and effective use of the
available floor space. Thus it leads to cost reduction in the office.




Effective Supervision:

         In a good laid-out office, the amount of supervision needed would be
reduced to the minimum, thereby reducing the burden of the supervisor and saving
in the cost of supervision.



MANAGEMENT OF THE COMPANY:
   The management of the LIS consists of,

               Board of directors

               Executive committee
Management committee



BOARD                                 OF                             DIRECTORS
         Elected by the shareholders, the board of directors is made up of two types
of representatives. The first type involves individuals chosen from within the
company. This can be a CEO, CFO, manager or any other person who works for
the company on a daily basis. The other type of representative is chosen externally
and is considered to be independent from the company. The role of the board is to
monitor the managers of a corporation, acting as an advocate for stockholders. In
essence, the board of directors tries to make sure that shareholders' interests are
well                                                                        served.


Board members can be divided into three categories:

       Chairman – Technically the leader of the corporation, the chairman of the
       board is responsible for running the board smoothly and effectively. His or
       her duties typically include maintaining strong communication with the chief
       executive officer and high-level executives, formulating the company's
       business strategy, representing management and the board to the general
       public and shareholders, and maintaining corporate integrity. A chairman is
       elected from the board of directors.

       Inside Directors – These directors are responsible for approving high-level
       budgets prepared by upper management, implementing and monitoring
       business strategy, and approving core corporate initiatives and projects.
       Inside directors are either shareholders or high-level management from
       within the company. Inside directors help provide internal perspectives for
other board members. These individuals are also referred to as executive
      directors if they are part of company's management team.

      Outside Directors – While having the same responsibilities as the inside
      directors in determining strategic direction and corporate policy, outside
      directors are different in that they are not directly part of the management
      team. The purpose of having outside directors is to provide unbiased and
      impartial perspectives on issues brought to the board.



EXECUTIVE COMMITTEE:

      The Executive Committee of the Company comprising of Managing
      Director, Functional Directors, Chief Vigilance Officer and Company
      Secretary meets twice a month to review broad areas of activities like
      Quarterly Performance, Departmental targets, Risk Assessment and
      Minimization measures, Vision and Mission statement of the Company,
      Security issues, Nomination Contracts and Strategic Issues.




MANAGEMENTCOMMITTEE
         As the other tier of the company, the management team is directly
responsible for the day-to-day operations (and profitability) of the company.

      Chief Executive Officer (CEO) – As the top manager, the CEO is typically
      responsible for the entire operations of the corporation and reports directly to
      the chairman and board of directors. It is the CEO's responsibility to
implement board decisions and initiatives and to maintain the smooth
      operation of the firm, with the assistance of senior management. Often, the
      CEO will also be designated as the company's president and therefore also
      be one of the inside directors on the board (if not the chairman).

      Chief Operations Officer (COO) – Responsible for the corporation's
      operations, the COO looks after issues related to marketing, sales,
      production and personnel. More hands-on than the CEO, the COO looks
      after day-to-day activities while providing feedback to the CEO. The COO is
      often referred to as a senior vice president.

      Chief Finance Officer (CFO) – Also reporting directly to the CEO, the
      CFO is responsible for analyzing and reviewing financial data, reporting
      financial performance, preparing budgets and monitoring expenditures and
      costs. The CFO is required to present this information to the board of
      directors at regular intervals and provide this information to shareholders
      and regulatory bodies such as the Securities and Exchange Commission
      (SEC). Also usually referred to as a senior vice president, the CFO routinely
      checks the corporation's financial health and integrity.




INDICATORS OF GROWTH
The Company has achieved a Turnover of Rs. 22,885.17 lakhs during the year
2012, as compared to Rs. 16908.14 lakhs in the previous year. The profit after tax
stood at Rs. 2543.50 lakhs during the year 2012. The Reserves and Surplus also
registered an increase from Rs.16358.36 lakhs as on 31-03-2012 to Rs. 14709.52
lakhs as on March 31, 2011. LUCAS INDIAN SERVICES LTD has not accepted
any fresh public deposits during the year 2011-2012.

PERFORMANCE ANALYSIS
Performance Analysis is the process of making an assessment of the performance
and progress of the company. A financial statement is an organized collection of
data according to logical and consistent accounting procedures. The financial
statement may show a position at a movement of time as in case of a balance sheet,
or may reveal a series of activities over a given period of time, as in case of income
statement.



ANALYSIS AND INTERPRETATION:
          Analysis and interpretation of financial statements refer to such a
treatment of information contained in the income statement and balance sheet so as
to afford full diagnosis of the profitability and financial soundness of the business.


          Financial department is the major and important of every company in the
present world. Finance is the life blood of every business. This department is
controlled and managed by a chieARE CAPITAL:


       YEAR                                 AMOUNT (IN LAKHS)
1.1                                                                                Bar
       2009-2010                            807.91

       2010-2011                            807.91

       2011-2012                            807.91
diagram                     showing                      share               capital

 900

 800

 700

 600

 500

 400

 300

 200

 100

   0
          2009-2010          2010-2011       2011-2012

INFERENCE:

                 The share capital of LIS for all the three years is same as
807.91lakhs. This implies that the company did not make any new issue of shares
to increase the share capital.




SALES:

Turnover of the company means the aggregate value of the realization made for the
sales, supply or distribution of goods or account of services rendered or both by the
company during the financial year.

1.2 TABLE SHOWING TURNOVER:
YEAR                              AMOUNT (IN LAKHS)

        2009-2010                         12791.95

        2010-2011                         16908.14

        2011-2012                    22885.17
1.2          CONE             DIAGRAM        SHOWING                 TURNOVER


  25000


  20000


  15000
                                                                AMT IN LAKHS
  10000


      5000


         0
             2009-2010   2010-2011   2011-2012



INFERENCE:

                 The turnover during the year 2009-10 was Rs.12791.95lakhs where
as it has been increased to Rs.16908.14lakhs during the year 2010-11 but there is a
steep increase in the year to Rs.22885.17lakhs during the year 2011-2012. This
indicates there is an increasing trend.

PROFIT AFTER TAX:
               Profit after tax is the gain or balance left with the company after
paying all expenses and deducting tax.
1.3 TABLE SHOWING PROFIT AFTER TAX:


         YEAR                                    AMOUNT (IN LAKHS)

         2009-2010                               1175.15

         2010-2011                               1992.37

        2011-2012         2543.50
1.3PIE DIAGRAM SHOWING PROFIT AFTER TAX


                                    profit after tax
      3000

      2500

      2000

      1500

      1000                                                       profit after tax

        500

             0

                 2009-2010
                             2010-2011
                                         2011-2012




INFERENCE:

         The profit after tax during the year 2009-10 was Rs.1175.15lakhs, where
as it has been increased to1992.37lakhs during the year 2010-11and increased to
2543.50 during the year 2011-2012.This indicates the company has increased its
profit during the previous year.

RATIO ANALYSIS
Analysis and interpretation of financial statements with the help of
ratios is termed as „Ratio Analysis‟.

           Ratio Analysis involves the process of computing, determining and
presenting the relationship of item or group of items of financial statements.

           Ratio analysis was pioneered by Alexander Wall who presented a
system of ratio analysis in the year 1909. Alexander‟s contention was that
interpretation of financial statements can be made easier by establishing
quantitative relationship between various items of financial structure.

         In the words of kennedy and mc millan“ the relationship of an item to
another expressed in simple mathematical form is known as a ratio”


MEANING OF ‘RATIO:


          A ratio is a mathematical relationship between two items expressed in a
quantitative form. Ratio can be defined as „ relationship expressed in quantization
terms between figures which have cause and effect relationship which are
connected with one another in some manner or other‟.

         Ratio analysis reveals the trend in costs, sales, profit and other inter-
related facts which will be helpful in forecasting future events.Ratios can be used
as an instrument of control regarding sales, cost and profit.

         Ratio analysis facilitates the communication function of the management
as they convey information relating to the present, past and future effectively.



EXPRESSION OF RATIOS
Ratios are expressed in three ways

      Time
      In this type of expression one number is divided by another number and the
      quotient is taken as number of times.
      Percentage
      It is expressed in percentage
      Pure
      It is expressed as a proportion
The study of relationships between various items or groups of items in financial
statements is known as „financial ratio analysis‟



OBJECTIVES
The objectives of using ratios are to test the profitability, financial position
(liquidity and solvency) and the opening efficiency of a concern.
ADVANTAGES OF RATIO ANALYSIS:
       Ratio analysis is an important technique in financial analysis. It is a means
for judging the financial soundness of the concern. The advantages of accounting
ratios are as follows:

    It is an useful device for analyzing the financial statements.
    It simplifies, summarizes the accounting figures to make it understable.
    It helps in financial forecasting
    It facilitates interfirm and intrafirm comparisons


Ratio analysis is useful in finding the strength and weakness of a business concern.
After identifying the weakness, the ratios are also helpful in determining the causes
of the weakness.
GROSS PROFIT RATIO:


This ratio is also known as Gross margin or trading margin ratio. Gross profit ratio
explains the relationship between gross profit and net sales. It includes the
difference between sales and direct costs. A higher ratio is preferable, indicating
higher profitability. The gross profit ratio is expected to be adequate to cover
operating expenses, fixed interest charges, dividends and transfer to reserves.



2.1 TABLE SHOWING GROSS PROFIT RATIO:

Particular         2009-2010         2010-2011         2011-2012

Ratio
                   11.66             15.24             14.57
(In %)




INTERPRETATION:


         The Gross Profit ratio during the year 2009-10 was 11.66% whereas it
has been increased to15.24% during the year 2010-11 and decreased to 14.57%
during the year 2011-12. This may be due to decrease in the value of goods sold.
NET PROFIT RATIO:


This ratio is also called net profit to sales ratio. It is a measure of management‟s
efficiency in operating the business successfully from the owner‟s point of view. It
indicates the return on shareholder‟s investments. Net profit includes non-
operating incomes and profits. It is the profit after reducing non-operating
expenses and provision for tax.



2.2 TABLE SHOWING NET PROFIT RATIO:

      Particular         2009-2010        2010-2011         2011-2012

      Ratio
                         9.18             11.78             11.11
      (In %)

INTERPRETATION:
              The net profit ratio during the year 2009-10 was 9.18% ,where it has
been increased to 11.78% during the year 2010-11 and decreased to 11.11%
during the year 2011-12.
CURRENT RATIO:


           The ratio of current asset to current liability is called “current ratio”. In
order to measure the short term liquidity or solvency of a concern, comparison of
current asset and current liability are inevitable. The current ratio indicates the
ability of a concern to meet its current obligations as and when they are due for
payment.



2.3 TABLE SHOWING CURRENT RATIO:


      Particular         2009-2010          2010-2011          2011-2012

      Ratio
                         3.138              2.043              2.507



INTERPRETATION:


    The current ratio during the year 2009-2010 was 3.138; in 2010-11 it was
2.043 and increased to 2.507 during the year 2011-12. This indicates the
fluctuating trend of the company.
FIXED ASSETS RATIO:


This ratio could also be determined by comparing the net sales with the net fixed
assets. This ratio determines the efficiency of utilization of fixed assets and the
profitability of a business concern. Higher the ratio more is the utilization of fixed
assets. A lower ratio is the indication of under utilization of fixed assets.


2.3 TABLE SHOWING FIXED ASSETS RATIO:

      Particular          2009-2010          2010-2011         2011-2012

      Ratio
                          1.544              1.427             2.117
      (In %)

INTERPRETATION:
The fixed asset ratio in the year 2009-10 is 1.544; in 2010-11it was 1.427 and
increased to 2.117 during the year 2011-2012. This indicates the increasing trend
of the company.
DEBT EQUITY RATIO:


               This ratio is ascertained to determine long-term solvency position of a
company. Debt equity ratio is also called „external-internal equity ratio‟. The term
external equity refers to total outsiders liabilities. Internal equity refers to
shareholders funds or the tangible net worth. Here shareholders refer to only the
equity shareholders. Ideal ratio is „1‟.



2.3 TABLE SHOWING DEBT EQUITY RATIO:

      Particular          2009-2010         2010-2011         2011-2012

      Ratio
                          0.13              0.17              0.19
      (In %)


INTERPRETATION:


               The debt equity ratio in the year 2009-10 was 0.13; in 2010-2011 it
was 0.17 and increased to 0.19 during the year 2011-12.
Chap 2

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Chap 2

  • 1. INTRODUCTION: Lucas Indian Service Ltd commenced its operations way back in 1930 with its base in Bombay as a sterling company under Joseph Lucas, Birmingham, U.K. The company steadily grew, meeting the entire needs of diverse imported automobiles for auto electrical, diesel injection pumps, brakes etc. In order to cope up with the growing demand from Eastern India, it opened a branch in Calcutta in 1936. Simultaneously, it also created a country wide dealer network in those early days to provide services. HISTORY OF THE COMPANY The onset of the Second World War led to the total stoppage of supplies from U.K. And LIS rose to the challenge to keep the war efforts going by the ingenious and improvised methods of reconditioning worn out equipment for defence. In fact, LIS, Calcutta became a major base for reconditioning. By the time the war ended in 1943, LIS acquired sufficient expertise in sales and service which led to the opening of its 3rd branch in Madras in 1946. LIS, Madras also set a plant in the early 60's to manufacture ignition coils for 2 wheelers/ 4 wheelers to cater to O E manufactures / replace markets. It has been highly successful not only in meeting the demands of domestic market but also in exporting to other countries. The post-independence period saw a proliferation of automobile manufactures for country's self-reliance and economic growth which in turn led to the development and manufacture of components for auto industry. Joseph Lucas joined hands with TVS – another pioneering institution in India in 1962 to manufacture Auto Electricals for a wide range of applications for
  • 2. 2 wheelers, cars, trucks, tractors, buses, marine / stationary engines. The product range is very comprehensive consisting of starters, alternators, dynamos, regulators, distributors, wiper motors, lamps, horns . Due to new legislation brought out the Govt. on import restrictions, LIS had to curtail the imports from U.K. and heavily depend on Lucas-TVS for its support to market /service their indigenous products and thus LIS became a fully owned subsidiary of Lucas-TVS Ltd. on 1.8.1968. LIS started expanding its network of branches starting from Delhi in 1972 to meet the country's huge demands and presently it has 25 branches in all metropolitan cities and major state capitals or major commercial centres of states. Apart from branch outlets for distribution and service, LIS has a dedicated dealer network of over 500 centres which in turn cater to about 20,000 retail outlets all over India to meet the end user needs. Besides the Lucas-TVS range of products, LIS has also been distributing and marketing 'LUCAS' batteries as a basic product for auto electrical system right from the inception. LIS took up diversification in marketing a host of quality products under the brand name 'LISPART' during 1975. The product range covers fan belts, auto cables, bulbs, switches, relays for head lamps and horn and dash board instruments which are basic akin auto electrical in any automobile. Apart from marketing of Lucas-TVS auto electrical and 'LISPART' spares, LIS has been also a role to play in servicing this equipment and it has been successful in developing and marketing highly accurate and precise test equipment / special tools. With the commencement of the production of Rotary Type of diesel fuel injection pumps for cars and LCV's by Lucas-TVS Ltd., LIS is also active in
  • 3. providing country wide sales and service through its branch operations and upgrading the service points. As part of its service to India's automotive industry, LIS conducts training courses for personnel from O E manufactures, Defence Establishments, Nationalised Transport Undertakings, Fleet Operators, and Auto Electricians. LIS has employee strength of over 350 spread all over India, and has never lost a man day as industrial relationships has been always cordial. With a turnover of over Rs.325 crores, LIS has come to be acknowledged as a unique automobile institution of this country and the day is not far in it becoming a Rs.400 crore company. COMPANY PROFILE: 22nd March 1877 marked the dawn of industrialisation of Southern India with the birth of the doyen Shri T V SundaramIyengar. The TVS Group was formed in 1911 by T V SundaramIyengar, one of the pioneers of Indian industry. He was a visionary, whose ideas were years ahead of their times, and a man of principles. Both these things combined to make him a legend in his own life time all over Southern India. Three years before World War I, when the automobile was still seen as some kind of intimidating “horseless carriage”, he had the vision to set up South India's first ever rural bus service. And, over the years, this transport company became the largest of its kind in the country – legendary for its punctuality and service. In fact, the rules and regulations our Founder laid down for himself later became the blueprint for the Motor Vehicles Act. During the war years, TVS set up a service station for reconditioning vehicles and a tyre re-treading unit. The shortage of petrol was overcome through the
  • 4. manufacture of conversion kits which allowed the use of charcoal gas in automobiles as a substitute for petrol. T V SundaramIyengar's philosophy of business reflected the kind of man he was: simple, but stern. It was based rigidly on four concepts-quality, service, reliability and a sense of ethics. It is this personal philosophy that has formed the cornerstone of our corporate culture as, over the past 90 years, we have evolved into one of India's leading industrial houses. TVS believes that the success of any enterprise is built on the solid foundation of customer satisfaction. Continuous innovation and close customer interaction have enabled TVS companies to stay ahead of competition. The group endeavours to be competitive without compromising on Quality. And quality at TVS determines not only the end product but the systems, processes and operations at all levels. The rise of India's automotive industry after Independence saw TVS enter components manufacture, the Group's next major milestone. For two decades, beginning in 1960, the TVS Group formed alliances with many world leaders for manufacture of critical automotive components, and later, of two-wheelers. These years of steady growth, expansion and diversification, repeatedly proved the Group's unique ability to sense a sunrise industry in the Indian environment and to build it up to maturity. This was not restricted to the automotive industry alone. Today the TVS Group has a leading presence in computer peripherals and consumer durables. TVS Group is surging ahead towards attaining further heights in the industrial hemisphere of India, with the devotion and dedication of the multi-skilled work force behind.
  • 5. INDUSTRIAL PROFILE TVS Group is one of India's oldest business groups. It is a giant conglomerate with presence in diverse fields like automotive component manufacturing, automotive dealerships and electronics. Today, there are over thirty companies in the TVS Group, employing more than 40,000 people worldwide and with a turnover in excess of USD 2.2 billion. TVS Group originated as a transport company in 1911. TV SundaramIyengar and Sons Limited is the parent and holding company of the TVS Group. TV SundramIyengar and Sons Limited has the following three divisions: TVS and Sons: TVS and Sons is the largest automobile distribution company in India. It distributes Heavy Duty Commercial Vehicles, Jeeps and Cars. TVS and Sons represents premier automotive companies like Ashok Leyland, Mahindra and Mahindra Ltd., and Honda. The company is also one of the leading logistics solution providers and has set up state-of-the-art warehouses all over the country. TVS and Sons has also diversified into distributing a range of Garage equipments. Sundaram Motors:Sundaram Motors distributes Heavy Duty Commercial Vehicles, Cars, and auto spare parts for several leading manufacturers. The company is also the dealer for Ashok Leyland, Honda, Fiat, Ford and Mercedes Benz.
  • 6. Madras Auto Service: Madras Auto Service distributes automotive spare parts for all leading manufacturers. Other major companies of TVS Group are: TVS - Motor Company Limited: TVS Motor Company Limited is one of the largest two-wheeler manufacturers in India. It manufactures Motorcycles, Mopeds, Scooters. TVS Electronics Limited: TVS Electronics was incorporated in 1986 in collaboration with Citizen Watch Co. of Japan. The company manufactures a complete range of computer peripherals. Axles India Limited: Axles India was promoted by Sundaram Finance, Wheels India and Eaton Corporation for the manufacture of axles for medium and heavy duty commercial vehicles in India. Brakes India Limited: Brakes India is a joint venture between TV SundramIyengar and Sons Ltd. and Lucas Industries Plc., UK. The company manufactures braking equipment for automotive and non-automotive applications. Sundaram Polymers Division:Sundaram Polymers Division manufactures Engineering Plastic compounds for various applications.
  • 7. Harita Finance Limited:Harita Finance Ltd is a finance company under the TVS Group. It deals in retail finance, hire purchase, leasing and bill discounting. Harita Finance Limited:Harita Finance Ltd is a finance company under the TVS Group. It deals in retail finance, hire purchase, leasing and bill discounting. India Motor Parts and Accessories Limited: It is engaged in the distribution of automobile spare parts. India Nippon Electricals Limited: It is a joint venture between Lucas Indian Service and Kokusan Denki Co Ltd., Japan. The company manufactures Electronic Ignition Systems for two wheelers and portable gensets. IRIZAR TVS (P) Ltd: IRIZAR TVS (P) Ltd. is a joint venture between Sundaram Industries Ltd, Ashok Leyland Ltd and IRIZAR S. Coop of Spain. The company builds bus bodies for export and domestic market. Lakshmi Auto Components Limited: The company is a subsidiary of TVS-Suzuki. It manufactures gears, crankshafts and connecting rods for TVS-Suzuki motorbikes and mopeds. Lucas Indian Service: Lucas Indian Service is a wholly owned subsidiary of Lucas-TVS Ltd., engaged in the sales and service of auto-electricals and fuel injection equipment. Lucas - TVS Limited: Lucas-TVS, a joint venture between Lucas Varity group, UK and TVS Group, is a leading manufacturer of auto electrical products and diesel fuel injection equipment in India. Sundaram Brake Linings Limited:Sundaram Brake Linings is the leading manufacturer
  • 8. of brake linings in India Sundaram-Clayton Limited:Sundaram - Clayton Ltd manufactures complete range of air brake actuation system - compressors, actuators, valves, brake chambers, spring brakes, slack adjusters, couplings, hoses, switches and vacuum boosters for light/medium and heavy commercial vehicles and trailers. Foundry Division manufactures aluminum, gravity and pressure die-castings. LUCAS INDIAN SERVICE VISION Lucas Indian Service will become India's dominant and most respected service provider (Parts and after service) in its areas of specialization by 2015-2016 LUCAS INDIAN SERVICE will expand overseas with focus on SAARC, ASEAN and Middle East LUCAS INDIAN SERVICE MISSION The mission of LUCAS INDIAN SERVICE is to provide proactive and high quality after sales and service to vehicle makers and users in its areas of specialization (electrical and diesel systems). LUCAS INDIAN SERVICE will continuously expand the scope of its sales and service offering for vehicle and non-vehicular applications in anticipation of customer needs. LUCAS INDIAN SERVICE will continuously enhance the technical skill of its people and expand its network through use of contemporary technology.
  • 9. OBJECTIVES OF THE COMPANY: : Maintain leadership in the domestic market and presence in export markets. Ensure customer satisfaction through timely delivery of quality products and services, at competitive prices. Continuously improve & innovative product design, process technology and work environment to offer better products. Bring about involvement of all employees in achieving the above objectives.
  • 10. THE INDIAN COMPANIES ACT (ACT VII OF 1913) COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF LUCAS INDIAN SERVICE LIMITED 1. NAME CLAUSE: The name of the company is LUCAS INDIAN SERVICE LIMITED. 2. REGISTRATION CLAUSE: The registered office of the company will be situated in state of Tamil Nadu. 3. OBJECT CLAUSE:
  • 11. The objects for which the company is established are:  To carry on the business of manufacturers, importers and dealers in all their branches of and in every form of mechanically-propelled vehicle or vessels and of all parts thereof and accessories thereto whatever the motive power of such vehicle may be.  To carry on the business of proprietors of garages ,service stations and mechanical engineers .  To buy ,sell, manufacture, repair ,alter, improve, exchange, let out on hire, import, export and deal in all works ,plant,machinery,tools,utensils,appliances,apparatus,products,materials,petl and things capable of being used in any every such business as afore side or required by any customers of or persons having dealings with the company or commonly dealt in by persons engaged in such business or which may seem or capable of being profitably dealt in connection any of the said business.  To expend money in experimenting on and testing and improving or seeking to improve any patents , rights inventions, discoveries or information of the company or which the company may acquire or propose acquire.  Generally to carry on any other trade or business whether manufacturing or otherwise subsidiary or auxiliary to ,or which can be conveniently carried on in connection with any of the companies objects; and to establish and to maintain agencies in any part of the world for the conduct of the business of the company or for the sale of any materials or things for the time being at the disposal of the company for the sale ;and to advertise and adopt any means of making known all of any of the manufacture products or goods of
  • 12. the company or any articles or goods traded or dealt in by the company in any way that may be thought advisable including the posting of bills in relation there to and the issue of circulars ,books ,pamplets and price lists and the conducting of competitions and the giving of prizes and donations .  To acquire by purchase amalgamation grant concession lease license barter or otherwise either absolutely or conditionally and either solely or jointly with others any real or personal immovable or movable property rights or privileges including any land, building, rights of way , easements , licenses, utensils, stock in trade.  To build , construct, maintain ,alter enlarge pull down and remove or replace any buildings factories offices works machinery engines walls or fences and to clear sites for the same and to work or control the same.  To transact and carry on all kinds of agency business .  The other objects for which the Company is established are:  To enter into partnership or into any arrangement for sharing profits with any person , firm or company engaged in or about to engage in any business which may seen capable of being carried on directly or indirectly the benefit of the company.  To amalgamate with any company or companies having objects altogether or in part similar to those of the company .  To promote ,form, be interested in and take hold and dispose of share in other companies having all or any of the objects of the company and take up debentures or otherwise subsidise or assist such companies .  To procure the incorporation, registeration or other recognition of the company in country ,state or place or any of the company‟s agencies.
  • 13.  To draw ,accept and make and to endorse ,discount and negotiate promissory notes ,hundies, bills of exchange and other negotiable instruments connected with the business of the company.  To sell or in any other manner deal with or dispose of the undertaking or property of the company, or any part thereof for such consideration of the company may think fit.  To create depreciation, reserve or sinking or insurance funds or any other special fund for the benefit of the company.  To provide for the welfare of the employees of the company by creating and contributing to any provident fund or otherwise the company shall see fit.  To distribute any of the property of the company amongst the members in specie or kind.  To pay all legal and other expenses connected with the formation of the company.  To do all such other things as are incidental or conductive to the attainment of the above objects or any of them. 4. LIABILITY CLAUSE: The liability of the members is limited. 5. CAPITAL CLAUSE: The share capital of the company will be rupees ten crores, divided into one crore equity shares of rupees ten each with power to increase and with power from time to time to issue any shares of the original or new capital with any preference or priority in the payment of dividends or the distribution of assets or otherwise with any other shares whether ordinary or preference and whether issued or not to vary the regulations of the company as far as necessary to give effect to any such preference or priority and upon the sub-division of a share to apportion
  • 14. the right to participate in profits or surplus assets with special rights priorities and privileges to any of the undivided shares of the right to vote in any manner as between the shares resulting from such division. 6. ASSOCIATION CLAUSE: We, the several persons, whose names and addresses are subscribed, are desirous of being formed into a company in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the Company set opposite our respective names. THE INDIAN COMPANIES ACT (ACT VII OF 1913) COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF LUCAS INDIAN SERVICE LIMITED The regulations contained in table „A‟ in the first schedule to the companies act1956 shall apply to this company subject as hereinafter provided. The following
  • 15. regulations of table „A‟ shall not apply for the management of the company, that is to say, 9, 21 to 24, 40 to 43, 65, 66, 74, 79(2) and 99. The remaining regulations of table „A‟ and these articles shall constitute the articles of association of the company. 1. SHARE CAPITAL : The share capital of the company shall be Rs.10, 00, 00,000 (Rupees ten crores) divided into 1, 00, 00,000 (one crore) equity shares of Rs 10 each. 2. COMPANY’S LIEN ON SHARES: The company shall have a first and paramount lien upon all the shares registered in the name of each member (whether solely or jointly with others) upon the proceeds of sale thereof, for his debts, liabilities and engagements. Solely , or jointly , with any other person , to or with the company , whether the period for the payment ,fulfillment , or discharge thereof shall have actually arrived or not . and no equitable interest in any share shall be created except upon the footing and condition that regulation of table „A‟is to have full effect any such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company‟s lien, if any, on such shares. 3. CLOSURE OF REGISTER OF MEMBERS IN WHICH ITS REGISTERED OFFICE IS SITUATED : The board shall have power on giving not less than seven days previous notice by advertisement in a newspaper circulating in the state of Tamilnadu to close the transfer books, the register of members at such time or times and for such period or
  • 16. periods, not exceeding 30 days at a time and not exceeding in the aggregate 45 days in each year, as it may deem expedient. 4. DIRECTORS MAY REFUSE TO REGISTER TRANSFERS : Subject to the provisions of section 111 of the act and subject as herein after mentioned, the board may, at its own absolute and uncontrolled discretion and without assigning any reasons , decline to register or acknowledge the transfer of any share to any person whom it shall not approve as transferee , ( notwithstanding that the proposed transferee be already a member ) , but in such case it shall, within two months from the date on which the instrument of transfer was lodged with the company , send to the transferee and the transferor notice of the refusal to register such transfer. 5. NOTICE OF APPLICATION WHEN TO BE GIVEN: Where in case of partly paid shares an application for registration, is made by the transferor , the company shall give notice of the application to the transferee in accordance with the provisions of section 110 of the act. 6. NUMBER OF DIRECTORS : Unless and otherwise determined by a general meeting, the number of directors shall not be less than three or not more than seven. As per the special resolution passed at the extraordinary general meeting held on 31-10-1958, The present directors of the company are:
  • 17. 1.JOHN MASTERTON 2.CLAUDE HENRY MARTIN 3. A.G.WOZENCROFT 7. APPOINTMENT OF ALTERNATE DIRECTOR : The board may, appoint an alternate director to act for a director (here in after called the “the original director “) during his absence for a period of not less than 3 months from the state in which the meetings of the board are originally held. An alternate director appointed under these articles shall not hold office as such for a period longer than that permitted to the original director returns to the state in which the meetings of the board are ordinarily held. If the term of office of the original director is determined before he so returns to the said state, any provision in the act or in these articles for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original director and not to the alternate director. 8. QUALIFICATION OF DIRECTORS: No share qualification shall be necessary for any director. 9. REMUNERATION OF DIRECTOR: Every director shall be paid a sitting fees for every meeting of the board or the committee of the board attended by him and this amount will be fixed by the board of directors within the maximum permissible
  • 18. amount under the companies act and rules that are in force at that time. Every director shall be entitled to be paid all travelling, hotel and other expenses properly incurred by him in attending and returning from meetings of the board of directors or any committee thereof or general meetings of the company or in connection with the business of the company. 10. QUESTIONS AT BOARD MEETINGS HOW DECIDED: Action resulting from the questions arising at any meeting of the board or a committee of the board shall require a unanimous decision. 11. DIRECTORS AND OTHERS RIGHT TO INDEMNITY: Save and expect so far as the provision of this article shall be avoided by section 201 of the act , the board , auditors , secretary , general manager , asst.secretary and other officers or servants for the time being of the company and the trustees (if any) for the time being acting in relation to any of the affairs of the company , and every one of them ,their hiers, executors and administrators shall be indemnified and secured harmless out of the assets and profits of the expenses which they or any of them , their or any of their or any of their executors or
  • 19. administrators , shall or may incur or sustain by or by reason of any act done , concurred in or the execution of their duty or supposed duty in their respective offices or trusts , except such (if any) as shall incur , or sustain through or by their own willful neglect or default respectively , and none of them shall be answerable for the acts, receipts neglects or defaults of the other or others of them , or for joining in any receipt for the sake of conformity , or for any bankers or other persons with whom any monies or effects belonging to the company shall or may be lodged or deposited for safe custody , or for any other loss, misfortune trusts or in relation thereto except when the same shall happen by through their own neglect or default respectively. 12. SECRECY CLAUSE: No member shall be entitled to visit or inspect any works of the company without the permission of the board or to enquire discovery of any information respecting any detail of the company‟s trading , or any matter which is or may be in nature of a any matter which may relate to the conduct of the business of the company and which , in the opinion of the board, it would be inexpedient in the interest of the company to disclose. ORGANISATION STRUCTURE AND DEPARTMENTATION ORGANISATION:
  • 20. Organization is the process of combing the work which individuals or group has to perform with facilities necessary for its execution, that the duties so performed provided the best channels for the efficient, systematic, and positive and co-ordinate application of the available efforts. The term organization is also used as a function of management or as a process carried out for arranging the task into manageable units and defining the formal relationship among people working on different tasks. It is a series of activities rather than a function. ORGANISATION STRUCTURE: It is a kind of information structure which says the relationship between the different departments, divisions and units of an organisation as well as the functional relationship between the different departments, divisions and union of an organisation as well as the functional relationship between employees, executives, etc… it enables each executive and employee to understand what is his position in the organisation. Organisation Structure is indispensable because a wrong structure will seriously impair business performances and may even destroy it. The organisation Structure must be designed so as to make possible the attainment of the objective of the business. ORGANISATIONAL CHART:
  • 21. Diagrammatic presentation of the organisation structure is what is known as an “Organisational Chart”. It may show the names, designation and functions of the personnel in an organisation. Chairman is the top most official in LIS.The overall administration is vested with the Chairman. He is been assisted by the Managing Directors. The chairman delegates his authority to the Managing Director. There are two Directors in the company whose functions are delegated by the Managing Director. They are, Director Operation and Director Technical. The Director of Operation has three subordinates working under him named General Manager. Manufacturing G.M, Maintenance G.M and G.M Human Resource (HR).
  • 22. CHAIRMAN MANAGING DIRECTOR DIRECTOR DIRECTOR OPERATION TECHNICAL GENERAL MANUFACT MAINTENA H.R MANAGER URING G.M NCE G.M G.M
  • 23. DEPARTMENTATION: Departmentation means the process by which similar activities of business are grouped into units for the purpose of facilitating smooth administration at all levels. It is a process of dividing the large functional organisation into small and flexible administrative units. It increases the operating efficiency of the employees. It makes the executive alert and responsible in his duties. It helps in better co-ordination among the managerial personnel. DEPARTMENTAL ACTIVITY: There are many departments functioning successfully at LIS. VARIOUS DEPARTMENTS Every organisation is made up of different department. Each department contributes to the running of the business. The most common departments are: Production department Human resource department Marketing department Finance department Occupational health services department` Fire and safety. Projects department
  • 24. Administration department PRODUCTION DEPARTMENT The production department is responsible for converting inputs into outputs through the stages of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished goods effectively. He or she must make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. FUNCTIONS There are five production sub-functions. Production and planning. They will set the standards and targets at each stage of the production process. The quantity and quality of products coming off a production line will be closely monitored. Purchase This department will provide the materials, components and equipment required. An essential part of this responsibility is to ensure that stocks arrive on time and are of good quality stores
  • 25. The stores department are responsible for stocking all the necessary tools, raw materials and equipment required to service the manufacturing process. Design, technical and support They are responsible for the design and testing of new product processes and product types, together with the development of prototypes through to the final product. works This department is concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control and inspection. HUMAN RESOURCE DEPARTMENT The role of Human resource department is in charge of recruiting, training, and the dismissal of employees in an organisation. FUNCTIONS Recruitment and selection Training programs
  • 26. Training programs are held by the HRD to improve the employee‟s skills, as well as to motivate them. There are three main types of training : 1. Induction training 2. On-the- job training 3. Off-the-job training Manpower Planning The HR department needs to think ahead and establish the number and skills of the workforce required by the business in the future. Failure to do this could lead to too few or too many staff or staff with inappropriate needs. Dismissal and Redundancy (retrenchment) Dismissal is where a worker is told to leave their job due to unsatisfactory work or behaviour. Redundancy is when the business needs to reduce the number of employees either because it is closing down a branch or needs to reduce costs due to falling profits. It may also be due to technological improvements, and the workers are no longer needed. MARKETING DEPARTMENT
  • 27. These are the main section of the market departments: Sales Sales department is responsible for the sales and distribution of the products to the different regions. Research Research department is responsible for market research and testing new products to make sure that they are suitable to be sold. Promotion Promotion department decides on the type of promotion method for the products, arranges advertisements and the advertising media used. Distribution Distribution department transports the products to the market. FINANCE DEPARTMENT FUNCTIONS Book keeping procedures Keeping records of the purchases and sales made by a business as well as capital spending.
  • 28. Preparing Final Accounts Profit and loss account and Balance Sheets Providing management information Managers require ongoing financial information to enable them to make better decisions. Management of wages The wages section of the finance department will be responsible for calculating the wages and salaries of employees and organising the collection of income tax and national insurance for the Inland Revenue. Raising Finance The finance department will also be responsible for the technical details of how a business raises finance e.g. through loans, and the repayment of interest on that finance. In addition it will supervise the payment of dividends to shareholders. OCCUPATIONAL HEALTH SERVICES: This department periodically carries out the health checkup of its employees, contract labours and maintains the records. It also looks after the emergence condition during accident. FIRE AND SAFETY: This is most important department in the refinery because all petroleum products are highly inflammable. A separate crew is stationed inside the refinery premises to combat the firefighting activities in case of fire. Many fire trucks,
  • 29. fomenters and fire extinguishers are adequately placed to put out the fire. A separate fire water pipeline runs throughout the refinery. PROJECTS DEPARTMENT: This department looks after the expansion of refineries ongoing projects and also plan for future projects. The important sections in project department are engineering, inspection and planning. ADMINISTRATION DEPARTMENT: The key function of this department to procure office equipment, stationery, transportation, canteen facility, employee attendance, leave, garden maintenance, office repair work and arrangement of meeting etc,. OFFICE LAYOUT An office is a place of management business. In other words, an office is a place where an administrative work or management works are carried on. Office means a place to manage or administer the company‟s work. In office,
  • 30. machines are operated for the management to save time and for the smooth functioning of the company. Office layout refers to the arrangement and placing of men and equipment within each department or section of the office with a view to make the best policy utilization of the available space or accommodation. It has been defined as “The arrangement of office equipment within the available floor space”. The office layout is scientifically planned and organized. The office is divided into departments and sections in such a way that it helps in carrying inter- department transactions, easily and smoothly. The departments are situated in such a way that accessibility to different departments is most convenient. The departments are provided with separate cabins which help them to maintain privacy. The office layout of LIS has been very spaciously organized. The office layout of the company has an important bearing on the efficiency of the employees. The furniture is also properly maintained here. Office productivity is influenced by a number of factors, one of which is office layout because office layout influences the entire white collar employee segment of the organisation, its importance to organisational productivity should never be underestimated. Office layout is based on the inter-relationships among three Office Layout Primary factors: Employees Flow of work through various units Equipment
  • 31. ADVANTAGES OF GOOD OFFICE LAYOUT: A good office layout offers the following advantages: Increase in Efficiency: A properly laid out office promotes efficiency as it follows the flow of work. The moment of employees and paper follow the shortest route and this allows for smooth flow of work. Reduction in Cost: A good layout aims at making the most economic and effective use of the available floor space. Thus it leads to cost reduction in the office. Effective Supervision: In a good laid-out office, the amount of supervision needed would be reduced to the minimum, thereby reducing the burden of the supervisor and saving in the cost of supervision. MANAGEMENT OF THE COMPANY: The management of the LIS consists of, Board of directors Executive committee
  • 32. Management committee BOARD OF DIRECTORS Elected by the shareholders, the board of directors is made up of two types of representatives. The first type involves individuals chosen from within the company. This can be a CEO, CFO, manager or any other person who works for the company on a daily basis. The other type of representative is chosen externally and is considered to be independent from the company. The role of the board is to monitor the managers of a corporation, acting as an advocate for stockholders. In essence, the board of directors tries to make sure that shareholders' interests are well served. Board members can be divided into three categories: Chairman – Technically the leader of the corporation, the chairman of the board is responsible for running the board smoothly and effectively. His or her duties typically include maintaining strong communication with the chief executive officer and high-level executives, formulating the company's business strategy, representing management and the board to the general public and shareholders, and maintaining corporate integrity. A chairman is elected from the board of directors. Inside Directors – These directors are responsible for approving high-level budgets prepared by upper management, implementing and monitoring business strategy, and approving core corporate initiatives and projects. Inside directors are either shareholders or high-level management from within the company. Inside directors help provide internal perspectives for
  • 33. other board members. These individuals are also referred to as executive directors if they are part of company's management team. Outside Directors – While having the same responsibilities as the inside directors in determining strategic direction and corporate policy, outside directors are different in that they are not directly part of the management team. The purpose of having outside directors is to provide unbiased and impartial perspectives on issues brought to the board. EXECUTIVE COMMITTEE: The Executive Committee of the Company comprising of Managing Director, Functional Directors, Chief Vigilance Officer and Company Secretary meets twice a month to review broad areas of activities like Quarterly Performance, Departmental targets, Risk Assessment and Minimization measures, Vision and Mission statement of the Company, Security issues, Nomination Contracts and Strategic Issues. MANAGEMENTCOMMITTEE As the other tier of the company, the management team is directly responsible for the day-to-day operations (and profitability) of the company. Chief Executive Officer (CEO) – As the top manager, the CEO is typically responsible for the entire operations of the corporation and reports directly to the chairman and board of directors. It is the CEO's responsibility to
  • 34. implement board decisions and initiatives and to maintain the smooth operation of the firm, with the assistance of senior management. Often, the CEO will also be designated as the company's president and therefore also be one of the inside directors on the board (if not the chairman). Chief Operations Officer (COO) – Responsible for the corporation's operations, the COO looks after issues related to marketing, sales, production and personnel. More hands-on than the CEO, the COO looks after day-to-day activities while providing feedback to the CEO. The COO is often referred to as a senior vice president. Chief Finance Officer (CFO) – Also reporting directly to the CEO, the CFO is responsible for analyzing and reviewing financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs. The CFO is required to present this information to the board of directors at regular intervals and provide this information to shareholders and regulatory bodies such as the Securities and Exchange Commission (SEC). Also usually referred to as a senior vice president, the CFO routinely checks the corporation's financial health and integrity. INDICATORS OF GROWTH The Company has achieved a Turnover of Rs. 22,885.17 lakhs during the year 2012, as compared to Rs. 16908.14 lakhs in the previous year. The profit after tax stood at Rs. 2543.50 lakhs during the year 2012. The Reserves and Surplus also registered an increase from Rs.16358.36 lakhs as on 31-03-2012 to Rs. 14709.52
  • 35. lakhs as on March 31, 2011. LUCAS INDIAN SERVICES LTD has not accepted any fresh public deposits during the year 2011-2012. PERFORMANCE ANALYSIS Performance Analysis is the process of making an assessment of the performance and progress of the company. A financial statement is an organized collection of data according to logical and consistent accounting procedures. The financial statement may show a position at a movement of time as in case of a balance sheet, or may reveal a series of activities over a given period of time, as in case of income statement. ANALYSIS AND INTERPRETATION: Analysis and interpretation of financial statements refer to such a treatment of information contained in the income statement and balance sheet so as to afford full diagnosis of the profitability and financial soundness of the business. Financial department is the major and important of every company in the present world. Finance is the life blood of every business. This department is controlled and managed by a chieARE CAPITAL: YEAR AMOUNT (IN LAKHS) 1.1 Bar 2009-2010 807.91 2010-2011 807.91 2011-2012 807.91
  • 36. diagram showing share capital 900 800 700 600 500 400 300 200 100 0 2009-2010 2010-2011 2011-2012 INFERENCE: The share capital of LIS for all the three years is same as 807.91lakhs. This implies that the company did not make any new issue of shares to increase the share capital. SALES: Turnover of the company means the aggregate value of the realization made for the sales, supply or distribution of goods or account of services rendered or both by the company during the financial year. 1.2 TABLE SHOWING TURNOVER:
  • 37. YEAR AMOUNT (IN LAKHS) 2009-2010 12791.95 2010-2011 16908.14 2011-2012 22885.17 1.2 CONE DIAGRAM SHOWING TURNOVER 25000 20000 15000 AMT IN LAKHS 10000 5000 0 2009-2010 2010-2011 2011-2012 INFERENCE: The turnover during the year 2009-10 was Rs.12791.95lakhs where as it has been increased to Rs.16908.14lakhs during the year 2010-11 but there is a steep increase in the year to Rs.22885.17lakhs during the year 2011-2012. This indicates there is an increasing trend. PROFIT AFTER TAX: Profit after tax is the gain or balance left with the company after paying all expenses and deducting tax.
  • 38. 1.3 TABLE SHOWING PROFIT AFTER TAX: YEAR AMOUNT (IN LAKHS) 2009-2010 1175.15 2010-2011 1992.37 2011-2012 2543.50 1.3PIE DIAGRAM SHOWING PROFIT AFTER TAX profit after tax 3000 2500 2000 1500 1000 profit after tax 500 0 2009-2010 2010-2011 2011-2012 INFERENCE: The profit after tax during the year 2009-10 was Rs.1175.15lakhs, where as it has been increased to1992.37lakhs during the year 2010-11and increased to 2543.50 during the year 2011-2012.This indicates the company has increased its profit during the previous year. RATIO ANALYSIS
  • 39. Analysis and interpretation of financial statements with the help of ratios is termed as „Ratio Analysis‟. Ratio Analysis involves the process of computing, determining and presenting the relationship of item or group of items of financial statements. Ratio analysis was pioneered by Alexander Wall who presented a system of ratio analysis in the year 1909. Alexander‟s contention was that interpretation of financial statements can be made easier by establishing quantitative relationship between various items of financial structure. In the words of kennedy and mc millan“ the relationship of an item to another expressed in simple mathematical form is known as a ratio” MEANING OF ‘RATIO: A ratio is a mathematical relationship between two items expressed in a quantitative form. Ratio can be defined as „ relationship expressed in quantization terms between figures which have cause and effect relationship which are connected with one another in some manner or other‟. Ratio analysis reveals the trend in costs, sales, profit and other inter- related facts which will be helpful in forecasting future events.Ratios can be used as an instrument of control regarding sales, cost and profit. Ratio analysis facilitates the communication function of the management as they convey information relating to the present, past and future effectively. EXPRESSION OF RATIOS
  • 40. Ratios are expressed in three ways Time In this type of expression one number is divided by another number and the quotient is taken as number of times. Percentage It is expressed in percentage Pure It is expressed as a proportion The study of relationships between various items or groups of items in financial statements is known as „financial ratio analysis‟ OBJECTIVES The objectives of using ratios are to test the profitability, financial position (liquidity and solvency) and the opening efficiency of a concern.
  • 41. ADVANTAGES OF RATIO ANALYSIS: Ratio analysis is an important technique in financial analysis. It is a means for judging the financial soundness of the concern. The advantages of accounting ratios are as follows:  It is an useful device for analyzing the financial statements.  It simplifies, summarizes the accounting figures to make it understable.  It helps in financial forecasting  It facilitates interfirm and intrafirm comparisons Ratio analysis is useful in finding the strength and weakness of a business concern. After identifying the weakness, the ratios are also helpful in determining the causes of the weakness.
  • 42. GROSS PROFIT RATIO: This ratio is also known as Gross margin or trading margin ratio. Gross profit ratio explains the relationship between gross profit and net sales. It includes the difference between sales and direct costs. A higher ratio is preferable, indicating higher profitability. The gross profit ratio is expected to be adequate to cover operating expenses, fixed interest charges, dividends and transfer to reserves. 2.1 TABLE SHOWING GROSS PROFIT RATIO: Particular 2009-2010 2010-2011 2011-2012 Ratio 11.66 15.24 14.57 (In %) INTERPRETATION: The Gross Profit ratio during the year 2009-10 was 11.66% whereas it has been increased to15.24% during the year 2010-11 and decreased to 14.57% during the year 2011-12. This may be due to decrease in the value of goods sold.
  • 43. NET PROFIT RATIO: This ratio is also called net profit to sales ratio. It is a measure of management‟s efficiency in operating the business successfully from the owner‟s point of view. It indicates the return on shareholder‟s investments. Net profit includes non- operating incomes and profits. It is the profit after reducing non-operating expenses and provision for tax. 2.2 TABLE SHOWING NET PROFIT RATIO: Particular 2009-2010 2010-2011 2011-2012 Ratio 9.18 11.78 11.11 (In %) INTERPRETATION: The net profit ratio during the year 2009-10 was 9.18% ,where it has been increased to 11.78% during the year 2010-11 and decreased to 11.11% during the year 2011-12.
  • 44. CURRENT RATIO: The ratio of current asset to current liability is called “current ratio”. In order to measure the short term liquidity or solvency of a concern, comparison of current asset and current liability are inevitable. The current ratio indicates the ability of a concern to meet its current obligations as and when they are due for payment. 2.3 TABLE SHOWING CURRENT RATIO: Particular 2009-2010 2010-2011 2011-2012 Ratio 3.138 2.043 2.507 INTERPRETATION: The current ratio during the year 2009-2010 was 3.138; in 2010-11 it was 2.043 and increased to 2.507 during the year 2011-12. This indicates the fluctuating trend of the company.
  • 45. FIXED ASSETS RATIO: This ratio could also be determined by comparing the net sales with the net fixed assets. This ratio determines the efficiency of utilization of fixed assets and the profitability of a business concern. Higher the ratio more is the utilization of fixed assets. A lower ratio is the indication of under utilization of fixed assets. 2.3 TABLE SHOWING FIXED ASSETS RATIO: Particular 2009-2010 2010-2011 2011-2012 Ratio 1.544 1.427 2.117 (In %) INTERPRETATION: The fixed asset ratio in the year 2009-10 is 1.544; in 2010-11it was 1.427 and increased to 2.117 during the year 2011-2012. This indicates the increasing trend of the company.
  • 46. DEBT EQUITY RATIO: This ratio is ascertained to determine long-term solvency position of a company. Debt equity ratio is also called „external-internal equity ratio‟. The term external equity refers to total outsiders liabilities. Internal equity refers to shareholders funds or the tangible net worth. Here shareholders refer to only the equity shareholders. Ideal ratio is „1‟. 2.3 TABLE SHOWING DEBT EQUITY RATIO: Particular 2009-2010 2010-2011 2011-2012 Ratio 0.13 0.17 0.19 (In %) INTERPRETATION: The debt equity ratio in the year 2009-10 was 0.13; in 2010-2011 it was 0.17 and increased to 0.19 during the year 2011-12.