A Run

Every Home, Every Where With Pride… Passion… &…Performance…

PREFACE Every Home, Every Where With Pride…. Passion…. &…Performance…. With deep sincerity and immense sense of pleasure, I had completed my training at this technically marvelous plant of WHIRLPOOL OF INDIA LTD. (FRO) The purpose of training is to develop skills of performing Work effectively and efficiently .I feel that the training at Whirlpool is different than the other industries in the manner that here you are given the opportunity to meet the challenges of routine work. It also develops favorable attitude on the part of trainee in regard to actual job requirement in management skills, industrial and human relations. My two months of training at this plant gave me enough opportunity to fulfill the above stated needs of industrial training and I utilized the same with best of my efforts. ARUN JEVARIA

1

Every Home, Every Where With Pride… Passion… &…Performance…

ACKNOWLEDGEMENT In the modern technical education set-up more stress is being laid on practical experience of students. For this purpose, various workshop practice and industrial trainings are arranged for management students. After 2nd semester, I had undergone summer training at WHIRLPOOL OF

INDIA

LTD.

FARIDABAD

REFRIGERATION

ORGANIZATION (FRO) Faridabad, Haryana. I am extremely grateful to Mr. Sanjay Aggarwal, Senior Manager (Finance), Mr. Pawan Kumar (Manager), Mrs. Reena Aggarwal (HR. Manager) Mr. Naresh Johar (Deputy Manager), Ms Sarika Shukla (Sr. Executive) for their valuable support and guidance during my training period. My sincere thanks to all the people of finance department who had given me opportunity to work with such a world class company and helped me a lot to complete my curriculum.

2

Every Home, Every Where With Pride… Passion… &…Performance…

CONTENTS Page Nos.  Company Profile............................................................... 5  Product Profile.................................................................. 37  Research Methodology...................................................... 50  Information from SAP...................................................... 52

 Project 1

Evaluation of fixed Assets

• Introduction to Fixed Assets .............................................. 58 • Findings .............................................................................. 63 • Recommendations............................................................... 69  Project 2 Movement of Inventory in Whirlpool • • • • • •

Introduction ......................................................................... ABC Analysis....................................................................... Perpetual Inventory System................................................. Kanban................................................................................. Milkrun................................................................................ JIT.......................................................................................

71 75 77 78 82 84

 Recommendations  Limitations.........................................................................

88

 Annexure............................................................................

89

3

Every Home, Every Where With Pride… Passion… &…Performance…

Sanjay Aggarwal (Senior Manager)

Pawan Kumar (Manager)

Naresh Johar

Surender Bisht

Kamal Sehgal

(Deputy Manager)

(Senior Executive)

(Sr. Executive)

Sarika Shukla (Sr. Executive)

4

Every Home, Every Where With Pride… Passion… &…Performance…

COMPANY PROFILE The Refrigeration industry in India is fast growing and with the advent of global brands the industry has woken up to new opportunities and new challenges. Whirlpool’s association with India goes back to the year 1987 with the establishment of the joint venture TVS Whirlpool Ltd. Whirlpool Corporation is the world’s leading manufacturer and market of major home appliances the industry is fast growing. There has been a rapid entry of global brands which has resulted in local infrastructure / industry waking up to opportunity and of course the threats. Whirlpool plans to launch products to suit the Indian customer in various income groups. Whirlpool portfolio will follow its top-4 agenda in India: • • • •

Refrigerators, Washing machines, Air conditioners Microwaves

All high growth areas, which allow it to leverage WOI’s existing strengths. The Whirlpool products currently available in the market include Refrigerators and washing machines. Whirlpool guarantees performance, promise and reliability of its products. Suitable warranties and a wide network of service centers back all Whirlpool products. Emphasis is placed on after sales service and whirlpool strives to achieve those goals. In refrigerators the industry growth has been less than 27%. The 165L occupy around 75% segment of market. The main players in the market are LG, Godrej, BPL,

5

Every Home, Every Where With Pride… Passion… &…Performance…

Whirlpool, Electrolux, Samsung and Videocon. Whirlpool has a market share of about 30% and is the market leader.

THE WHIRLPOOL MISSION STATEMENT  WE

WILL BE DEMANDING OF OURSELVES SO AS TO CARE FOR OUR CUSTOMERS LIKE NO OTHER

BRAND DOES.

 WE

WILL SERVE WITH PRIDE IN EVERY

INDIAN

HOME AND BRING PROSPERITY TO OUR

INVESTORS.

 WE

WILL DARE TO CHANGE THE STANDARDS OF OUR INDUSTRY AND BE THE ENVY OF OUR

COMPETITORS.  WE WILL BE THE LEADER IN HOME APPLIANCES WITH ALL OTHERS WILL WANT TO EMULATE.

ABOUT WHIRLPOOL CORPORATION Whirlpool Corporation is the world’s leading manufacturer and marketer of major home appliances. Headquartered at Benton Harbor, Michigan, the major brand names in about 140 countries. Though now a global leader, the company began as a family owned machine shop located in a small town on eastern shore of lake Michigan.

THE HISTORY ♦ Founded in 1911 as Upton Machine Company produced motor driven wringer washer. ♦ Sold first order of washers in 1916 to Sears Roebuck and Co- our largest retail customer today. ♦ In 1950 the company was renamed the ‘The Whirlpool Corporation – automatic dyers were added to washer line. ♦ In 1958 Whirlpool made it’s first investment outside North America in Brazil. Revenues reached $ 1 billion in 1968. ♦ Whirlpool purchased ‘Kitchen Aid’ brand in 1986 and began its globalization efforts in 1980’s.

6

Every Home, Every Where With Pride… Passion… &…Performance…

WHIRLPOOL CORPORATION TODAY. ♦ ♦ ♦ ♦ ♦

World’s leading manufacturer and marketer of major home appliances. Full line of major home appliances. Manufacturer: 12 countries. Revenue: $ 12 billion. Employees: 45000 worldwide.

THE WHIRLPOOL VISION ‘EVERYHOME, EVERYWHERE WITH PRIDE, PASSION AND PERFORMANCE’ Whirlpool, in its chosen lines of a business will grow with new opportunities and be the leader in an ever-changing market. We will be driven by our commitment to continuous quality improvement and to exceeding all our customer’s expectations. We will gain competitive advantage through this by building our existing strengths and developing new competencies. We will be market driven, efficient and profitable. Our success will make Whirlpool a company that worldwide customers, employees and stockholders can depend on.

7

Every Home, Every Where With Pride… Passion… &…Performance…

Core Competencies •

Innovation: Unique and compelling solutions valued by our customers and aligned to our brands create competitive advantage and differentiated shareholder value.

•

Operational Excellence (OPEX): A methodology for solving problems & continuous improvement of products & processes through pursuit, acquisition, and utilization of knowledge using critical thought and planned experimentation helps us achieve operational excellence.

•

Customer Excellence: Excelling the customer expectation from the company, its brands, products and services are a three-step process. The three steps are: Know a customer, be a customer, Serve a customer.

•

Knowing a customer helps us know who our customers are, how to treat them, how we add value, and what the drivers of brand loyalty are. This information is gathered from the customer's data base history. This way we are better able to customize products for them and recommend the right product to solve problems. Being a customer is important to share customer knowledge and insights, drive actions based on customer insights, be passionate about our brands and customer loyalty and provide a positive voice for our brands. We show empathy for customers and seek to resolve their problems by creating consistent customer touch-points, with our endeavor always being to provide unique solutions for the customer.

8

Every Home, Every Where With Pride… Passion… &…Performance…

THEN WHIRLPOOL WENT THE GLOBAL WAY. Whirlpool strategy has been to remain focused on major home appliances but to expand into markets not already served by Whirlpool. The goal has been world leadership in a rapidly globalize major appliances industry. Before Whirlpool began its expansion into Europe, a move that established the company as a world leader in major home appliances, it undertook a global analysis of markets and opportunities in home appliance industry. A conclusion was that the industry would, over time, become global and a handful of companies would dominate the manufacturer and the sale of home appliances. Whirlpool determined to lead that globalization process and be one of those companies. In 1980’s there was a major acquisition in Europe, joint ventures with companies in Mexico and India and increased ownership in companies in Canada and Brazil. Throughout the early 90’s the company continued its expansion in Latin America and Europe and a manufacturing and marketing presence was established in Eastern Europe. In Asia, Latin America, North America and Europe, in all the countries where it has presence was established in Eastern Europe. In Asia, Latin America, North America and Europe, in all the countries where it has a presence, Whirlpool seeks to set standards against which the global major domestic appliance industry is measured. To that end the company vigorously pursues the goal of its worldwide excellence system (WES). Whirlpool’s strategy to shape and lead the emerging global home appliance industry is working because the company consistently improves the quality of its products and services while refining its understanding of customers and what they want from whirlpool. WHIRLPOOL IS POSITIONED GLOBALLY North America Latin America Europe Asia

#1 #1 #3 #Leading Western Company

9

Every Home, Every Where With Pride… Passion… &…Performance…

WHIRLPOOL IN ASIA In 1992, the company decided to focus on the significant growth opportunities in Asia and Latin America. As a result, stand-alone business unit was established in these two major regions of the world. Thus the Whirlpool Asian Appliances Group (WAAG) was formed. In 1993, WAAG began a series of moves to increase its presence in Asia and position the company to aggressively pursue potential business opportunities throughout the region. The company has been aggressively pursuing its Asian Strategy, which focuses on: • • • • •

Partnering to build win – win relationships. Attracting, retaining and developing the best people. Ensuring quality in all respects of business. Offering four key products: refrigerators, washers, microwaves and air conditioners. Exceeding customer needs and satisfaction.

Also in 1994 Great Techo Whirlpool Ltd. A marketing joint venture in Taiwan was formed with great Techo Trade Co. Ltd. In 1995 Whirlpool entered the fast growing home appliance market in the People’s Republic of China through four majority owned joint ventures. From a small volume exporter to niche markets thirty weeks ago, WAAG today comprises 12000 people in 25 countries. With six manufacturing sites in India and China and more coming up and over $US350 million in investments, Whirlpool is well on it’s way to achieving its objectives in Asia.

10

Every Home, Every Where With Pride… Passion… &…Performance…

Whirlpool Corporation in Asia Whirlpool Corporation is the leading major home appliance manufacturer among western companies in Asia and is number one in India. Its presence in Asia is concentrated in India, China and other countries in the Asia Pacific area.

Key Statistics: • • •

Leader among Western companies, with No. 1 market position in India $457 million in 2006 sales Approximately 4,820 employees

Brands: Whirlpool, Maytag, Kitchen Aid Principal Products: Air Conditioners, Compressors, Microwave Ovens, Refrigerators, Automatic Washers Headquarters: 565 Jin Gang Road Jingqiao Export Processing Zone Pudong New Area Shanghai, PRC 201206 Manufacturing Locations India Faridabad, Pune, Pondicherry China Shanghai, Shunde Regional Offices: Hong Kong Singapore New Delhi, India

11

Every Home, Every Where With Pride… Passion… &…Performance…

WHIRLPOOL IN INDIA Whirlpool’s association with India goes back to the year 1987 with the establishment of joint venture TVS Whirlpool Washing Machines Ltd. Headquartered at Madras, with manufacturing base in Pondicherry, Whirlpool management expertise and transfer of technology has helped to expand manufacturing capabilities and product lines for increased market shares throughout region. On February 24, 1995, Whirlpool acquired controlling interest in Kelvinator of India, traditionally the countries largest manufacturer and marketer of refrigerators. With the manufacturing base in Faridabad, Haryana this association has also yielded a network over 3500 trade dealers. Whirlpool is now selling the Whirlpool brand and Opera Brand Refrigerators, replacing the Kelvinator brand name, with the largest investor in MDA industry in India with financial commitments in access of INR 350 crores. Whirlpool sees a tremendous opportunity in white good segments in India. The emerging market holds promise and we believe that estimates of market potential are yet to be defined totally. To meet the growing trend Whirlpool is expanding its local production capabilities in both Washing Machines and refrigerators. A new project in the Global No-Frost refrigerator plant in Ranjangaon, Pune, plant will manufacture no frost CFC Free Refrigerators. The product form this plant will specifically be designed for the Indian consumer and is backed with latest worldclass technology. Whirlpool plans to launch products to suit consumers in various income groups. Fridge and washing machines is just the beginning. Whirlpool’s portfolio will follow it’s ‘Top_4’ agenda in India: refrigerators, washing machines, air- conditioners and micro waves – all high growth areas, which allow it to leverage WOI’s existing strengths.

12

Every Home, Every Where With Pride… Passion… &…Performance…

WHIRLPOOL’S GOAL IN INDIA TO BECOME THE MOST PROFITABLE PRODUCER OF T-2 PRODUCTS; REFRIGERATORS AND WASHING MACHINES, IN INDIA. MANUFACTURING FACILITIES Whirlpool has manufacturing facilities at three places: Washing Machines Refrigerators CFC free ref.

Pondicherry, Madras Faridabad, Haryana Ranjangaon, Pune

Started April’94 Started Feb’95 Started March’98

WHIRLPOOL SHARES AND LISTING Whirlpool of India. Key Dates Year Ending Month Mar AGM Date (Month) Aug Book Closure Date (Month) Aug Listing Information Face Value Of Equity Shares Market Lot Of Equity Shares BSE Code NSE Code BSE Group

10 1 500238 KELVINATOR B1

13

Every Home, Every Where With Pride… Passion… &…Performance…

Whether The Company Forms A Part Of The Following Indices Sensex Nifty BSE-100 BSE-200 CRISIL-500 CRISIL MIDCAP-200 CNX FMCG

No No No No No No No

Date Of Demat Status Demat Scrip - NSDL (Mandatory)

Jun 26,2000

Demat Scrip - NSDL (Total Lot)

N.A.

Listed On

Mumbai

BSE: 500238 NSE: KELVINATOR Reuters: WHIR.BO WHIR.NS Source: www. capitalmarket.com http://www.moneycontrol.com/stocks/companydetails/hist_graph.php

14

Every Home, Every Where With Pride… Passion… &…Performance…

BRAND AMBASSADORS Beautiful and Vivacious – Kajol Like a fresh breath, Kajol wafted into the film world that thrived on predetermined codes of demeanor. She carries the halo of spontaneity. Kajol has made a distinctive indent into the Hindi film industry. Kajol is outstanding in her acting. The flexibility of her acting can be seen from the various characters done by this natural actress. On association with Whirlpool: "Whirlpool believes in providing world-class quality to its consumers. Whirlpool is a '‘Perfect partner to the demanding homemaker' of today. Whirlpool's products are stylish, modern and contemporary with elegant looks and reflect the sense of pride homemakers take in choosing them for their homes."

The intense emotional hero – Ajay Devgan Ajay Devgan, known more for his intense acting abilities carved a niche for himself as an actor. Ajay is one actor who has gained stardom on the merit of his performances, not based on Bollywood-style good looks. On association with Whirlpool: "Whirlpool brand has successfully emulated the dreams, aspirations and expectations of Indian home maker through the years. It symbolizes a relationship based on equality, love and romance, which is why I agreed to represent the brand," declares Ajay Devgan. " We are very pleased to be associated with Whirlpool – the leaders in home appliances”, he adds.

15

Every Home, Every Where With Pride… Passion… &…Performance…

Organisation Structure Board of Directors Mark Hu (Chairman) Arvind Uppal (Managing Director) Robert Lawrence Mink Mahesh Krishna S.J. Scarff Anand Bhatia Audit Committee Anand Bhatia, Chairman S.J. Scarff Mark Hu Directors Remuneration Committee Anand Bhatia, Chairman S.J. Scarff Mark Hu Investors Grievance Committee Anand Bhatia, Chairman Arvind Uppal Mahesh Krishna Share Transfer Committee R.S. Narayan Ravi Sabharwal Seema Narang New Share Certificate Committee Robert Lawrence Mink, Chairman Arvind Uppal Mahesh Krishna

16

Every Home, Every Where With Pride… Passion… &…Performance…

WHIRLPOOL IN FARIDABAD On February 24 th 1995; Whirlpool acquired controlling interest in Kelvinator of India, traditionally the country’s largest manufacturer and marketer of refrigerators. With the manufacturing base in Faridabad, Haryana, this association also yielded a network of over 3500 trade dealers. Whirlpool is now selling, the Whirlpool brand refrigerator, replacing the Kelvinator brand name, with the later having reverted to Electrolux in the early 1997. PRODUCTION CAPACITY IN FRO PLANT The production capacity in Faridabad Refrigeration Organisation Plant (FRO) is 1095000 lakhs annually. Whirlpool is expanding its local production capacities in both washing machines and refrigerators 1. 2 3. 4 5. 6. 7

Component Compressor CRCA Steel Masterbatch HIPS Granules Wireharness Condesnsor Packaging

Supplier Tecumseh Bushan Steel SCJ, Alok Supreme Dudeja & Delton STI Box & Carton, Kemeka

17

Every Home, Every Where With Pride… Passion… &…Performance…

RAW MATERIAL AND POWER CONSUMPTION Whirlpool of India, Faridabad caters to its power requirements through its own powerhouse, which has 7 DG sets out of which 4 remain functional at a time. It also consumes electricity from Haryana Electricity board. Its monthly power requirement is around 1000000 KW/hr per month out which it takes wound 200000 KW/hr from Haryana Electricity Board and produces rest of the power in its own powerhouse. This power consumption varies widely with season. In summers this rate is as high as 1300000 KW/hr and it falls down to around 7500000 KW/hr in months of December and January. Whirlpool, Faridabad mainly deals with the assembly of refrigerators. The outsource the raw material from different vendors and give the shape of refrigerator. They have more than 200 vendors. Their main raw material and supplier are as listed above.

18

Every Home, Every Where With Pride… Passion… &…Performance…

PRODUCT RANGE IN FRO

EXISTING MODELS ARE: ⇒ 165L RANGE •

MASTER PIECE

•

FLAT DOOR REFRIGERATOR

•

CORONA DELUXE

•

BPL

•

SINGER

⇒ OPERA RANGE •

190 ELITE

•

190 DELUXE

•

215 ELITE

•

215 DELUXE

19

Every Home, Every Where With Pride… Passion… &…Performance…

ANALYSIS OF WHIRLPOOL FRO PLANT STRENGTHS: • • • • • • •

Its technology Its manpower and their dedication towards work Training and education It’s sophisticated paint shop Whirlpool LOGO 5-S conscious Implementation of 6 sigma.

WEAKNESSES: • • • • •

Resistance to change Not much effective team work High rejections in door High rework in door High rework of closed system

20

Every Home, Every Where With Pride… Passion… &…Performance…

PRODUCTS DISTRIBUTION AND SERVICES Whirlpool products currently available in the Indian markets include refrigeration and washing machines, A.C. The distribution of the entire whirlpool range is through an integrated sales network, which resulted from the merger of Kelvinator of India’s network and Whirlpool washing machines Ltd. Sales network. With the combined strengths, Whirlpool aims to achieve critical in their distribution with over 4000 dealers. Whirlpool calls them trade partners, an integral part of the chain of “ the partners in progress . Thus sales team and trade partners form a formidable team in the market with network across the country. Whirlpool guarantees performance and promises reliability of all its products. In fact, suitable warranties and a wide network of service centers back all Whirlpool products. Emphasis is placed on after sales services and Whirlpool strives to achieve 90% customer satisfaction by servicing products within 24 hours of receiving the call. Whirlpool has its own 17 consumer service branches all over the country and to cover other towns, there are 100 service partners. Trade partners are also used for customer service. At Whirlpool, consumer feedback is given a great deal of thought while designing the products. All whirlpool products are suited to local customers needs while conforming to international standards of quality and safety. Whirlpool is driving the entire market of home appliances by launching products to suit consumers in various income groups.

21

Every Home, Every Where With Pride… Passion… &…Performance…

CAPACITY OF THE PLANT The company works in three shifts of eight hours duration each for seven days a week. The actual production time is around 7hours 10 minutes. The FRO has production capacity of about 3400 refrigerators per day but the demand is not that high, therefore the company also manufactures for some other companies. On an average around 2500-2600 refrigerators are produced everyday. Maximum daily production till date has been 3200pcs. These days (May and June) the production is around 3100pcs everyday.

ABOUT THE PLANT

The whole plant is broadly classified into six major parts, which are •

PRESS SHOP

•

PAINT SHOP

•

VACCUM FORMING

•

EXTRUSION

•

EVAPORATOR SECTION

•

ASSEMBLY LINES

22

Every Home, Every Where With Pride… Passion… &…Performance…

PRESS SHOP In the press shop, the following cabin and door is made. C.R.C.A. Steel Cold Rolled Cold Annealed Steel sheet cut to the desired size as per model and is fed into the Carriage Unit. Rolled conveyer, on Carriage Unit shapes the sheet the roll forming of sheet is done to get the desired thickness. T he thickness of door panel is 0.42 mm., that of back panel and cabinet is 0.38 mm and for deck the thickness of sheet is 0.25 mm. After this sheet is send to Notching and Punching (N/P) unit, where holes are punched into the sheet. The next operation is roller edge bending. Here the edges of the sheets are bend into U-shapes, where the liners are later inserted. The next step is t he roller End Bending. Here the ends of the sheet are bended by 90 deg. Next sheet is folded in the Folding Fixture by the application of Hydraulic Pressure. Next, the folded sheets are sent for various spot welding operations. First, the Back Panel is welded with the cabin. Then the bottom (deck) is welded. The bottom panel is curved in shape and has space for the compressor to fit in. Doors are also made here in the Press Shop. Next operation is of removing sharp edges at the corners cabin and doors are loaded on overhead conveyer and then are passed on to the Paint Shop for further processing.

23

Every Home, Every Where With Pride… Passion… &…Performance…

A VIEW OF PRESS SHOP

24

Every Home, Every Where With Pride… Passion… &…Performance…

THE PAINT SHOP The Cabinet/Door from the Press Shop is hanged on the overhead conveyor line, manually. The locking system is deactivated so that the cabin is free to rotate. Then the cabin is rinsed in soap solution to free all the dirt. Prior to this the cabin is also soaked in a solution to free all the grease on the surfaces. This is known as Degreasing. The next step is Activation, where the cabin/Door is kept in a medium which allows the exothermic reaction to take place. After this the cabinet/door is coated with Zinc Phosphate, so that the pain sticks to the surface nicely. This process is called Phosphating. After phosphating the surface which results is very rough and irregular. This is smoothened in the Passivation stage. Next, the cabin/door is dried properly. Now, the cabin/door is ready for the actual paining. First, the interior areas of the cabin/door are painted manually by the painter. This is done because during the process of paining by the electrostatic gun the interior areas are generally left out. Next, the cabin/door goes through the process of electrostatic paining where the sides and the top surface of the cabin or the from side of the door is painted by the electrostatic guns, which are three in no. Two to paint the sides and one at the bottom to paint the top surface of the cabin.

25

Every Home, Every Where With Pride… Passion… &…Performance…

The painted obtained in this process does not have a proper finishing. So, the cabin/door is now sent to the curing oven where it is heated to specified temperature, to obtain a shine on the surfaces. After this process, there is an Inspection process and the passed components are sent for the foaming process.

26

Every Home, Every Where With Pride… Passion… &…Performance…

A VIEW OF PAINT SHOP

EXTRUSION PLANT In the extrusion plant, the sheet for cabinet and door liner is prepared from :• HIPS (High Impact Polystyrene) • Master batch • 585 to provide gloss • Regrind The three components – HIPS, Master batch and regrind are fed to different pipes and finally the mixture is prepared. The mixture contains 61.4 % HIPS, 1.6 % Master batch, 35 % regrind and 2 % 585. The mixture of these components is fed into a CNC Extrusion Machine in above-mentioned proportions. The extruded material from the machine moves past the two cylinders and takes the form of a sheet. The cabinet or door liner sheets of definite size are cut by means of adjustable cutting knifes. The sheets produced are then sent to Vacuum Forming plant.

27

Every Home, Every Where With Pride… Passion… &…Performance…

VIEW OF EXTRUSION PLANT

CABINET FOAMING SECTION VARIOUS PROCESSES IN FOAMING: •

The first stage is to unload the painted shells or cabinets from the overhead conveyer line. This is done manually. Next, the shells are sent for PreFoaming. Here among other things the liner and the anti-moisture tube (A.M.T.) are fitted into the shell.

•

Next, the shell is heated in the oven to a specified temperature to start the chemical reaction of foaming. After this the shell is loaded into the Foaming Plugs, 18 in no. Here a mixture of Isocyanate and Polyol is added in between the liner and cabin. The foam expands and covers all the space in between. After this the shell is unloaded, cleaned and inspected. The shells, which are O.K, are sent to the assembly line.

•

Doors are also foamed in the similar manner in Door Drum. Here after addition of Isocyanate and Polyol, the door liner is placed over the door shell. The foamed doors are then unloaded, inspected and sent to the assembly line.

28

Every Home, Every Where With Pride… Passion… &…Performance…

A VIEW OF FOAMING SECTION EVAPORATOR SECTION VARIOUS PROCESSES IN EVAPORATOR SECTION: In the evaporator section, the freezer assembly is made. The freezer assembly comprises of:  THE SERPENTINE COIL- Processes included in it are tube cutting, deburring, flaring, dot punching, bending and argon welding.  THE EVAPORATOR BODY- Processes included are cutting aluminium to size, allochroming, clear coating, dehydration, clinching, folding and riveting the Compliments.  THE SUCTION LINE ASSEMBLY- Processes included are copper tube shaping, vapour degreasing, putting of sleeve with the capillary tube, and heating of suction line assembly in oven.

29

Every Home, Every Where With Pride… Passion… &…Performance…

 THE SOUND DEADENER ASSEMBLY- Processes included are sound deadener formation, degreasing, butt welding of sound deadner, butt welding of suction line, leak testing and inserting sleeve on butt welded joints.

A VIEW OF EVAPORATOR SECTION

ASSEMBLY LINE There are three assembly lines. VARIOUS PROCESSES IN ASSEMBLY LINE :• • • • • • • • • • •

THERMOSTAT FIXING BULB, BOTTOM HINGE, REAR FIXING ANGLE TRAY FIXING TOP HINGE FIXING COMPRESSOR AND CLAMPS FOR CONDENSER FIXING FREEZING FIXING DOOR FIXING CONDENSER FIXING AMT CONNECTION, THERMOSTAT KNOB FIXING BRAZING OF SEALED SYSTEM, FREEZER DOOR FIXING, RELAY FIXING COMPRESSOR EARTHING, DOOR HANDLE FIXING 30

Every Home, Every Where With Pride… Passion… &…Performance…

• •

VACUUMISATION: Here, a loop of nine vacuum pumps is employed to vacuumise the compressor completely. GAS AND OIL CHARGING: Here, the Galileo Machine is employed for the Gas and Oil charging. The machine has to be calibrated before use. For this purpose, three parameters are set to evaluate the amount of gas charge in the Compressor.

These parameters are: o Weight o Pulse o Temperature Weight here means the gas specification; Pulse is the value of R.P.MxNo. Of Blades in the turbine, or in other words the no. Of blades passing through a point in a minute. Temperature is the gas temperature at the junction of the cylinder and the Galileo Machine.

During calibration the following data has been used for line no.3: SL NO. 1 2 3

WEIGHT 87 97 118

PULSE 705 863 1020

TEMPERATURE 36 36 36

Apart from above, other parameters used in the setting of a program for a particular slot are: • Evacuation Time • Vacuum Testing Time • Leak Testing Time • Vacuum Upper and Lower Limits • Recovery Time

31

Every Home, Every Where With Pride… Passion… &…Performance…

•

Reference Pressure

1. EVACUATION TIME is the time set for the compressor to be evacuated to the Upper limit of Vacuum. The Compressor should be evacuated to the upper limit in the specified time; otherwise the machine gives an alarm and stops the further process. It is kept at around 40-60 seconds. 2. VACUUM TESTING TIME is the time specified for the compressor to be further vacuumised from the upper specification limit to the lower specification limit. Again, if the compressor is not vacuumised in the prescribed time the machine gives a signal and further process is stopped. It is kept at around 40-60 seconds. 3. LEAK TESTING TIME the machine stops the vacuumisation process and checks the pressure in the compressor. If the pressure drops below the lower specified limit in a time less than equal to the Leak Test Time, the machine gives a Group Leak Signal and the process again stops. It is kept at around 5 seconds. 4. RECOVERY TIME is the time specified for the excess gas in the filler tubes to be recovered by the machine. This reduces wastage of the refrigerant. The Upper and Lower limits are set in such a manner that the Lower specified limit is above the

5. REFERENCE PRESSURE in the machine. The Reference Pressure is the lowest level of Vacuum that the machine can obtain. All the pressures are measured in terms of micrometers of mercury, where 760 mm of mercury corresponds to 1 Atmosphere. The upper limit is generally set above 1000 micrometers of mercury and the lower limit is set around 300 micrometers of Mercury. o SEALING OF THE CHARGING LINE o INSPECTION IN TEST LOOP BY CONNECTING TO THE MAINS SUPPLY o CABINET AND DOOR CLEANING o CRISPER TRAY AND SHELVES FIXING o OUTSIDE CLEANING o PLASTIC PARTS FIXING o FINAL INSPECTION o BAR CODING AND PACKING

32

Every Home, Every Where With Pride… Passion… &…Performance…

A VIEW OF ASSEMBLY LINE PRODUCTS WORLDWIDE

33

Every Home, Every Where With Pride… Passion… &…Performance…

 Washers  Refrigerators  Microwaves  Air conditioners  Dryers  Dishwashers  Freezers  Cooking ranges  Exhaust fans / ovens / hoods etc.

SOME BASICS ABOUT REFRIGERATION In olden days food was stored in caves where the temperature remained lower than outside air temperature. At around 2500 B.C, Indians, Egyptians, Romans, etc. produced ice by keeping water in porous pots open to cold

34

Every Home, Every Where With Pride… Passion… &…Performance…

atmosphere during the night. The evaporation of water in cold dry air accompanied with radiative heat transfer in clear night caused the formation of ice. Back in the old days, Earthen Pots were used to cool water. Jacob’s Perkiness invented artificial refrigeration in the year 1834. In the beginning of the 19th century, there was tremendous progress in the refrigeration systems to replace natural ice using a system engine, a very low speed power-developing source to power the compressor. In the beginning of 20th century, large sized refrigeration machines were under progress using ammonia and water as coolants from the third decade onwards; considerable growth has taken place in the refrigeration industry. Now no longer a refrigerator considered a luxury but a necessity. In India the first commercial refrigerator was developed in the year 1956 by ALLWYN and then other companies came into the market.

METHODS OF REFRIGERATION  Vapour Absorption System.  Vapour Compression System.  VAPOUR ABSORPTION CYCLE In vapour absorption system, heat energy is used to circulate the refrigerant. The heat energy is obtained from a gas flame, an electric heater, or a kerosene flame. It does not have a moving part, therefore the maintenance cost is minimum.

Components in use are:    

Boiler and Generator. Condenser Evaporator Absorber connecting to suction pump.

VAPOUR COMPRESSION SYSTEM

35

Every Home, Every Where With Pride… Passion… &…Performance…

In the vapour compression system the low-pressure refrigerant is compressed to high pressure by the compressor, using mechanical energy in the form of motor. It is then condensed to the liquid state in the condenser and then again evaporated to the gaseous state by extracting heat from the evaporator area. Most of the modern refrigerators including the one falling under this category. The main components used in the refrigerators manufactured here are:            

Condenser. Capillary. Charging line. Dip tray Oil cooler inlet. Anti moisture tube. Evaporator Drier and Accumulator. Compressor Cooler Outlet Sound Deadener Suction and Discharge Line.

The provision compartment is cooled by natural air circulation. The cold in contact with the evaporator moves down, from the back of the evaporator to the lower portion of the provision compartment, being heavier in weight. The warm air in the provision compartment being lighter in weight, moves upward form the front side of the evaporator being cooled. The air circulates in the cabinet due to convection current arising because of natural temperature difference between the evaporator and the provision compartment. The 165L, 220L and 310L models fall in this category called Direct Cool Refrigerators.

WORKING OF THE SYSTEM The refrigeration system consists of four very important components namely, Compressor, Capillary, Condenser and Evaporator. When these components are joined together the refrigerant (R-12) charged then these forms the Hermatic Sealed System.

36

Every Home, Every Where With Pride… Passion… &…Performance…

The compressor compresses the gas to increase pressure. The high-pressure gas that passes through the anti- moisture tube to heat the cabinet front pilaster which is in contact with the gasket of the door. The heating prevents the internal moisture condensation. Return gas from the anti moisture tube comes back in the compressor oil cooler tube to cool compressor and oil and then moves back to the condenser tube. Due to heat transfer at high pressure R-12 gets condensed in the condenser and the liquid refrigerant passes through the drier Before entering the capillary. Liquid ref. Now moves in the capillary and pressure start dropping. At the outlet of the capillary the low pressure liquid enters the evaporator and passes through the evaporator tube. Due to low pressure the temp. of the refrigerant is lower and therefore the tube gets cooled and we get frosting on these tubes. The un-vapourised liquid enters the accumulator and all the vaporized liquid returns to the compressor through the connecting tube called the suction line. The part of the capillary is in contact with the suction line to avoid formation of frost on the suction line and to utilize the returned clod vapour for heat transfer to improve the efficiency of the system. Return vapours are again compressed in the compressor and the cycle continues. ANATOMY OF A DIRECT COOL REFRIGERATOR COMPRESSOR The compressor is the heart of the refrigerator .It pumps the refrigerant through the entire system. It draws cool refrigerant gas in through the suction line from the evaporator coils. At the same time it compresses the gas and pump it into the discharge line. The compressed air sharply rises in temperature and enters the condenser.

Oil is charged into the compressor to: Provide lubrication to the moving parts. Cool the compressor body. Oil charge depends on the type of compressor used in the refrigerator, ML-033 and ML-043 types of compressors use 400cc of oil. The quantity of refrigerant charge depends on the size and design of the sealed system. 165ltr uses 135gms.

37

Every Home, Every Where With Pride… Passion… &…Performance…

220ltr uses 100gms. 310ltr uses 155gms.

The refrigerant used is Freon-12 (di chloro di fluoro methane or CCl2F2) . it has a boiling point at –21.6 deg. F. it is used generally to cool up to –110 deg. F. this is commonly known as R-12. CONDENSER The condenser is the cooling coil for the hot refrigerant. It expels the heat of the refrigerant to the room outside the cabinet and changes refrigerant to liquid state. It may be noted that support wires are used in the condenser tube and the whole assembly is painted black. This is done to increase the heat transfer area and reflect the atmosphere at a faster rate. DRIER The hot liquid refrigerant from the condenser enters the drier. The drier contains synthetic zeolite composed of soda, alumna and silica. It removes any moisture and impurities from the refrigerant. CAPILLARY The capillary is a small diameter tube connecting the condenser to the evaporator. The capillary tube is carefully calibrated in length and internal diameter. Its resistance or pressure drop due to length of the tube and diameter, regulates the exact amount of refrigerant into the evaporator. HEAT EXCHANGER Soldering a portion of the capillary tube to the suction line forms the heat exchanger. The purpose of the heat exchanger is to increase the overall capacity and efficiency of the system by using the cold sucked gas leaving the evaporator to cool the warm liquid refrigerant passing through the capillary tube into the evaporator. Suction cooled liquid expands at lower pressure giving more cooling effect and heated vapour ensures no liquid particles at the compressor suction.

EVAPORATOR The liquid refrigerant at low pressure leaves the capillary and enters the larger tubing of the evaporator. Due to sudden increase in the tube diameter, expansion takes place and the temperature of the refrigerant drops rapidly. In the

38

Every Home, Every Where With Pride… Passion… &…Performance…

processes of the passing through the evaporator, the refrigerant absorbs heat gradually and changes to gaseous form at the same pressure.

ACCUMULATOR Rate of evaporation of the refrigerant from the evaporator changes with heat load on the evaporator. It evaporates at a faster rate on high load and at a slower rate on low load. Accumulator serves the purpose of a storage vessel which stores the unevaporated excess liquid when the load is low and supplies extra liquid to the evaporator when the load is high .it also prevents liquid refrigerant from flowing into the suction line and also entering into the compressor. ANTI MOISTURE TUBE The anti moisture tube is in contact with the door of the refrigerator. The basic advantages of the anti moisture tube is as follows: It provides external condensation at the front pilaster. Acts as an oil cooler. THERMOSTAT Thermostat ensures that the temperature in the freezer and the provision compartment are maintained as per specified requirements. The thermal capillary senses the freezer plate temperature and cuts off the compressor when the temperature is attained and cuts in when temperature rises for a particular setting. There are three types of thermostats: Defrost Thermostat (push button)- Used in the 165 L, 220L,310L refrigerators.The push buttonnis used for defrosting the refrigerator. Non – Defrost Thermostat – used in deep freezers. Constant Cut-In Thermostat – used in vertical plate evaporators for two door models. RELAY The function of the starting relay is to connect the starting winding of the compressor motor at the time of starting and disconnect as soon as the motor is up-to its running speed .the motor used in the hermetic compressor is fractional H.P. split phase, which has two windings.  Main winding (running)

39

Every Home, Every Where With Pride… Passion… &…Performance…

Auxillary winding(starting) When the refrigerator is switched on, there is a starting current (24 times the rated current) in the running winding, this induces electromagnetic force in the relay coil which picks the plunger and connects the starting winding with the running winding. As the motor arrives to a speed the current reduces, thus reducing the electromagnetic force and cutting of the starting winding. 

The relay consists of:  Relay coil  Plunger  Switch silver contacts  Plastic body OVERLOAD PROTECTOR The overload protector protects the compressor during high current, high compressor temperatures and overload conditions. It is connected in series with the compressor winding It consist of: Nichrome wire Bimetallic switch Switch silver contacts When the bimetallic strip is heated by nichrome wire, the temperature of the strip increases and stresses are setup in the disc, tending to buckle it, thus opening the contacts and cutting off the supply to the compressor. When the disc cools down to a certain temperature, it snaps back to its original position, thus making the contact and starting the compressor.

NO FROST REFRIGERATORS In no frost refrigerators cooling is carried out by forced air through fan motor. The fin and tube evaporator is concealed and cold air is sucked through the coil and fan and circulated in the freezer and cabinet compartments by providing opening inside the duct arrangement. Ice formation on the fin and heating the coil once or twice in a day terminates tube evaporator. The defrost water falls on the tray over the compressor and evaporates. This technique makes sure that freezer does not get clogged by the frost .No frost means that there is no formation of ice in the freezer due to which ice trays, food and other items do not get struck.

40

Every Home, Every Where With Pride… Passion… &…Performance…

The following additional components are added to achieve these characteristics: 

Fan motor



Heater



Thermal cut out



Duct

QUALITIES OF A REFRIGERANT Low boiling point Safe and non toxic Should liquify easily at moderate temperature and pressure. Mixes well with oil. Non corrosive with metal The refrigerant used in this plant is Freon-12 (CCL2F2). Its boiling point is – 21.6deg F. It is commonly known as R-12.     

CFC SUBSITUTES The depletion of ozone layer by the use of CFC refrigerants has lead to the lookout for other eco-friendly refrigerants. Efforts are made to find substitutes with similar refrigeration properties like CFCs but with a lower effect on the ozone layer. The essential requirement for the substitutes will be that they should be compatible with vapour compression and heat transfer systems. Examples are: HFC-134 ( Hydro fluoro carbon) HFC-134a HCFC-22 ( Hydro chloro fluoro carbons) HCFC-14b ISOBUTANE PROPANE AMMONIA

SPECIFICATIONS OF REFRIGERATORS

41

Every Home, Every Where With Pride… Passion… &…Performance…

Refrigerators are specified as the volume of the refrigerator. For example 165 lt. indicates the total space inside the refrigerator or the volume. Volume is measured by filling the cabinet with water to take 165-3%+0 MODEL 165 lt. 220 lt. 310 lt.

VOLUME OF CABINET 152.5 lt. 205 lt. 378 lt.

INSIDE FREEZER SPACE 12.5 lt. 15 lt. 32 lt.

MARKET SHARE OF TOP 3 COMPANIES IN REFRIGERATORS IN MONTH OF MAY’07

MARKET SHARE 25.5% 23.2% 16.9% 34.4%

LG WHIRLPOOL GODREJ OTHERS

MKT SHARE (%)

OTHERS 34%

LG 26%

WHIRLPO GODREJ OL 17% 23%

42

Every Home, Every Where With Pride… Passion… &…Performance…

SOLD (UNITS)

LG WHIRLPOOL GODREJ

VALUE (IN CRORES) 149.59 cr 138.24 cr 86.13 cr

1.37 LAKH 1.24 LAKH 90,900

VALUE (CRORES)

GODREJ WHIRLPOOL LG

1

0

50

100

150

200

IN CRORES

43

Every Home, Every Where With Pride… Passion… &…Performance…

SALES in the month of MAY'07

140000 120000 100000 UNITS 80000 SOLD 60000 40000 20000 0

LG WHIRLPOOL GODREJ

1

FROST FREE REFRIGERATORS SOLD (IN UNITS) LG 47200 SAMSUNG 36900 WHIRLPOOL 34100

VALUE (IN CRORE) 72.51 CR 65.88 CR 53.94 CR

MARKET SHARE 30.6% 23.9% 22.1%

44

Every Home, Every Where With Pride… Passion… &…Performance…

MARKET SHARE (IN FROST FREE SEGMENT) 35 30 25 20 15 10 5 0

LG SAMSUNG WHIRLPOOL 1 MARKET SHARE

DIRECT COOL

WHIRLPOOL LG GODREJ

MARKET SHARE 23.6% 23.5% 19.4%

45

Every Home, Every Where With Pride… Passion… &…Performance…

MARKET SHARE OF DIRECT COOL

19.40%

23.60% WHIRLPOOL LG GODREJ 23.50%

Analysis of Market Share According to ORG data for May, the domestic refrigerator market stood at Rs 574.11 crores in terms of value and 5.37 lakh units in terms of volume. The frost-free segment formed 28.6 per cent of the entire market, worth Rs 246.74 crores with a total of 1.54 lakh units sold during the period. The direct-cool segment stood at 71.4 per cent of the whole market, worth Rs 327.37 crore (3.83 lakh units).

46

Every Home, Every Where With Pride… Passion… &…Performance…

However, what is interesting is the frost-free segment grew at 50.2 per cent in terms of volume and 60.8 per cent in terms of value while the direct-cool segment grew at a considerably slow pace of 3.3 per cent in terms of volume and 11.3 per cent in terms of value for the month of May. In fact, the above trend was also visible in the five-month period of January-May for the current calendar year, where the frost-free segment grew at a rapid pace of 45.9 per cent in terms of volume and 53.8 per cent in terms of value as opposed to a slow growth of 6.3 per cent in terms of volume and 12.1 per cent in terms of value in the direct-cool segment.

As far as the frost-free refrigerator category is concerned, it is certainly growing at a much faster pace than the direct-cool category. Frost-free refrigerators offer several advantages — they don’t need manual defrosting, are easy to maintain, and the price difference between the direct cool and frost-free segments has narrowed considerably, CETMA said.

Source: http://www.ibef.org/artdisplay.aspx?tdy=1&cat_id=60&art_id=16113

Research Methodology Research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. 47

Every Home, Every Where With Pride… Passion… &…Performance…

----Clifford Woody Research MeThodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically.

SOURCES OF DATA COLLECTION To understand the system better and to make practical suggestion for improvement, it is imperative to think in an innovative manner and with in the constraints imposed by the system. To affect this plan and to get deeper in to the system, the following sources were adopted.

PRIMARY SOURCES DIRECT OBSERVATION:

48

Every Home, Every Where With Pride… Passion… &…Performance…

Since the procedure for various function are lengthy and complex, the best way to get aquatinted with the system is direct observation so as to get a first hand experience of the issues and problem facing the organisation in carrying out the particular procedure. The direct observation of various documents at the time of auditing helped understanding the various aspects of the procedures as also the problems and issues arising there from. It also helps enhancing the perception about the possible issues that might arise in future, if the same procedure is being followed. Similarly the direct observation of the issue procedure has helped to understand the pressures at the time of auditing and practical constraints in the procedure due to slow speed. This method helps us to understand the current procedure followed by different area owners.

INQUIRY: The inquiry through questioning the staff member or through investigation is another method to get aquatinted with the system and procedures. While the inquiry from the experienced staff member may help in bettering the perception process about the system, procedures and the constraints there in, but this method must be used very cautiously for it may give a particular mindset and reduce the chances for own innovative thinking.

Information from SAP The system used in whirlpool is latest version of Sap (4.7) .The first step in the assets inventory is collecting information from the system sap. Every person in whirlpool has it different login id and password provided to him or her according to their authority. The person who is responsible for maintaining assets record can’t access the information related to the assets. In the system all the records of the assets are maintained assets class wise i.e.  Plant and machinery  Land and building 49

Every Home, Every Where With Pride… Passion… &…Performance…

 Moulds  Equipments   

Office Equipments General Equipments Furniture and fixtures

To access the assets record we have to enter: Company code 9101 Business area 2100 Cost center 912114, 912115, 912116, etc Date last months date

SAP (4.7 VERSION)

50

Every Home, Every Where With Pride… Passion… &…Performance…

Gate Entry

51

Every Home, Every Where With Pride… Passion… &…Performance…

Gate Entry Code 103 No material can enter the factory premises, without entering the details in Goods Receipt Purchase Order

Stores

52

Every Home, Every Where With Pride… Passion… &…Performance…

Stores Code 105 Goods received note being entered into the system. Items become part of inventory after this movement. Stores

53

Every Home, Every Where With Pride… Passion… &…Performance…

Stores Code 311 Issue of material from stores to shop floor.

54

Every Home, Every Where With Pride… Passion… &…Performance…

Process Flow Diagram For Refrigerators Vendors

Central Store

Press Shop/ Paint Shop

Cabinet Foaming Extrusion

Vaccum Foaming

Door Foaming

Line 1

Line 2

Line 3

Finished Goods Godown

55

Every Home, Every Where With Pride… Passion… &…Performance…

Introduction To Fixed Assets Also called: Capital Assets DEFINITION: An accounting term that describes tangible property used in the operation of a business such as buildings, machinery, fixtures, furniture and equipment. It does not include items normally consumed in the course of business operation or production. Fixed asset, also known as property, plant and equipment (PP&E), is a term used in accountancy for assets and property, which cannot be easily converted into cash. This can be compared with the current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred too as fixed. Fixed assets normally include items such as land and buildings, motor vehicles, furniture and fittings and plant and machinery. These often receive favorable tax treatment (depreciation allowance) over short-term assets because they depreciate over time.

56

Every Home, Every Where With Pride… Passion… &…Performance…

Purpose or need of Fixed Asset Verification Assets inventory should be done periodically in every organisation for assessment of: • Capitalisation of assets in fixed assets is done for preparation of annual financial statement. • Assets inventory shows the picture of gross block • Maintain proper records of fixed assets i.e. plant and machinery according to the location where they are installed. • To present report to management regarding the assets acquired, disposed, obsolete, not working etc.

Depreciation Depreciation is a the gradual and permanent decrease in value of an asset from any cause -------- By R.N Carter “It is a matter of common knowledge that all fixed assets such as plant, machinery, building furniture etc. gradually diminish in value as they get older and become worn out by constant use in the business. ------- By JR Batliboi In every business there are certain assets of a fixed nature tat are needed for the conduct of the business operations. Some examples of such assets are building, plant and machinery, motor vehicles, furniture, office equipments etc. these assets have a definite span of life after the expiry of which the assets will lose there usefulness for the business operations. Fall in the value and utility of such assets due to their constant use and expiry of time is termed as Depreciation. In other words the process of allocation of the cost of a fixed asset over its useful life is known as depreciation.

57

Every Home, Every Where With Pride… Passion… &…Performance…

Special features or characteristics of depreciation:  Depreciation is decline in the value of fixed assets (except land). Such fall is of a permanent nature. Once the value of an asset is reduced due to depreciation, it cannot be restored to its original cost.  Depreciation is a gradual and continuing process because the value of asset will decline either by their constant use or obsolescence due to expiry of time.  Depreciation is not the process of valuation of asset but process of allocation of the cost of asset to its effective span of life.  The term dep. is used only in respect of tangible fixed assets. The term is not used for wasting assets such as mines, oil wells etc.

Causes of depreciation  By constant use: Due to the constant use of fixed assets in business operations. Wear and tear arise in them which results in the reduction of there values.  By expiry of time: The value of majority of assets decreases with passage of time even if they are not being put to use in the business. Natural forces such as rain, winds etc. contribute to the deterioration of their values.  By expiry of legal rights: There is certain assets, which have a definite, span of life such as lease.  By obsolences: Due to new inventions and improved techniques the old assets become obsolete and may have to be discarded even if they can be put to use physically.  By Accident: Some times a machine may be destroyed due to fire, earthquake, flood etc.

58

Every Home, Every Where With Pride… Passion… &…Performance…

 By depletion: It is the decrease in the value of wasting assets such as mines, oil wells etc. due to there constant working.  By permanent fall in market price: Due to the fluctuation in the mkt. Value of fixed assets are not recorded because such as assets are not meant for resale but for use in the business, sometimes the fall in the value of certain fixed assets is treated as depreciation e.g. permanent fall in the value of investments.

Methods of providing or allocating depreciation: • • • • • • • •

Straight-line method Written down value method Annuity method Depreciation fund method Insurance policy method Revaluation method Depletion method Machine hour rate method

Straight-line method The method is also termed as Original Cost method because under this method depreciation is charged as a fixed percentage on the original cost of the assets. The amount of depreciation remains equal from year to year and as such the method is also known as Equal Installment method or Fixed Installment method Yearly depreciation =

Cost of the Asset- Scrap Value Estimated life

59

Every Home, Every Where With Pride… Passion… &…Performance…

Merits • • • •

Simplicity Equality of depreciation burden Assets can be completely written off Knowledge of original cost and up to date depreciation

Demerits • • • • • •

Difficulty in computation Unequal charge against income Undue pressure in later years Omission of interest factor Unrealistic to write off the value of asset to zero Difficulty in the determination of scrap value

60

Every Home, Every Where With Pride… Passion… &…Performance…

Findings and Analysis GROSS VALUE

TOTAL ASSETS

8095.84 LACS

ASSETS AS PER ASSET REGISTER ASSETS VERIFIED

8076.41 LACS

ASSETS NOT FOUND PHYSICALLY

9.86 LACS

ASSETS NOT IN USE/OBSOLLETE ASSETS

80.56LACS

ASSETS FOUND PHYSICALLY BUT NOT IN FA

1.00 Nos.

OBSERVATION SHEET 10000 8000 VALUE IN 6000 LACS 4000 2000 0

Asset as per register Asset Verified Asset Not found 1 STATUS OF ASSETS

Asset not in use

61

Every Home, Every Where With Pride… Passion… &…Performance…

COST CENTER 2112 2114 2115 2131 2141 2143 2145 2146 2147 2151 2152 2153 2154 2156 2157 2158

DEPARTMENT NAME HR PROCUREMENT QUALITY PDC ADMIN STORE ROOM MAINTENANCE ROOM TOOL ROOM POWER HOSE PRESS SHOP PAINT SHOP CO EXTRUSION VACCUM FOAMING CABINET FOAMING DOOR ASSEMBLY MAIN ASSEMBLY TOTAL

GROSS BLOCK 1,919,343.95 7,566,815.00 15,903,376.85 7,956,568.98 11,385.00 23,677,669.98 893,056.00 67,475,087.07 120,025,052.09 72,514,364.15 50,190,424.80 94,084,024.37 111,759,343.34 55,858,284.51 179,749,425.27 809,584,221.36

62

Every Home, Every Where With Pride… Passion… &…Performance…

63

Every Home, Every Where With Pride… Passion… &…Performance…

SUMMARY SHEET HR PROCUREMENT 1,800.00

QUALITY

1,600.00

PDC

1,400.00 1,200.00 GROSS BLOCK (IN LAKHS)

ADMIN

1,000.00

STORE ROOM

800.00 600.00

MAINTAINANCE ROOM TOOL ROOM

400.00 200.00 -

1 COST CENTER

POWER HOUSE PRESS SHOP PAINT SHOP CO-EXTRUSION VACCUME FOAMING CABINET FOAMING DOOR ASSEMBLY MAIN ASSEMBLY

64

Every Home, Every Where With Pride… Passion… &…Performance… Cost Centre

Cost Centre

(Code)

Name

2112

HR

2114

Gross Total

Asset not in

Asset not

use

found

Asset in use & found

1919343.95

-

-

1919343.95

Procurement

7566815.00

-

204,618.00

7,362,197.00

2115

Quality

15903376.85

409,715.00

-

15493661.85

2131

PDC

7,956,568.98

-

-

7,956,568.98

2141

Admin

11385.00

-

11385.00

0.00

2143

Stores

0.00

-

-

0.00

2145

Maintenance

23677669.98

-

-

23677669.98

2146

Tool Room

893056

729539

-

163517

2147

Power house

67475087.07

-

46525

67428562.07

2151

Press shop

120025052.0

4,288,611

1.00

115,736,440

2152

Paint shop

72514364.15

-

-

72514364.15

2153

Co extrusion

50190424.80

320112

10152

49860160.8

2154

Vacuum foaming

94084024.37

-

-

94084024.37

2156

Cab foaming

111759343.3

668200

-

111091143.34

2157

Door assly

55858284.51

-

537432

55,320,853

2158

Main assly

179,749,425.27 1,640,199.92 176,608.14

178594234

65

Every Home, Every Where With Pride… Passion… &…Performance…

Assets found and Use

HR PROCUREMENT QUALITY PDC ADMIN STORE ROOM MAINTAINANCE ROOM TOOL ROOM POWER HOUSE PRESS SHOP PAINT SHOP CO-EXTRUSION VACCUME FOAMING CABINET FOAMING DOOR ASSEMBLY MAIN ASSEMBLY

66

Every Home, Every Where With Pride… Passion… &…Performance…

67

Every Home, Every Where With Pride… Passion… &…Performance…

Problems occurred during physical verification of Assets  Wrong description of fixed asset’s Name Due to incomplete or wrong description of assets in the assets register are difficult to identify because assets are capitalised as per the invoice description.

 Fixed assets not found or scraped off Fixed assets are scraped off without prior information to responsible department. This can lead to over Capitalisation because the same is not written off in assets record.

 Fixed assets transferred to different cost center Fixed assets are transferred to different cost center without any prior information. Thus, in record, assets are transferred to different cost center and which creates problem in physical verification to identify the assets.

 Obsolete fixed assets The obsolete assets have been a matter of concern, especially with fast changing technology. Obsolete fixed assets are not written off in the assets record because not any prior information given. As a result, it shows the false picture of the gross block in the books.

 Wrong description of regarding the cost center In case, if the information regarding the cost center where the fixed assets are installed is documented false or mentioned in different cost center. Thus during the physical verification of assets is difficult to identify the assets.

 Wrong description regarding the number of items or quantity installed If it is not clearly mentioned that where and how many number of items are installed in which cost center. It becomes difficult to identify the assets.

68

Every Home, Every Where With Pride… Passion… &…Performance…

Suggestion for the assets  The assets not found should be written off The assets that are not found physically in the company, there is no need to show them in the records. They should be written off in the books of accounts. Because clear picture of gross block is necessary for the preparation of annual financial statements. Thus these assets should be written off from the records.

Benefits • •

It would help the company to show the actual picture of gross block. It would reduce the amount of depreciation and thus lead to increase the profits of company.

 Suggestions for the assets not in use If possible utilize the assets in any other department The assets, which are not in use for one department, might be useful for any other department. Thus it should be checked whether it could be used for any other purpose or not.

Benefits The assets, which are obsolete, may be useful for any other thus by utilizing obsolete assets in other department will reduce the expenditure of the company.

 Refurbish and sell which are obsolete The assets, which are obsolete for FRO that, might be useful for any other company. Thus they should be refurnished and sell that assets to any one who needs that.

Benefits Space used by the obsolete assets can be utilized for any other purpose. Return form the sale of assets can be utilized in adopting new technologies and innovation etc.

69

Every Home, Every Where With Pride… Passion… &…Performance…

INVENTORY Definition: Inventory is the stock of any item or resource used in an organisation: raw materials, finished products, components parts, supplies and work in progress. Inventory is a store of goods and stock. In manufacturing, items in inventory are called Stock Keeping items, held at a stock (storage) point. Stock keeping items usually are raw materials, work in progress, finished products and supplies. Inventory Management a fruitful area for lowering overall operations costs From the firm’s viewpoint, inventories represent an investment: capital is required to store materials at any stage of completion. Purpose of Inventory: • • • • •

Enables the firm to achieve economies of scale Balances supply and demand Enables specialization in manufacturing Provides protection from uncertainties in Demand and Order Cycle Acts as a buffer critical interface within the supply chain.

Functions of Inventory • • • • •

The Decoupling Function Storing Resources Irregular Supply and Demand Quantity Discounts Avoiding Stock outs

70

Every Home, Every Where With Pride… Passion… &…Performance…

Inventory control is concerned with minimizing the total cost of inventory. In the U.K. the term often used is stock control. The three main factors in inventory control decision-making process are: The cost of holding the stock (e.g., based on the interest rate). The cost of placing an order (e.g., for row material stocks) or the set-up cost of production. • The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand The third element is the most difficult to measure and is often handled by establishing a "service level" policy, e. g, certain percentage of demand will be met from stock without delay. • •

Inventory Management and Inventory Control must be designed to meet the dictates of the marketplace and support the company's strategic plan. The many changes in market demand, new opportunities due to worldwide marketing, global sourcing of materials, and new manufacturing technology, means many companies need to change their Inventory Management approach and change the process for Inventory Control. Despite the many changes that companies go through, the basic principles of Inventory Management and Inventory Control remain the same. The underlying principles for accomplishing good Inventory Management and Inventory activities are: The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations.

71

Every Home, Every Where With Pride… Passion… &…Performance…

The basic building blocks for the Inventory Management system and Inventory Control activities are:     

Sales Forecasting or Demand Management Sales and Operations Planning Production Planning Material Requirements Planning Inventory Reduction

The emphases on each area will vary depending on the company and how it operates, and what requirements are placed on it due to market demands. Each of the areas above will need to be addressed in some form or another to have a successful program of Inventory Management and Inventory Control.

STORE MANAGEMENT & PROVISIONING Provisioning is a part of Store management • Present trends in consumption. • Future planned It is a process of translating plans in to hardware which includes: - Forecasting of future requirements based on past consumption. - Utilization of equipment. • Future planned utilization of equipment.

Objectives of Provisioning are: a) Right kind of equipment available. b) In the right quantity & quality. c) In the right place. d) At the right time. e) At the right reasonable cost

72

Every Home, Every Where With Pride… Passion… &…Performance…

Material Management activities includes        

Material planning & programming. Purchasing. Inventory Control. Receiving & Accounting. Warehousing. Store Keeping. Transportation & Material handling. Disposal of surplus stores.

Two important aspects of Material Management are Inventory Control & ABC analysis of Stock items.  Inventory control determines systematically what items to hold in stock, when and in what quantities to order them and how much to hold at any time.  ABC Analysis

`A’ – High value items, `B’ – Medium value items, `C’ – Low value items,

73

Every Home, Every Where With Pride… Passion… &…Performance…

‘ABC’ SYSTEM Activity Based Costing analysis, it also is a way of dividing a Pareto Chart into three regions (A, B and C), which contain 80%, 15% and 5%, respectively, of the problems ABC analysis is a technique of exercising selective control over inventory items. The technique is based on assumption that a firm should not exercise the same degree of control on all items of inventory. It should rather keep greater control over those items, which are more costly as compared to those items, which are less costly. According to this approach, the inventory items are divided into 3 categories A, B, & C. ‘A’ class items includes more costly items, while ‘B’ Class items consist of less costly items and ‘C’ Class items consist of least costly items. Thus ABC analysis concentrates On important items and therefore, is also known as Control by Importance and Exception (CIE). This approach is also known as Proportional Value Analysis (PVA), since the items are classified in importance of their relative value. Inventory surveys in general have shown the following trends regarding the components of Inventory manufacturing Organizations:

74

Every Home, Every Where With Pride… Passion… &…Performance… PERCENTAGE OF CATEGORY A B C

TOTAL VALUE 80

PERCENTAGE OF TOTAL QUANTITY 5

15

15

5

80

IN WHIRLPOOL (FRO) ‘A’ class items: These are the high value items, which constitutes about 80% of the total value of material consumption in the production. The ‘A’ class has approximately 35 items for which stringent controls have been placed. ‘B’ class items: The B class constitutes of those items, which make it about 15- 20% of total consumption. There are approximately 100 items classified under this category for which the control is limited to surprise check and periodic inventory. C class items: This category constitutes of the minor item making all most 70-75% of total items in the stop, but contributing only 5-10% of the total consumption of the 75

Every Home, Every Where With Pride… Passion… &…Performance…

material. Many of these items are placed under JIT so as to minimise the inventory investment. For these items periodic reconciliation and a daily shortage list is sufficient control.

PERPETUAL INVENTORY SYSTEM As per the Institute of Cost And Management Accountant, London, “The Perpetual or Continuous Inventory System is a system of records maintained by the controlling departments which reflects the physical movement of stock and their current balance.” Thus it refers to the system of regular updating of stock records with each passing transaction so as to reflect the current state of the stock balance at any point of time. It also facilitates the regular stocktaking whereby the physical inventory is regularly checked with the system stock and any adjustment required is made with the immediate effect. A perpetual inventory system is one in which the inventory quantities and values for all purchases and issues are recorded directly in the inventory system as they occur. Perpetual inventory system balances are verified by means of periodic physical counts. A revolving physical count, where segments of inventories are counted at different times, may be used, provided all inventories are counted at least every other fiscal year. The agency inventory officer is responsible for developing and implementing procedures for recording inventory additions as received and reductions as used. In Short: • •

Perpetual inventory system updates inventory accounts after each purchase or sale. Inventory subsidiary ledger is updated after each transaction.

76

Every Home, Every Where With Pride… Passion… &…Performance…

•

Inventory quantities are updated continuously.

IN WHIRLPOOL (FRO) In this organisation updating of Inventory is done in 2 ways: I • External Inventory check • Internal inventory check  External inventory check: It is done on quarterly basis. Generally in the months of March, June, September, December. In this system Whirlpool’s statutory auditors (S.R.batliboi) come for a physical inspection and check the inventory. All the items whether A, B, C have to undergo this check.  Internal Inventory checks: Apart from External check, the company also keeps a check on its inventory internally. Audit is done on various items as follows: A class items: - 80% items weekly basis and remaining on monthly basis. B class items: - Majority items on monthly basis C class items: - Quarterly basis at the time of external audit.

77

Every Home, Every Where With Pride… Passion… &…Performance…

KANBAN SYSTEM Kanban means ‘sign’ or ‘instruction card’ in Japanese. In paperless control system, containers can be used instead of cards. The cards or containers make up the Kanban pull system

FLOW OF 2 KANBANS Withdrawl Kanban

Machine Center Production Kanban

Storage Parts A&B

Storage Parts A&B

Machine center

Material Flow Card (signal) flow

The Japanese refer to Kanban as a simple parts-movement system that depends on cards and boxes/containers to take parts from one workstation to another on a production line. Kanban stands for Kan- card, Ban- signal. The essence of the Kanban concept is that a supplier or the warehouse should only deliver components to the production line as and when they are needed, so that there is no storage in the production area. Within this system, workstations 78

Every Home, Every Where With Pride… Passion… &…Performance…

located along production lines only produce/deliver desired components when they receive a card and an empty container, indicating that more parts will be needed in production. In case of line interruptions, each workstation will only produce enough components to fill the container and then stop. In addition, Kanban limits the amount of inventory in the process by acting as an authorization to produce more inventories. Since Kanban is a chain process in which orders flow from one process to another, the production or delivery of components are pulled to the production line. In contrast to the traditional forecast oriented method where parts are pushed to the line. "Kanban represents an efficient tool to continuously rationalize the production process and find the source of problems”. Since the circulation of Kanban will stop if there is a production problem on line, it is easy to both spot and correct the problem instantaneously. THE KANBAN PROCESS- MORE THAN INVENTORY CONTROL To managers outside of Japan, Kanban may look only like a pure production method having little or nothing to do with the surrounding environment. This is a fallacy. Instead, the concept takes form on the shop floor, in close interaction between the work force and management, and more importantly, involves both internal and external customers. Identifies Kanban as a production system, which draws many of its elements from two primary sources: industrial re-engineering and work force (Japanese) Kanban management. Kanban scheduling systems operate like supermarkets. A small stock of every item sits in a dedicated location with a fixed space allocation. Customers come to the store and visually select items. An electronic signal goes to the supermarket's regional warehouse detailing which items have sold. The warehouse prepares a (usually) daily replenishment of the exact items sold. In modern supermarkets Kanban signals come from checkout scanners. They travel electronically (usually once a day) to the warehouse. Smaller stores still use visual systems. Here, a clerk walks the aisles daily. From empty spaces he deduces what sold and orders replacements

Advantages •

Low fixed stock (number of Kanbans in system)

79

Every Home, Every Where With Pride… Passion… &…Performance…

•

Low lead-time

•

Quality problems visible

•

Highly stable

Disadvantages •

Inflexible (transfer batch fixed, except with "Variable Quantity Systems" above)

•

Can cause stoppages (often viewed as an opportunity to solve a problem)

•

Highly stable! (But you may need to change it, or it may be an unstable environment)

KANBAN IN WHIRLPOOL (FRO) In the manufacturing Kanban system, a machine shop supplies components to final assembly. Assembly is a manual operation with little setup and produces in lot sizes of one, to customer requirements. Machining is more automated and has significant setup costs. Machining produces in batches to amortize the setup and sequence parts to minimize tool changes. A small quantity of each part is maintained at machining. By observing the quantities, the machinists know what products need to be made.

A Manufacturing Example

80

Every Home, Every Where With Pride… Passion… &…Performance…

In Whirlpool (FRO) 25 items are used in Kanban system in which cards are used. 30 items are used in Kanban without cards; the purpose of this system is to minimize inventory inflow.

81

Every Home, Every Where With Pride… Passion… &…Performance…

KANBAN IN WHIRLPOOL

MILKRUN It is a routine trip involving stops at many places. It is basically used for local components. A transporter is fixed which take the material from the local vendors and delivers it to the company It is just like a Milk Van Route, in which the milkman collects milk from many vendors and delivers it to different customers.

In Whirlpool (FRO) A transporter named TCI (Transport Corporation Of India) SUPPLY CHAIN SOLUTION is fixed. They provide various vehicles to the company. 82

Every Home, Every Where With Pride… Passion… &…Performance…

The requirement is send to 5-6 Vendors, time and route is fixed from vendors and as per schedule pick the orders. Bulky components like freezer etc are not used in Milk run.

WOIL SUPPLY CHAIN - INBOUND

•

Supply Vehicle Turnaround

–Faridabad :- 12 to 24 trips a day –NCR region :- 3 trips a day

83

Every Home, Every Where With Pride… Passion… &…Performance…

Just in Time (JIT)

84

Every Home, Every Where With Pride… Passion… &…Performance…

JIT system is a system of Purchases and Inventory management whereby the stores make adequate arrangements with the suppliers so as to bridge the gap between delivery and consumption. The effect of the JIT system is that the system is able to work with the minimum stock level and the cost of making an investment in keeping the stores is passed on to the suppliers.

JUST-IN-TIME (JIT) PRODUCTION Just in time (JIT) is defined in the APICS dictionary as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. It also has been described as an approach with the objective of producing the right part in the right place at the right time (in other words, “just in time”). Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown).

In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, balanced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all inventory buffers toward zero and achieving the ideal lot size of one unit. The basic elements of JIT were developed by Toyota in the 1950's, and became known as the Toyota Production System (TPS). JIT was well established in many Japanese factories by the early 1970's.

85

Every Home, Every Where With Pride… Passion… &…Performance…

JIT Just-in-Time manufacturing `Just-in-time' is a management philosophy and not a technique. It originally referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the `customer' is the final purchaser of the product or another process further along the production line. It has now come to mean producing with minimum waste. "Waste" is taken in its most general sense and includes time and resources as well as materials. Elements of JIT include:  Continuous improvement.  Attacking fundamental problems - anything that does not add value to the product.  Devising systems to identify problems.  Striving for simplicity - simpler systems may be easier to understand, easier to manage and less likely to go wrong.  A product-oriented layout - produces less time spent moving of materials and parts.  Quality control at source - workers are responsible for the quality of their own output.  Preventative maintenance, Total productive maintenance - ensuring machinery and equipment functions perfectly when it is required, and continually improving it.

 Eliminating waste. There are seven types of waste: • • • • • • •

Waste from overproduction. Waste of waiting time. Transportation waste. Processing waste. Inventory waste. Waste of motion. Waste from product defects.

 Good housekeeping - workplace cleanliness and organisation. 86

Every Home, Every Where With Pride… Passion… &…Performance…

In Whirlpool (FRO) Milk van route is used for local items. JIT is used in the items, which are delivered to shop floor directly from Vendor. For Example: Plastic components, Bush and Knobs. In Whirlpool the JIT operations are being done on roughly 180 items in a separately managed location primarily low value and high volume (C Class) items. The JIT system presupposes the following attributes:  The company should have reliable suppliers with adequate capacity to fulfill the requirement on timely basis.  The suppliers should have shared understanding of as well as acceptability for the system and the requirement schedule.  The procurement division must have elaborate scheduling arrangements for the purchases including keeping buffer with vendors as well as alternative vendors.  The store staff has to be ever alert about the situation so as to be able to act quickly in the case of contingencies else the impact might be dreadful.  Since JIT system discourages the inventory in excess of the current requirement hence the system cannot afford to deviate frequently from the established plan because it puts the stores arrangements under unnecessary stress and pressure to perform. Thus the stable production schedule should be adhered as far as possible.

LIMITATIONS This project is a result of my training in finance at WHIRLPOOL .It was a successfully completed so that this report is prepared. But nothing is perfect we know so this report also has some limitations, which is observed by me. These are as follows:

87

Every Home, Every Where With Pride… Passion… &…Performance…

 Lack of time is one of the problems, which is faced by me during this training.  Lack of supervision.  Biased data as data is also collected through secondary sources, thus the bias of publication might have entered into the research report.  Lack of experience as this is very first report prepared by me so due to inexperience there may be some limitation

88

Every Home, Every Where With Pride… Passion… &…Performance…

89

Every Home, Every Where With Pride… Passion… &…Performance…

90