Asgn 1- Annual Reprt Demo

OM Assignment No. 1

Operations Management

Study of a Manufacturing Co. from Annual Report (Select Annual report of 2007-8 or Calendar Yr 2007 only) Objective of the Assignment –

To get familiar with Co. Annual Report – Which info is lying in which corner? 2. To understand – What-all info can be extracted from such reports. 3. To judge the operational health of Co. thru’ some selective ratios. 1.

Imp. Instructions – 1. Joint Assignment of 2 students, hence interaction for analysis / comments is expected. 2. Last Date of Submission : ……… 2008 (-ve marks, if delayed) 3. Coping strictly prohibited – Both parties will get 0 marks 4. Following is a template. The same format must be followed.

Company Name: H.O. Location: Factory Location: CEO: Products Manufactured:

Cipla Limited. Mumbai Central, Mumbai Central Dr. Y. K. Hamied Bulk Drugs, Tablets & Capsules, Liquids, Creams,

Capacity Analysis 2006 -07 Product Name Tablets & Capsules Bulk Drugs Aerosols/ Inhalation Liquids

Units

Installed Capacity

Production Sales

Million Tonne Thousand Kilolitre 2007-2008

Product Name

Units

Tablets & Capsules Bulk Drugs Aerosols/ Inhalation Liquids

Million Tonne Thousand Kilolitre

Installed Capacity

Production

Sales

YoY Increase %

Financial Analysis

Net Sales (Excluding other income) Rs. Material Cost Employee Cost No. of Employees (assumed or

( All fig. in Rs Cr. except employees) 07-08 % of 06-07 % of YoY % Sales sales Change ----------

----

-----

actual )

Inventory held on yr. end Power & Fuel Cost Interest paid Depreciation Exports Imports Net Profit (NOPAT) Average Earning of Employee Revenue /Employee ( Sales / No. of Emps.) Inventory/Turn-Over

Rs. ----- L/Yr

Rs. ----- L/Yr

Rs. ----- L

Rs. ------ L

----- Times

----- Times

E.P.S. (Rs.)

Student’s Name 1. __________________ , Roll No. __________ 2. __________________ , Roll No. __________

Page 2 1. Go thro’ all pages of the annual report, particularly – Chairman’s statement, Directors’ Report, Corporate Governance, Explanatory Notes, Product & Capacity Details 2.

Find answers to following issues and give your comments (not exceeding this page).

( Imp. :

1.

Whole assignment should not exceed 2 Pages. No folder/ Plastic cover required. Only printed pages, No hand-written / No e-mail )

Capacity Utilization: How is Production and Sell w r t Installed Capacity? Is there improvement w r t last year.? Is company moving with market trends ?

2. Productivity , Quality– How do find this company’s productivity of their input resources like – Manpower, Capital, Power? Is there any improvement w r t last year? 3. Inventory Management – Is there any improvement over last yr.? What steps/ measures are taken to curtail it? 4. Profitability -

Is there any rise/fall over last yr.? For what reasons there is rise/ fall?

5. Future Plans -

What info do you get from the Chairman’s statement/ Directors’ Report

Student’s Name__________ ,

Div. -_________, Roll No. __________

OM Assignment No. 1 Pg. 1.

Operations Management

Study of a Manufacturing Co. from Annual Report Company Name: H.O. Location: Factory Location: Managing Director: Products Manufactured: Product Name

Units

(Annual report of 2004-05) Maruti Udyog LTD New Delhi Gurgaon, Haryana Jagdish Khattar A1 (Maruti 800), A2 (Alto, Zen, Wagnor) A3 (Esteem, Baleno)

Passenger Cars and Light Duty Utility Vehicles (2003-04)

Nos.

Installed Capacity (Unit) 3,50,000

Passenger Cars and Light Duty Utility Vehicles (2004-2005)

Nos.

3,50,000

Items Net Sales (Excluding other income) (Rs. Cr) Material Cost Employee Cost (Rs. Cr) No. Of Employees ( Actual) Inventory (Rs. Cr.) Power & Fuel Cost( Rs. Cr) Interest (Rs. Cr) Depreciation(Rs. Cr) Exports (Rs. Cr) Imports (R/M and M spares) (Rs. Cr) Net Profit (after Int., Dep., Tax) (Rs. Cr)

Production (Unit) 4,72,908

(%) Cap. Utilization

5,40,409

135.11

Sales (Unit) 4,72,122

YOY (Units) -

154.41

5,36,301

+ 13.6 %

2004-05

%

2003-04

%

10,911

-

9,018

-

196 3,453 666 58 36 457 982 1,608 853

1.8 6 0.5 0.4 4.2 9 19.7 7.8

177 3,334 439 95 43 495 941 1,360 542

1.9

4.9 1 0.5

5.5 10.5

20.4 6

Ratios Items Average Earning of Employee (Rs. L /year) Revenue /Employee (Sales / No. of Emps.) Inventory/Turn-Over Ratio E.P.S. (Rs./ Share of FV Rs. ……. /-)

2004-05 5.67 316 15.4 Times 29.6

2003-04 5.32 271 15.2 Times 18.8

YoY % Change 20.98 10.42 3.56 51.57 (39.35) (17.05) (7.69) 4.38 18.19 57.5

Student’s Name- ____________,

Division ___,

Roll No. _______________

Pg. 2 : Analysis of MUL Operations 2004-05 1. Capacity Utilization:  Co. is utilizing it’s installed capacity at optimum level, which shows Co’s efficiency to use available resources  MUL also reduced the number of hours required to produce a vehicle. From a high of 100 hours in FY01 to 41.86 hours in FY05, it has come a long way in improving its Productivity and efficiency. 2. Productivity & Quality :  Productivity –Company has implemented the Maruti Production System (MPS) on the shop floor. MPS has a systematic way to identify and eliminate waste in operations, such as unnecessary movement of men and material, in-process waiting  Productivity measured in terms of HPV (Hours per Vehicle) i.e. man-hours spent to produce one vehicle, showed an improvement of 9.2 per cent during 2004-05  To reduce inventory across the value chain, company had adopted a system of “e-nagare”, an online system to schedule and order material and other components. Inventory levels at the MUL plant reduced by 22 per cent  Maruti has improved productivity and cut cost through kaizen practices  Quality-During 2004-05, able to reduce warranty cost per vehicle by 16 per cent compared to the previous year, and by more than 50 per cent over the last three years  Safety-Using the Japanese practice of Kiken Youchi Training or KYT, employees across the shop floor regularly identify potential safety hazards in their area of operations. Based on this feedback, the layout and sequence of the manufacturing process is modified to prevent accidents. 3. Inventory Management :  MUL follows just-in-time (JIT) inventory principles. Around 70 per cent of components are outsourced, and manufacturing is undertaken based on JIT inventory principles  MUL has successfully improved average inventory turnover from15.2 in 2003-04 to 15.4 in 2004-05 and average receivables from 17.8 days in 2003-04 to 14 days in 2004-05.

4. Profitability :     

Net profit increased 57.5 per cent Net profit margin (PAT /Net Sales) increased from 6 %t in 2003-04 to 7.8 % in 2004-05 ROCE increased from 22.3 % in 2003-04 to 32.1 % in 2004-05 Return on av. net worth (RONW) increased from 16.5 % in 2003-04 to 21.5 % in 2004-05 EPS increased from Rs. 18.77 in 2003-04 to Rs. 29.55 in 2004-05.

5. Outlook and future strategies :  Identify specific customer segments like teachers and motorbike owners, and offer them customized schemes and explore new markets for export  Co. is now preparing for further efficiency called the “The Next Leap”  New Car Manufacturing Plant at located in Manesar, Haryana (2006)

Student’s Name- ____________,

Division ___,

Roll No. _______________