Download - Project q Wl
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 1/43
Quality of work life
PART- A
1. INDUSTRY PROFILE:
- 1 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 2/43
Quality of work life
CONSTRUCTION AND MINING EQUIPMENT INDUSTRY
Construction and mining equipments industry covers a variety of machinery such ashydraulic excavators, wheel loaders, backhoe loaders, bull dozers, dump trucks, tippers, graders,
pavers, asphalt drum / wet mix plants, breakers, vibratory compactors, cranes, fork lifts, dozers,
off-highway dumpers, drills, scrapers, motor graders, rope shovels etc. They perform a variety of
functions like preparation of ground excavation, haulage of material, dumping/laying in specified
manner, material handling, road construction etc. These equipments are required for both
construction and mining activity.
Exporters of construction machineries are riding the boom wave with many bigger orders from
west Asian African countries. Most of them have managed to get huge profits with many
registering as high as a threefold increase.
Domestic production began in INDIA in 1964 with the setting up of Bharat Earth Movers Ltd
(BEML), a public sector unit of the Ministry of Defence, at Kolar in South India to manufacture
bull dozers, dumpers, graders, scrapers, etc. for defence requirements. In the private sector, the
Hindustan Motors’ Earthmoving Equipment Division was established in 1969 at Tiruvallur, near
Chennai with technical collaboration from Terex, UK for manufacture of wheel loaders, dozers
& dumpers...
In 1974, L&T started manufacturing hydraulic excavators under license from Poclain, France. In
1980 and 1981, two more units, Telcon and Escorts JCB commenced manufacturing of hydraulic
excavators (under license from Hitachi, Japan) and backhoe loaders (under license from JCB,
UK) respectively.
- 2 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 3/43
Quality of work life
The construction and mining equipment industry is dominated by a few large manufacturers in
each product segment. BEML supplies to nearly half the total market. BEML and Caterpillar
lead in dumpers and dozers while L&T Komatsu and Telcon lead in excavators, JCB India in
backhoe loaders and Escorts Construction Equipment Ltd. in Mobile Cranes.
India’s construction equipment sector has a market size of 1.49billion, a fraction of the global
market of over 56.17billion. The global industry is growing at a 5% rate, while Indian
construction equipments sector is growing at the rate of 30% annually.
The Indian capital equipment industry has:• The advantage of high technical talent base.
• Established component vendor base.
• Low labor rates, all ingredients for a competitive product.
The appreciable increase in real estate construction activities has resulted in a surge of demand
for transit concrete mixers, bar bending and cutting machines, excavator and backhoes and
earth rammers. For the construction equipment sector, which has adapted rapidly to the changed
scenario, this is indeed good news, as it paves the way for an exciting future.
The opening of the Indian economy and the booming infrastruction and real estate sectors
attracted international giants including Telco, JCB, VOLVO, TEREX, CATERPILLAR and
HITACHL.
State Government development authorities and even companies have begun investing in
infrastructure development projects.
Present market condition is very competitive and there are five to six global players (Telco, JCB,
VOLVO, TEREX, CATERPILLAR and HITACHL.) for excavators in India, only those
companies, which can supply quality machines at lowest price, can be successful. This requires
substantial improvement in productivity levels by more effective utilization of fixed assets of the
company.
- 3 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 4/43
Quality of work life
The success depends upon the company’s ability to meet the challenges of price, increasing
value to customers & investors and retaining the powerful brand image. And L&T Komatsu is
one such company which steps forward for success of the company.
L&T Komatsu is a firm under construction and mining equipment industry which has established
itself to the fullest and competitive as well. L&T Komatsu is a premium manufactures of various
types of earth moving equipments like hydraulic excavators, wheel loaders, backhoe loaders, bull
dozers, dump trucks, tippers, graders, pavers, asphalt drum / wet mix plants etc.., L&TK is
known as NO.1 Company in maintaining quality of its products and has 66 acres of wide campus
for manufacturing their products.
L&T K has upgraded itself with advanced technology; they have advanced equipments for the
movement of spare parts, paint spray machines for the purpose of painting and 2 world class
robots for welding purpose. L&TK has an advantage of strong technical base workers and
recognizes the best workers by rewarding them.
2. COMPANY PROFILE:
(a) BACKGROUND AND INCEPTION OF L&T-KOMATSU
ABOUT LARSEN & TURBO
- 4 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 5/43
Quality of work life
The evolution of Larsen & turbo Ltd (L&T) into the country’s largest engineering and
construction organization is among the remarkable success stories in old Indian Industry. L&T,
a partnership firm founded in 1938 by two Danish Engineers, Henning Hock-Larsen and Soren
Kristian Toubro- both of whom were strongly committed to developing India’s engineering
talent and enabling it to meet the demands of industry. Beginning with the import of machinery
from Europe, L&T rapidly took on Engineering and Construction assignments of increasing
sophistication.
In 1938, the two friends decided to forgo the comforts of working in Europe, and started their
own operation in India. All they had was a dream. Their first office in Mumbai (Bombay) was so
small that only one of the partners could use the office at a time.
In the early years, they represented Danish manufacturers of dairy equipment for a modest
retainer. But with the start of the Second World War in 1939, imports were restricted, compelling
them to start a small work-shop to undertake jobs and provide service facilities.
Germany's invasion of Denmark in 1940 stopped supplies of Danish products, this crisis forced
the partners to stand on their own feet and innovate. They started manufacturing dairy equipment
indigenously. These products proved to be a success, and L&T came to be recognized as a
reliable fabricator with high standards.
The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation
of a new company, Hilda Ltd., to handle these operations. L&T also started two repair and
fabrication shops - the Company had begun to expand.
Larsen & Toubro group started in 1975 to manufacture Hydraulic Excavators. L&T is a
technology driven engineering and construction organization, and one of the largest companies
in India’s private sector.
- 5 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 6/43
Quality of work life
A strong customer-focused approach and the constant quest for quality enabled the company to
attain & sustain leadership in its major lines of business across seven decades in infrastructure
segment with factories and office located across seven the country, further supplemented by a
wide marketing and distribution network, L&T’s image and equity extends to virtually every
district of India. L&T believes that progress must necessarily be achieved in harmony with the
environment. A commitment to community welfare and environmental protection constitute an
integral part of the corporate vision. L&T embraces corporate sustainability reporting as per GRI
2006 (G3) guidelines. L&T’s registered office and the first manufacturing unit is located inMumbai, because of constraints of place, power, transport etc and to create employment
opportunities to all sections of the society at different locations, company started one of its
manufacturing units at Bangalore in 1974.
L&T KOMATSU LTD
L&T Komatsu Limited was establishes in Feb. 1998 as an equal participation (50:50) joint
venture between Larsen & Tourbo limited and Komatsu Asia Pacific Pte limited, Singapore, a
wholly owned subsidiary of Komatsu Limited, Japan. LTK –BW (Larsen and toubro komatsu – Bangalore works) is the largest manufacturer of Hydraulic Excavators and high-pressure
Hydraulic systems and components.
The JV was formed to bring together the manufacturing expertise, marketing and service reach
of Larsen & Tourbo ltd with superior product design and engineering capability of Komatsu
Limited for the manufacture of hydraulic excavators in India. L&T markets & Provides service
support for hydraulic excavators manufactured by L&T-K.
L&T (Bangalore works) pioneered in manufacture of Hydraulic Excavators in the country in
1975 in collaboration with Poclain, SA of France with the opening up of the Indian economy; it
has become imperative that the company become globally competitive so that it can efficiently
- 6 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 7/43
Quality of work life
tackle International competition and provide best quality products at competitive prices and
establish the leadership in the Indian market and export its products to other countries.
Hence M/s KOMATSU Asia Pacific Private Limited, the World’s NO.1 Excavator manufacturer
with the widest range and reach and L&T formed a joint venture company and its Bangalore
Works is now known and called as L&T-KOMATSU LIMITED, BANGALORE WORKS.
HIGHLIGHTS OF L&T KOMATSU:
•
The Plant is located on national highway NH7 connecting Bangalore and Hyderabad.
• It is spread on an area of 65.7 acres.
• The estate is lush green with well laid lawns and about 3750 trees.
• The Plant has captive power generation of 2760 KVA capacity.
• Currently L & T Komatsu, Bangalore works Ltd is in the first place in manufacturing
excavator and Caterpillar holds the second place.
(b) NATURE OF BUSINESS CARRIED:
L&T-Komatsu's manufacturing facility - Bangalore works - comprises two manufacturing
divisions they are the Machinery Works and the Hydraulics Works. The Machinery Works
manufactures various Hydraulic Equipments required for the manufacture of Hydraulic
Excavators by the Hydraulic Works. They also supply customized Hydraulic Systems to
Komatsu Ltd. Japan.
The various products of Hydraulic works are Hydraulic Motors, Pumps, Turning Joints,
Hydraulic Cylinders, Hoses, Valve bank, Power packs of different varieties. These are the
various activities undertaken by L&T Komatsu.
• Engineering and construction projects:
1. Petrochemical projects.
- 7 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 8/43
Quality of work life
2. Oil and gas for projects.
3. Nuclear power and allied business.
• Construction
1. Building-factories, parks, hotels, public buildings.
2. Transportation- roads and expressways, bridges, stations, underpass.
3. Civil- infrastructure, ports, harbors.
•Minerals & Metals
1. Electrical, Instrumentation and Communication.
2. Electrification works in power, steel, metallurgical, glass, fertilizer.
3. Transmission Lines and Electrification.
• Heavy Engineering
1. Heat Transfer Equipment.
2. Refinery & Cracker Plant equipment.
3. Equipment & Systems for power plant.
• Electrical & Electronics
1. Control Power Grade Projects.
2. Motor Starters.
3. Energy Meters.
(c) VISION:
•
We shall be a world-class company with high standards of governance, dedicated toexcellence in Products, Processes and People.
• We shall be a company delighting customers by delivering on time, highly reliable
producers, which enable them to succeed.
- 8 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 9/43
Quality of work life
• We shall be a company with very high safety standards, caring for safety of people,
committed to social responsibility and environment protection.
• Our people shall have the passion to continual learning and engage themselves to
the highest level of involvements.
• We shall embrace an inclusive culture that incorporates a strong and well-
articulated set of values and behavioral expectation.
• Our supply chain shall be of world class standard with highest level of seamless
integration bringing in quality, cost and volume flexibility.
• Our business model shall drive entrepreneurial zeal, growth with scale and speed.
Our financial performance shall reward our stakeholders.
MISSION:
• We shall manufacture a premium range of globally competitive hydraulic excavators
and hydraulic system for the domestic market.
• Our focus is to attain market leadership through sustained growth, quality through
products, reliability and on- time delivery of our products to our customers.
• We shall be committed to provide a safe working environment, promote team
working and improve employee engagement.
• We shall embrace the lean manufacturing philosophy in our operations and improve
our operating profit margins.
- 9 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 10/43
Quality of work life
QUALITY POLICY:
QUALITY IS OUR MOST VALUABLE ASSEST AT L&T KOMATSU
ISO certified quality management system backed by inspection facilities that include:
• Non- destruction testing laboratory approved by Bhabha Atomic Research Center,
Mumbai.
• Equipment and qualified inspectors to carry X-Ray, gamma ray, and ultrasonic tests
to ensure internal soundness of welded structures and castings.
• Modern metrology laboratory for inspection of precision components and calibration
of equipment and whether conditions.
• Provide resources to maintain & continually improve the quality management system
with a view to deliver quality products and services.
• Operate under the framework of quality, cost and delivery objectives.
• Train and build our entire employee to enhance, customer satisfaction on a
continuous basis.
QUALITY CERTIFICATION:
•In 2009-2010 the company is certified by BUREAU VERITAS for its quality
management system at machinery works (MW) in line with ISO 9001 which is valid up to
July 2012.
- 10 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 11/43
Quality of work life
• In respect of the ISO 9001 certification of hydraulics works (HW) awarded in Jan
2003, recertification was done in May 2008 and surveillance audit was carried out at HW
during 2009.
- 11 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 12/43
Quality of work life
ORGANISATION STRUCTURE:
(d) PRODUCT PROFILE:- 12 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 13/43
Quality of work life
LIST OF PRODUCTS:
PRODUCT 1: PC 71
Price: 23 lakhs
Type: Crawler mounted
Weight: 7.05T
Bucket Size: 0.09-0.03 cu.m
- 13 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 14/43
Quality of work life
Attachments: Backhoe, Rock Breaker, Dozer Blade
PRODUCT 2: PC 130-7
Price: 34 lakhs
Type: Crawler mounted
Horse power: 88
Weight: 12.6T
Bucket Size: 0.64 cu.m
Attachments: Backhoe
PRODUCT 3: PC 72CK
Price: 30 lakhs
Type: Crawler mounted
Horse power: 97
Weight: 13.6T
Bucket Size: 0.6-0.7 cu.m
Attachments: Backhoe, Rock Breaker,
Wood grab, Elevated Cabin, Short Boom
For tunnel excavation, Auger.
- 14 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 15/43
Quality of work life
PRODUCT 2: 90CK-3
Price: 39 lakhs
Type: Crawler mounted
Horse power: 120
Weight: 20T
Bucket Size: 0.64 cu.m
Attachments: Backhoe, Rock Breaker,
Elevated Cabin, Auger, clamshell, Multiline
Grapple, Trenching Long Mount, Ditch Cleaning.
(e) AREA OF OPERATION
L&T has a global presence. A thrust on International Business over the years has seen overseas
revenues growing steadily. The company has manufacturing facilities in India, China, Oman and
Saudi Arabia. It has a global supply network with offices in 10 locations worldwide, including
Houston, London, Milan, Shanghai, and Seoul. Customers include global majors in over 30
countries.
GLOBAL OPERATIONS:
Komatsu designates those production bases with development capabilities around the world as
Mother Plants and position them as the core of global production. The Mother plants play an
- 15 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 16/43
Quality of work life
important part in achieving a target cutback on the production cost when a new model is
developed or an existing machine model is changed.
They are also assigned with a task of strengthening the production competitive edge of their
daughter plants that manufacture the same models as well as that of their own. Currently,
Komatsu is running as many as 35 spare parts centers in strategic locations around the world,
aiming at seamless deliveries of any spare parts that its clients require. The Parts Management
System links all centers and is in operation 24 hours 7 days a week. Through this system, we can
forecast demand for spare parts, regional and worldwide, make a plan for parts placement andassure quick and secure deliveries of spare parts that are required for repairs and replacement.
REGIONAL/ NATIONAL OPERATIONS:
L&T KOMATSU is carrying on its operations in Bangalore at Bellary road Byatarayanapura
Bangalore, Karnataka – 560001. They are the importers of Bearings, Hydraulic Equipments, and
Capital Equipments Goods. Their major imports are to KOMATSU Japan, they sell around 52
equipments in 6 months.
(f) OWNERSHIP PATTERN:
Ownership Pattern of L&T-Komatsu Limited is 50-50 Joint Venture. In which
60 crores is invested by L&T and 60 crores by Komatsu Limited. L&TK is a
joint venture of L&T and KOMATSU to manufacture the construction and mining equipment
and L&TK supplies major portion of its equipments to komatsu ltd. L&TK issues only equity
shares.
TABLE NO. 1
- 16 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 17/43
Quality of work life
SHARE HOLDERS NO. OF SHARES NO. OF SHARES
LARSEN & TOUBRO 60000000 50%
KOMATSU ASIAPACIFIC PVT LTD
60000000 50%
TOTAL 120000000 100%
TABLE NO. 2
- 17 -
Name of Shareholders
Number of Shares held
(thousand shares)
Equity
ratio (%)
Japan Trustee Services Bank,Ltd. (Trust Account) 48,073 4.9
JPMorgan Chase Bank 380055 41,614 4.2
The Master Trust Bank of
Japan, Ltd. (Trust Account) 40,978 4.2
Taiyo Life Insurance Company 38,000 3.9
State Street Bank and Trust
Company 33,290 3.4
Nippon Life InsuranceCompany 33,283 3.4
The Bank of New York Mellonas Depositary Bank for
Depositary Receipt Holders 21,937 2.2
SSBT OD05 OMNIBUS
ACCOUNT – TREATYCLIENTS 19,294 1.9
Sumitomo Mitsui Banking
Corporation 17,835 1.8
State Street Bank and Trust 17,582 1.8
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 18/43
Quality of work life
(g) COMPETITORS INFORMATION:
L&T- Komatsu Limited has the following competitors:
1. TELCON
TELCON Construction Equipment Co. Ltd, the Leader in Construction Equipment in India,
enhances the operational performance of its customers, leading to improving their profitability
and competitiveness by offering constructive solutions. Telcon is a subsidiary company of
TATA motors, which holds 60% share, and Hitachi Construction Machinery Co. Ltd, Japan
holding the balance 40%. The company commenced manufacturing of construction equipment in
1961, as a division of TELCON. In 1984, it entered into a technical collaboration with HCM,
Japan for manufacturing state of the art hydraulic excavators. Telcon is the largest manufacturer
of construction equipment and has two manufacturing plants - at Jamshedpur in Jharkhand and at
Dharwad in Karnataka.
2. CATERPILLAR
Caterpillar Inc is a United States-based corporation headquartered in Peoria, Illinois. It is "one
of the world's largest manufacturers of construction and mining equipment, diesel and natural
gas engines, and industrial gas turbines." Famous for their products featuring caterpillar tracks
and a distinctive yellow paint scheme, Caterpillar produces a wide range of engineering
vehicles, including the range of Caterpillar bulldozers.
3. JCB
- 18 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 19/43
Quality of work life
JCB India is a part of the world renowned and legendary company J C Bamford Excavators
Limited (JCB), one of the prominent players in the construction equipment industry and
amongst the 3 largest players in the world, producing over 275 different models, which are sold
in over 150 countries. JCB India is growing at an enviable pace and surging ahead with
ambitious development and expansion plans through launching revolutionary products and
adherence to world class JCB corporate identity norms. Today in India, JCB has a park of over
65,000 machines and one out of every two Construction machines sold in India is a JCB.
5. BEML
Bharat Earth Movers Limited was established in May 1964 as a Public Sector Undertaking for
manufacture of Rail Coaches & Spare Parts and Mining Equipment at its Bangalore Complex.
The Company has partially disinvested and presently Government of India owns 54 percent of
total equity and rest 46 percent is held by Public, Financial institutions, Foreign Institutional
Investors, Banks and Employees. BEML operates on three major business verticals for
associated equipment manufacturing:
• Mining and construction
• Defense
• Rail and metro
INFRASTRUCTURAL FACILITIES:
•
Design facility supported by CAD-CAM (PRO-E)• Finite Element Analysis software (FEM) for Stress measurement and endurance
testing facility.
• Robotic Welding, CNC machines, State of art Metrology and Metallurgy Labs
• Modern facility for Polyurethane painting.
- 19 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 20/43
Quality of work life
• Computer center with Digital Alpha dual servers for perpetual uptime
FABRICATION TECHNOLOGY:
1. CNC high-speed gas cutting
process for consistent quality profiles
with good surface finish
Axis Welding Robots for reliable welding
and high strength point
3. CNC machines for precision machining
of huge structures of high quality
ASSEMBLY OPERATIONS:
- 20 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 21/43
Quality of work life
1. Assembly line operating on the concept of
single piece unidirectional flow with equal
tart-time
2. Modern assembling tools, jigs, fixtures at
each workstation enable foolproof assembly
processes
3. Painting in modern paint booth using
polyurethane painting process ensures
superior wear resistant surface with good
gloss luster and finish
(i) AWARDS AND ACHEIVEMENTS
• LTK has been certified under ISO 9001 since 1994 and ISO 14001 in 1999.
Domestically, LTK was awarded Golden Peacock National Quality award in 1997, Rajeev
Gandhi National Quality Award in 1999
• Commendation certificate for CII-Exim business excellence in 2000.
- 21 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 22/43
Quality of work life
• Bangalore works won Rajeev Gandhi National Quality Award 1997 instituted by BIS in
best of all categories.
• Machinery works has a modern manufacturing facility with ISO 9001 accreditation for
design, manufacture and servicing of earthmoving equipment. Hydraulic works with
precision machine shop manufactures the complete range of high-pressure hydraulic
components and systems.
• ISO 9001 certified for hydraulic pumps, motors, cylinders, turning joints. Hose
assemblies, value blocks, hydraulic systems and power drives as well as allied gear boxes
• ISO 14001 certification for environmental management system in the year 1999.
ACHIEVEMENTS:
TABLE NO. 3
Year Achievement
1975
Bangalore work established, L&T pioneered the concept of
Hydraulic excavator in India by manufacturing LC 80 / LY
80 models. (In Collaboration with Poclain, France)
1979Introduced 90 CK-E, 300CK-E. TT 900 Vibratory SoilCompactor introduced
1989 Recognized as R&D house by GOI
1992Indigenous design & development of 72CK Excavator
(first time in India by any manufacturer).
- 22 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 23/43
Quality of work life
1995 Transit mixer developed
1999ISO 14001 Certification for Environmental
Management System
2005ISO 14001:2004 Certification. Greentech Gold Category
Safety Award.
2007Certificate for integrated management system of ISO
14001:2004 & OHSAS 18001:1999 (EHS)
(j) WORK FLOW MODEL
(k) FUTURE GROWTH AND PROSPECTUS:
L&T-Komatsu, Bangalore Works plans for obtaining improved Reliability and Cost Reduction
for this year. Following would facilitate achieving this:
1. Resource management:
a) Implement TPM and number of equipment under TPM : >30
Cycle time (through put time) reduction : 25% from present
b) Inventory discrepancy : zero
Inventory adjustment : <1%
2. Control Direct Material Cost and Overhead expenses: 3% & 5% respectively less than
budgeted level.
- 23 -
STEEL PLATES
CUTTING AND WELDING
SHOT BLASTING
PAINTING
ASSEMBLING
PRODUCT TESTING
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 24/43
Quality of work life
3. Improve capacity utilization:
Try for excavator exports, excavator new applications.
Increase hydraulic component exports to Komatsu/PH and sales to OEMs/new applications.
4. Improve quality / reliability levels:
(a) First pass yield: 100% (start six sigma projects)(b) MTBF: >900 hrs (no machine less than 500 hrs)
(c) MTTR: < 2 days
5. Total employee involvement:
(a) Kaizen : one person per month.
(b) SGA : 10 numbers in each PU/departments.
(c) House keeping : at least at each level 4
(d) Develop new models
(e) The company plans to reduce the variable overhead cost, by offering VRS to excess
personnel and by adopting in house manufacturing.
MTBF: Mean Time between FailuresMTTR: Mean Time to Response
OEM: Original equipment manufacturer
3. MCKINSEY’S 7S MODEL:
- 24 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 25/43
Quality of work life
7-S MODEL: A SYSTEMATIC APPROACH FOR THE IMPROVEMENT OF
ORGANISATIONS The 7-S model is a tool for managerial analysis and action that provides a structure with which
we have to consider a company as a whole, so that the organization's problems may be
diagnosed and a strategy may be developed and implemented.
The 7-S diagram illustrates the multiplicity interconnection of elements that define an
organization's ability to change. The theory helped to change manager's thinking about how
companies could be improved. It says that it is not just a matter of devising a new strategy and
following it through, nor is it a matter of setting up new systems and letting them generate
improvements.
- 25 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 26/43
Quality of work life
Those seven elements are distinguished in so called hard S’s and soft S’s. The hard elements are
feasible and easy to identify. They can be found in strategy statements, corporate plans,
organizational charts and other documentations.
The four soft S’s however, are hardly feasible. They are difficult to describe since capabilities,
values and elements of corporate culture are continuously developing and changing. They are
highly determined by the people at work in the organization. Therefore it is much more difficult
to plan or to influence the characteristics of the soft elements. Although the soft factors are
below the surface, they can have a great impact of the hard Structures, Strategies and Systems of
the organization.
STRATEGY:
The company has a rolling plan called Strategic Plan which spans a period of 10 years. The
strategic plans are dove-tailed to the company’s Mission and Vision statements. The plans are
reviewed annually and changes / course-corrections carried out in regard to additions of new
products to its portfolio, in line with the changing business, economic environment – both
domestic and international. Strategic plan for 2007-2008 is as follows:
• SUPPLY CHAIN : To maintain good relation ship with the suppliers to enable them
deliver value in the supply chain based on total cost approach and to be cost competitive with
volume flexibility.
• NEW PRODUCTS: To introduce identified new products and using new promotional
activities, marketing to serve customers better with increased product range.
• PROFITABILITY: Together strive to consistently improve our profitability with
focus on reduction on material cost improving ROCE managing the working capital
effectively and improving company’s cash to cash cycle.
- 26 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 27/43
Quality of work life
• PEOPLE: To create an organizational culture that fully engages current and new
employees in a safe and enjoyable working environment, enable them to embrace team L&T
komatsu. Employees will work together without boundaries creating synergy to enable them
scale new heights.
• QUALITY: Employees will significantly accelerate the pace of quality
improvements for current and new products. Employees will strive to achieve this by driving
passion for quality and organization wide focus on improving new products introduction
process and product improvement process.
• SCALE AND SPEED: Company will focus on increasing production capacity to
enable to meet the customer needs by investing in core manufacturing processes and to
maintain close relationship with the major suppliers in their manufacturing and quality
processes to ensure timely supplies maintaining quality.
SYSTEMS:
Being a professionally-managed organization since 1938, there are separate Divisional Boards
to oversee/supervise the operations of each Operating Division. Further, there are sector wise
business meetings to take stock of the business parameters and take corrective action wherever
required. L&T has a very strong communication network for propagating company’s plans,
policies and procedures in order to keep everybody informed. In L&T Komatsu, a number of
software applications for different functions are provided by Oracle. They are as follows:
• Inventory, Bills of Material, Costing, Purchasing, Receiving.
• MPS/MRP Planning, Lead Times, Order Management, Invoicing.
• Attendance Recording system, physical attributes, service, group wise LAN.
- 27 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 28/43
Quality of work life
STRUCTURE:
Organization has clearly been segmented into different business sectors and the structure is
clearly demarcated for empowerment with regard to each product and/or sector of economy
which is managed by independent Strategic Business Unit as independent profit / growth
centers.
SKILLS:
L&T has a very strong people-oriented process. For assessing the performance of employees
they have assessment process. For assessing the availability of future leaders, they have
leadership programmes. There are a host of training programmes – (both internal and external)
covering performance-oriented development programmes, technical competence, personality
development etc. which cover the entire gamut of skills required for running the organization
effectively and profitably and also develop the individuals as well.
SKILL MATRIX – TABLE NO.4
DESCRIPTIO
-N
MANAGER
-IAL
SKILLS
ANALYTIC-
AL SKILLS
PEOPLE
ORIENT-
ED
COMMUNICATI-
ON SKILLS
TECHNICA
-L SKILLS
MOTIVATION-
AL SKILLS
TEAM
WORKIN
-G
- 28 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 29/43
Quality of work life
SKILLS SKILLSMANAGERS SUPERVISO-
RS
EXECUTIVE-
S
× × × ×
TECHNICIA-
NS
× × × ×
STYLE/CULTURE:
Organization culture:
It is a set of some shared values, norms and belief systems that controls organization operations
and interaction with the members both inside & outside of the company. L&T Komatsu follows a
very distinct and insular culture throughout the company. The company incorporates various
activities, which help in the betterment of four factors that account for cultural differences
among the organization: They are: Organizational ethics, Organization structure, the
property right system used by the organization, and the characteristics of people working
in the organization. In L&T Komatsu Ltd Company, every employee needs to potray “officer
like qualities” which make them different from their competitors. A unique characteristic of each
employee is that they contribute towards production and share the information to each other as
and when required. The top managers have right to use organization resources, the work force
may be given rights to participate in decision making through various forums so that they can
help in achieving the goals of an organization of higher productivity, good quality and cost
reduction. The shareholders of the company are given the strongest property rights as they own
the resources of the employee and shares from profit.
MANAGEMENT STYLE:
- 29 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 30/43
Quality of work life
It’s all about the fundamental responsibility of employees in interacting with each department:
- 30 -
Customer Marketing
and sales
Resource
planning and
mgmt
Design
development
and planning
Qualityassurance
Information and
data mgmt
Training
Production
plan
Purchase
Equipment
planning
Production Customer
Product
service
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 31/43
Quality of work life
SHARED VALUES:
STAFF:
TABLE NO. 5
TYPES OF STAFF CATEGORY AT L&T KOMATSUnt cate or
T – technical category B – superior category
A – administrative category E – executive category
- 31 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 32/43
Quality of work life
S – skilled category CA – chartered accountant, C – covenant category
No of employees in each cadre are represented:
TABLE NO.6
S, T, AND A CADRE 416
B CADRE- SUPERVISORY 082
E CADRE- EXECUTIVE 048
M CADRE- MANAGERIAL 100
SUPERVISORY TRAINEES 010
TOTAL 656
- 32 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 33/43
Quality of work life
4. SWOT ANALYSIS:
STRENGTHS:
• Professionally managed company, Maximum resource utilization.
• Importing certain prime components, Recognition of performance of workers and rewarding
them for the same.
• Network of dealership helping in better customer servicing.
• Construction equipment division measures customer satisfaction by the means of customer
satisfaction index and to measure performance.
- 33 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 34/43
Quality of work life
• Quality, technology upgrading in regular intervals, TQM, Effective supervision.
• ISO 9001, 14000, 18000 Certifications, High productivity.
• 90% of the components are made in house of key hydraulic components like Cylinders,
Motors, Pumps, Swivel joint, Tubes and Hoses which offers the following advantages:
1. Corrective and preventive action (CPA), Extensive testing facility.
2. High capability of product development which has been proved by the development of 12 ton
excavator and upgrading 20,30,60 ton class to improve reliability and productivity.
WEAKNESS:
• Time is consumed in introduction of new products/models.
• More formalities are involved in the process of introduction of new product.
• Growth or the promotion of the employees at L&T Komatsu is time bound.
• Under utilization of knowledge and less scope for sharing ideas of shop floor workers.
• Limited scope for growth and monotonous work that is repetitive.
OPPORTUNITIES:
• Government projects like river linking, road linking, laying of optical fibers, etc.
- 34 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 35/43
Quality of work life
• Mining, Market, Introduction of new model E.g.; PC200 is modified with the
introduction of new attachment like microprocessor control, which reduces vibration and
enhances operator comfort.
• There is an upward trend in the demand for construction and mining equipments.
The company can capture the untapped market.
THREATS:
• Market uncertainty because of sudden government policies.
• Increasing steel prices in the market, it is a major threat to the company because
the major raw material used in the equipments is steel.
• Limited scope for exporting as there is increased competition.
5. FINANCIAL STATEMENTS ANALYSIS:
BALANCE SHEET FOR THE PAST THREE YEARS:
DESCRIPTION As at 31-3-2009 As at 31-3-2010 As at 31-3-2011
Sources of funds
Share holder's funds
Share capital 1200000000 1200000000 1200000000
Reserves and surplus 1316866025 1636478497 1936658056
Loan funds
Secured loans 1939423105 131350000 65675000Deferred tax liability 66587644 69634876 68653595
TOTAL 4522876775 3037463373 3270986651
Application of funds
Fixed assets Gross block 2013311599 205457761 2135888222
(-) depreciation 101366831 1085784872 1151542987
- 35 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 36/43
Quality of work life
Net block 996944768 968792729 978345235
Capital W-I-P 64307464 61328931 9446934
1061252232 1030121660 987792169
Deferred tax asset 14810271 3122055 2267182
Current assets
Loans and advances
Inventories 2898541865 2450296814 2156595888S.Debtors 1273172989 1839987365 2523946226
Cash and bank balance 1512611 313110868 254098311
Loans and advances 621868352 680473016 817841559Other current assets 0 0 23671
4795095817 5283868063 5752505655
(-)Current liabilities & prov Liabilities 1099537196 2557902132 2791272425
Provisions 248744349 721746273 680305930
1348281545 3279648405 3471578355
Net current assets 3446814272 2004219658 2280927300
TOTAL 4522876775 3037463373 3270986651
PROFIT AND LOSS A/C FOR THE PAST THREE YEARS
DESCRIPTION
RUPEES
2011
RUPEES
2010
RUPEES
2009
Income
Sales 14907279126 11998165921 12110180588
(-) Excise duty and education cesson sales 1390897561 896752327 1370213132
Other income 52768754 139018347 47608741
Total income 13569150319 11240431941 10787576197
Exp: Manufacturing & op exps 10356292369 8307411285 7649341363
Staff expenses 431759739 367101217 378572646
Sale and administration and other expenses 1757148724 1378157368 2273257615
Interest 27280252 99363991 105542409
Depreciation and obsolescence 75651643 74142971 79577071
12648132727 10226176832 10486291104
Profit before tax 921017592 1014255109 301285093
Provision for current tax 308392421 339031131 99721169
- 36 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 37/43
Quality of work life
Provision for deferred tax -126408 14735448 3393752Provision for fringe tax 0 0 0
Taxes in respect of earlier years
Income tax 5744620 5194166 4905507
Fringe benefit tax 0 -151308 107167
Profit after tax 607006959 655445672 189879943
Balance brought forward from
previous year 1362430647 1108362742 1016758599
Profit available for appropriation 1969437606 1763808414 1206638542
(-) transferred to general reserve 60700696 65544567 0
Profit available for distribution 1908736910 1698263847 1206638542
Proposed dividend 264000000 288000000 84000000
Additional tax on dividend 42827400 47833200 14275800
Balance carried to balance sheet 1601909510 1362430647 1108362742
EPS- Basic (in Rs.) 5.06 5.46 1.58
Face value/ share 10 10 10
RATIO ANALYSIS:
• CURRENT RATIO : TOTAL CURRENT ASSETS / TOTAL CURRENT
LIABILITIES
2009 = 4795095817/ 1348281545 = 3.55
2010 = 5339509313 / 3335289655 = 1.6009
2011 = 5752505655 / 3471578355 = 1.657
INTERPRETATION:
From the above calculations, current ratio indicates the operating efficiency and the standard
is 2:1, in the year 2009 CR is above the standards and it proves that the company has enough
resources to pay its debts, where as in the year 2010 and 2011 CR is below the standards and
proves the company does not have enough resources to pay off its debts.
- 37 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 38/43
Quality of work life
• QUICK RATIO: TOTAL QUICK ASSETS / TOTAL QUICK LIABILITIES
QUICK ASSETS = CURRENT ASSETS – STOCK ( INVENTORY)
QUICK LIABILITIES = CURRENT LIABILITIES
2009 = 4795095817 – 2898541865 / 1348281545 = 1.4066
2010 = 5339509313 – 2450296814 / 3335289655 = 0.866
2011 = 5752505655 - 2156595888 / 3471578355 = 1.0358
INTERPRETATION:
From the above calculations, quick ratio standard is 1:1, so in the year 2009 and 2011 quick
ratio higher than 1:1 indicates that the company can meet its current financial obligations
with the available quick funds on hand where as in the year 2010 QR is less than the
standards so the company cannot meet its current obligations.
• DEBT EQUITY RATIO: TOTAL DEBT / EQUITY
2009 = 1939423106 / 1200000000 = 1.616
2010 = 131350000 / 1200000000 = 0.109
2011 = 65675000 / 1200000000 = 0.0547
- 38 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 39/43
Quality of work life
INTERPRETATION:
From the above calculations, a standard of debt equity ratio may be 1:1, in the year 2010 and
2011 DER is less than 1 and in the year 2009 it is higher than 1. If the ratio is greater than 1,
the majority of the company’s assets are financed through debt. If the ratio is less than 1, its
assets are primarily financed through equity. The ratio measures how much money a
company might safely borrow over long periods of time. But if the company borrows funds
through debt earnings will be more, at the same time company should pay interest to
debenture holders.
• INVENTORY TURNOVER RATIO: COST OF GOODS SOLD / AVERAGE
INVENTORY
COGS = SALES – GROSS PROFIT
AVG INVENTORY = OP. BAL OF STOCK+ CLO. BAL OF STOCK / 2
2009 = COGS = 12110180588-301285093 = 120800565495
2010 = COGS = 11998165921-1014255109 = 10983910812
2011 = COGS = 14907279126-921017592 = 13986261534
2009 AVG STOCK = 2691768268
2010 AVG STOCK = 2674419340
2011 AVG STOCK = 2303446351
- 39 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 40/43
Quality of work life
ITR 2009: 11808898495 / 2691768268 = 4.387
ITR 2010: 10983910812 / 2674419340 = 3.7391
ITR 2011: 13986261534 / 2303446351 = 6.0718
INTERPRETATION:
From the above calculations, Inventory Turnover Ratio measures company's efficiency in
turning its inventory into sales. Its purpose is to measure the liquidity of the inventory. A low
ITR is a signal of inefficiency, since inventory usually has a rate of return of zero; a high
ITR implies either strong sales or ineffective buying, in the year 2009 and 2010 ITR is low
than compared to 2011.
• EARNINGS PER SHARE: EARNINGS AVAILABLE TO EQUITY
SHAREHOLDERS / NUMBER OF EQUITY SHAREHOLDERS
2009 = 189879943 / 120000000 = 1.58
2010 = 655445672 / 120000000 = 5.46
2011 = 607006959 / 120000000 = 5.06
INTERPRETATION:
- 40 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 41/43
Quality of work life
From the above calculations, EPS allows us to compare different companies’ power to make
money. Here as the calculations shows the positive trend year after year, and also shows the
company’s ability to earn profits and in creating value to shareholders. Though in the year
2011 it has seen a bit downfall in the EPS, it can be said that the company is on the positive
pace.
6. LEARNING EXPERIENCE :
It was really a great experience and very informative doing my summer project at L&T
KOMATSU.
As soon as I entered the company I met Mr. Prakash sir (manager of finance and accounts
department ) He introduced me to Mr. Jeevan sir who was external guide.
As the time went on Jeevan sir guided me on the so many concepts that were relavent to my
topic, I was able to learn online booking of currencies, importance of forward cover rates under
his guidence.
I had an opportunity to work in several areas like Bill of entry, Procurement of invoice bill,
matching the shipment documents, which works under Oracle applications and also checking of
despatched materials from suppliers of TVS company, I was taken for the factory visit where
- 41 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 42/43
Quality of work life
was able to have sight on the construction and mining equipments like bull dozers, excavators,
PC-71, PC-200 etc…, getting assembled and painted. And got the knowledge about the machines
at factory that help in the movement of heavy spare parts for assembling purpose. There was
mock show conducted through which I even had an experience of what measures has to be taken
if there is a fire in the factory,
Finally it was a wonderful experience in handful of time to know what is corporate world, and I
thank my guide for supporting me and for having shared the knowledge.
- 42 -
7/29/2019 Project q Wl
http://slidepdf.com/reader/full/project-q-wl 43/43
Quality of work life