By Bharat Dalvi (05)

SCRAP SOLD TO SALES %

0.60% 0.50% 0.40% 0.30% 0.20% TML Ashok

Ashok Layland has higher scrap% against sale due to possible operational ineffectiveness & product type

81.0% 0.10% 80.0% 0.00% 2012 2011 79.0% 78.0% TML Ashok

For Ashok Layland procurement cost is major part of total expenditure. Reducing over period.

77.0%
76.0% 75.0% 74.0% 2012 2011

MATERIAL COST INDEX = PROCUREMENT COST/EXPENDITURE

INVENTORY INDEX = PROCUREMENT COST /AVERAGE INVENTORY

10 9 8 7 6 5 4 3 2 1 0

TML Ashok

TML has higher procurement cost per Avg. inventory

2012

2011

TML has lesser spares inventory compered to Ashok Layland Must be with predictive maintenance etc

2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 2012 2011

TML
Ashok

SPARES INDEX = VALUE OF SPARES INVENTORY/NET FIXED ASSETS

COST OF GOODS SOLD = OPENING INVENTORY OF FINISHED GOODS + PURCHASES CLOSING INVENTORY OF FINISHED GOODS
6000000 5000000 4000000 3000000 TML Ashok

High cost of good sold in absolute terms for TML due to high sales

2000000
1000000 0

2012

2011

TML has lower raw material consumption cost compared to Ashok Layland possible due to operation efficiencies

10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2012 2011

TML Ashok

Ratio = RAW MATERIAL CONSUMPTION COST/EXPENDITURE

INVENTORY IN DAYS = (INVENTORY/SALES) *365

80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2012 2011 TML Ashok 100.0 90.0 80.0 70.0 60.0 50.0 TML Ashok 40.0 30.0 20.0 10.0 0.0 2012 2011

TML has better inventory management

Ashok Layland possible have better distribution compared to TML

FINISHED GOODS INVENTORY IN DAYS=(FG INV/SALES)*365

WIP IN DAYS=(WIP INV/SALES)*365

14.0 12.0 10.0 8.0 TML 6.0 Ashok

4.0
2.0 0.0 2012 2011

Both have apprx. 8 days of WIP inventory

ACCOUNTS RECEIVABLE IN DAYS=(ACR/SALES)*365

90.0 80.0 70.0 60.0 50.0 40.0 30.0 TML Ashok

TML & Ashok layland both have 60-80 days of Acc. receivables

20.0
10.0 0.0 40.0

2012

2011

35.0 30.0

TML has lesser acc. Payable compared to Ashok Layland may be with better ERP system

25.0 20.0 15.0 10.0 5.0 0.0 2012 2011 TML Ashok

ACCOUNTS PAYABLE IN DAYS=(ACP/SALES)*365

CASH IN HAND IN DAYS=(CASH IN HAND/SALES)*365

20.0 18.0 16.0 14.0 12.0 10.0 8.0 TML Ashok

TML always has strong hand in liquid cash Also it is increasing over period

6.0
4.0 2.0 0.0 2012 2011

OPERATING CYCLE IN DAYS = INVENTORY IN DAYS * ACR IN DAYS

3000.0 2500.0 2000.0 1500.0 1000.0 500.0 0.0 2012 2011 TML Ashok 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2012 2011 TML Ashok

TML has quicker operating cycle compared to Ashok Layland which shows better operating efficiencies

NET OPERATING CYCLE IN DAYS = INVENTORY IN DAYS + ACR IN DAYS-PURCHASE IN DAYS

VALUE ADD = SALES PURCHASE-OUTDOURCED SERVICES

350000 300000 250000 200000 150000 100000 50000 0 2012 2011 28.0% 27.5% 27.0% 26.5% 26.0% TML Ashok TML Ashok

25.5%
25.0% 24.5% 24.0% 2012 2011

Ratio= VALUE ADD/SALES%

RAW MAYERIAL CONSUMPTION INDEX =RAW MATERIAL CONSUMPTION/CLOSING BALANCE OF RAW MATERIAL
25.00 20.00 15.00 TML 10.00 5.00 Ashok 14.00 12.00 2012 2011 10.00 8.00 6.00 TML Ashok

TML has better raw material consumption

0.00

TML has faster inventory turnover

4.00 2.00 0.00 2012 2011

INVENTORY TURNOVER = 365/INVENTORY IN DAYS

RAW MAYERIAL IN DAYS=(RAW MATERIAL INVENTORY/SALES)*365

35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 2012 2011 3.00 2.50 2.00 TML Ashok

Ashok Layland handles more raw material than TML for equitable sales

TML handles inventory 50% better than Ashok Layland

1.50

TML Ashok

1.00
0.50 0.00 2012 2011

INVENTORY IN MONTHS=((CLOSING BALANCE-OPENING BALANCE)/2)/(YEARLY CONSUMPTION/12)

TML seems to have better overall operational effectiveness and efficiency than Ashok-Layland in following areas;

Material management Inventory management (RM,WIP & FG) Resource management Predictive maintenance Better value addition Lower operation cycle Fast inventory turnover Low scrap generation(Wastage) etc.