SUMMER TRAINING PROJECT REPORT

VE COMMERCIAL VEHICLES LTD

TRAINING SUPERVISOR SUBMITTED BY

Mr. SUMIT DEWAN KAPIL YADAV
Mr. PRADEEP NAIR ENROLLMENT NO: 1-23953361

FACULTY OF MANAGEMENT, JB KNOWLEDGE PARK,

FARIDABAD, HARYANA (AFFILIATED TO AICTE)
PREFACE

As a part of course curriculum of Post Graduate Diploma in Management (PGDM) we

were asked to undergo 8 weeks summer training in any organisation so as to give us
exposure to practical management to get us familiar with various activities taking
place in the organisation.

I have put my sincere efforts to accomplish my objectives within the stipulated time.
Despite all limitations, obstructs, hurdles and hindrances, I have toiled and worked to
my optimum potential to achieve desired goals. Being newbie in the highly
competitive world of business. I came across some difficulties to make my objective a
reality. Anyhow with the kind of help and genuine interest and the guidance of my
supervisor, I’m presenting this hand carved effort. I tried my level best to conduct a
research to gain a thorough knowledge about the project on topic, “Potential mapping
of top five hundred Spare parts”. I put the best of my efforts and have also tried to be
justice with available.
ACKNOWLEDGEMENT

I would like to thank VE Commercial Vehicles, for constant guidance to conduct the
present arduous project and untiring cooperation which they extended to me
throughout the duration of my summer training and helped to expand my base of
knowledge.

Getting a project ready requires the work and effort of many people. I would like to
thank all those who have contributed in completing this project especially Mr. Sumit
Dewan, Mr. Pradeep Nair, Esteemed distributor Patel Motors, without their valuable
guidance this project would have not been possible.

I hope this study will prove to be a valuable input to the spare parts division of VE
Commercial Vehicles and helps to attain the desired objective and to set new
standards and landmarks.
 INDICANT

CHAPTER CONTENTS
1 Profile of the organisation
2 Objective and Relevancy
3 Overview of Market
4 Process and Methodology
5 SWOT Analysis
6 Findings and Limitations
7 Recommendations
8 Conclusion
 CHAPTER – 1
PROFILE OF THE ORGANIZATION
EICHER MOTORS LIMITED

Eicher Group established in 1959 with the roll out of India’s first tractor. Diversified
company engaged directly and through subsidiary in the business of commercial
vehicles, motorcycles, automotive gears and components, engineering solutions.
Significant player in automobile sector having consolidated turnover of more than
25000 MINR for the year ended 31st March 2008. State of the art manufacturing
facilities and lean management systems. EML sold its Tractors and Allied Divisions in
FY 2005-06 to focus on current businesses. Entered into a Joint Venture with AB
Volvo, Sweden in July 2008, transferring its CV business to VE Commercial
Vehicles Ltd, the Joint Venture Company.

Eicher Motor is one of the prominent commercial vehicle manufacturers in India. The
companies’ origins date back to 1948, when Goodearth Company was established for
the distribution and service of imported tractors.

In 1959 the Eicher Tractor Corporation of India Private Ltd. was established, jointly
with the Gebr. Eicher company, a German tractor manufacturer. In 1960 the first
tractor ever produced in India was put on the market.

Since 1965 Eicher in India has been completely owned by Indian shareholders. The
German Eicher tractor being part of Massey-Ferguson from 1970 when they bought
30% before buying the German company out in 1973.

In 2005, Eicher Motors Ltd sold the Tractors & Engines business to TAFE, (Tractors
And Farm Equipment Ltd), of Chennai, India, the Indian licensee of Massey Ferguson
tractors.

German car manufacturer Daimler is holding a 20% stake in Eicher Motors. Eicher
Motors began its business operations in 1959 in India with the roll out of India’s first
tractor. Today the Eicher Group is a significant player in the Indian auto mobile
industry with a gross sales turnover of over INR 19,000 million ($424 million (US)) in
the year 2005-06.
Truck maker VE Commercial Vehicles Ltd, a 50:50 joint venture between Volvo
Group and Eicher Motors Ltd, aims to boost sales by up to 50% in the year to
December from the previous year on the back of robust economic growth, new
products and an improved aftermarket network. VE Commercial Vehicles sold 25,500
units in the year to December 2009. This year, it plans to sell 35,700-38,250 units,
said Somnath Bhattacharjee, executive vice-president for sales, marketing and
aftermarket. Aftermarket refers to the supply of accessories, spare parts, second-hand
equipment and other goods and services used in repair and maintenance. The Rs2,500
crore company, which started operations in April 2008, sells the mass market, light,
medium- and heavy-duty trucks and buses from Eicher and premium, heavy-duty
trucks from Volvo. VE Commercial Vehicles will grow 40-50% on the back of the
improved economic activity and the improved customer value proposition, said
Bhattacherjee.

The company launched the heavy duty VE series Eicher trucks in January and plans to
launch tippers and rear engine low-floor buses this year. Over the next five years, the
company also aims to double its aftermarket sales and service network from the
current network of 215 locations for Eicher and more than 100 for Volvo.

Brief Background

Eicher Motors Ltd. is one of the leading engineering companies in India engaged in
the following businesses:

 Commercial Vehicles
 Engineering Components
 Engineering Services
 Motorcycles
CV PRODUCTS
 CHAPTER – 2
OBJECTIVE & RELEVANCY
RELEVANCY OF THE STUDY

The project completed is an attempt to understand and learn kinetics present in the
market and the highly competitive environment provided by the local vendors in
accordance with the price of the parts, in which the business of spare parts engages
and arrive at ways to attain the market share of the genuine parts of EML.

The need of this project was generated as to eliminate the possibility of the errors on
the information collected for the potential mapping of spare parts on the basis of the
vehicle sales as the sales of spare parts can be easily correlated with the sales of trucks
and buses that EML sells.

The scope of this project is limited to the central region covering the distributor Patel
Motors as far as the reason for the downturn of the quantity billed of the top 500 spare
parts is concerned. So the findings do not necessarily reflect on what the reasons could
be in other regions of the country.

OBJECTIVE

 To map the market potential for the top 500 spare parts.
 To study the nature of the spare parts market in the presence of the competition
provided by the local vendors.
 To map the percentage growth or downturn of the top 500 spare parts for all the
distributors of EML.
 To study the reasons for the downturn in the sales of the spare parts in the
calendar year 2010 (till June 2010) on the basis of 2009 and give valuable
suggestions to rectify the reasons in order to generate sales.
 CHAPTER – 3
OVERVIEW OF MARKET
ENVIRONMENTAL SCANNING
• Structural changes in the underlying economy such as improvement in the road
infrastructure, and strong growth in the Indian economy have fueled and expected to
continue to drive growth in the CV Industry owing to:

– Increased freight availability aided by investment surge in key sectors -

manufacturing, construction, mining & increased foreign trade boosting containerized
freight movement
– Strong growth in non-bulk commodities which is leading to an increased share of
freight transportation by road which is the preferred mode for non-bulk commodities

• Improved profitability of fleet operators will boost overall CV demand:

– Decline in diesel prices as well as rising freight rates have mo re than compensated
for the incumbent cost pressures owing to increases in vehicle prices by OEMs, rising
tyre prices and rising interest rates resulting in increased operator profitability

• Increased replacement demand as well as shift towards heavy tonnage CVs owing to:

– Strong freight availability, changes in emission norms, introduction of more

economical and fuel –efficient vehicles, the Supreme Court ban on overloading and
strict restrictions imposed by cities on vehicle age.
– The proportion of trucks under five years of age rose from about 34% in FY 2002 to
nearly 45%.

• Significant improvement in road infrastructure will allow more efficient Cargo

movement thereby boosting CV demand

– Indian Railways has proposed several initiatives to arrest its steady decline in
market share. However, these initiatives would likely take at least five years to get
implemented and hence do not offer any significant threat to the fleet operators in the
medium term.

• Passenger vehicles are also expected to show significant growth with increasing
demand due to rise in consumers ’ affordability resulting from strong growth in
disposable income, increasing urbanization, improved road infrastructure and
consumer preference for comfortable rides

On comparing the Network Distribution of all three major players: TATA, Eicher,
Ashok Leyland
Eicher has 142 dealers and TATA and Ashok Leyland 176 and 178 resp.
MARKET SHARE IN HCV

MARKET SHARE OF EICHER IN LCV & MCV

BUSINESS OPPORTUNITIES IN MADHYA PRADESH
Madhya Pradesh is an emerging industrial powerhouse, home to around 1,800
companies and 19 industrial growth centres (located across 7,147 ha) that are close to
major cities. This makes good social infrastructure accessible to industrial units. There
are around 171,000 SSI units that contribute significantly to the economy. MNCs like
Cadbury, Bridgestone, Unilever, Coca Cola and renowned Indian companies like
Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymond’s,
Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej
and HEG have their presence in Madhya Pradesh. These companies not only meet
local requirements, but also export a variety of products and services to both
developed and developing countries.

ATTRACTIVE SECTOR
AUTO AND AUTO COMPONENTS
The size of the auto component industry in the state is $306 million. Sixty per cent of
the auto industry in Madhya Pradesh is dominated by auto component players. The
state has developed a 5,000-ha industrial cluster at Pithampur, which provides readily
available infrastructure for companies willing to set up manufacturing facilities. The
Government of India has sanctioned $11 million for an auto cluster in the Pithampur
industrial area.
VE COMMERICAL VEHICLES LIMITED IN MADHYA PRADESH
Eicher Motors, part of the $355 million Eicher Group, is a significant player in the
Indian automobile industry. It manufactures and markets commercial vehicles with
Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading
manufacturers of commercial vehicles. The company has a 72-acre manufacturing
facility in Pithampur; it has top-of-the line equipment, a robust infrastructure and an
annual production capacity of 30,000 vehicles. The company has a world-class R&D
centre that has helped it successfully develop a wide range of commercial vehicles
including trucks and buses. The company recently invested $22 million for
manufacturing heavy commercial vehicles at its Pithampur plant.
 CHAPTER – 4
PROCESS AND METHODOLOGY
PROCESS
The survey covered the distributor of the central region.
Central Region: Indore (Madhya Pradesh)

The project focused on exploring the spare market of this area and to discover the
potential. The objective to do this project was to map the sales data of top 500 spare
parts and to find the increase and decrease in H-1 2010, as it could have been done on
the basis of sales data of vehicles which was having probability of misleading
information, so to rectify the possibility of faults this survey was conducted.
Keeping the objectives in mind the process and methodology was designed to achieve
the accurate results
STEPS INVOLVED IN PROCESS
 Collection of the sales data of spares from SAP for the colander year 2009 and
H-1 2010 for top 500 spare parts.
 Sorting of the data was done according to the requirements of the project.
 Average sales of the top 500 spare parts were mapped for both the years.
 On the basis of the average sales the percentage increase/decrease was
calculated for all the esteemed distributors of EML.
 Further analysis and data crunching was done followed by finding the reasons
for the downturn of various spares among the list of top 500 parts especially for
central region.

METHODOLOGY
 Information collected during the survey was based on primary data.
 Questions asked by the distributor as follows.
a) What are the reasons for the fall in quantity billed in H-1 2010 as
compared to previous year?
b) Why there is less number of orders being placed for the running items.
 CHAPTER – 5
SWOT ANALYSIS
STRENGTHS
 Most of the customers engaged in farming profession generally demand for the
LCV’s of VE Commercial Vehicles, which can lead to increase in sale of the
spare parts.
 LCV parts are mostly demanded by the retailers and customers as most of them
showed good percentage increase among the top 500 spare parts

WEAKNESSES
 Very weak presence of HVC’s in this market due to that the demand of the
HCV spare parts is experiencing downturn.
 Compared to the competitors supply of the parts falls short.
 VOR placed by distributors are not being timely executed by CSPD.
 Distributors and retailers are not taking pain to inform the customers about the
effective usage of VECV genuine parts.

OPPURTUNITES
 There are lots small territories which come under central region as it covers
two states Madhya Pradesh and Chhattisgarh, so there is a possibility of
finding efficient retailers for VECV.
 The penetration into this market can provide with good opportunities for
business of spares as most of the territories in Chhattisgarh are untapped which
involves mining industry and engages good number of HVC and LVC of
VECV.
 The heavy-duty trucks of 16-49 tonnage, sold largely to the mining and
construction industry, grow with industrial production. Light- and medium-
duty trucks of 5-12 tonnage sold for freight transport trace the gross domestic
product (GDP) growth trajectory. Both macroeconomic indicators are looking
robust. The Index of Industrial Production grew 13.5% in March on a year-on-
year basis, marking the sixth consecutive month of double-digit growth. The
government expects GDP growth of 8.5% in the 2010-11 fiscal, up from 7.2%
in the year ended 31 March.
THREATS
 If measures not taken to improve bad image of company for supplying genuine
spare parts, this market can be overtook by the upcoming local vendors.
 Supply chain for the items by CSPD is not working properly as it creating
threat to loyal customers shifting to the local vendor’s items.
 CHAPTER – 6
FINDINGS AND LIMITATIONS
FINDINGS & LIMITATIONS

The analysis made above represents a micro picture about the region. Apart from these
inputs there are some points which were discovered while getting inputs from the
distributors, these findings are represented below.

 Local vendor parts provide very high margin ranging more than 50% because
of which retailers interest in doing business of genuine VECV spare parts is
getting diluted. As he is getting good amount of margin in selling the local
vendors parts. (List attached)
 The price difference lead to the decrease in the demand by the customer and
above that the delay in supply of the genuine parts act as a spark to ignite the
fire in the house, which means delay in supply plus high price in comparison
with vendor parts force customer to shift on the vendors product.
 TVS the authorized supplier to VECV for part number IA201790 and
IA211328 has directly stepped into the local market for same item but at much
lower price which means it is cutting the business of the concerned item
supplied by CSPD.
 Warranty for various parts is not being given by VECV that means no
replacements within the period is being provided, but on the counterpart the
vendor are proving on desk replacement and repair for the same item in case of
damage during fixing the part, that is why retailers are losing interest in selling
those concerned part number (e.g. IA201790).
 Customers are not aware about the effectiveness and efficiency of the genuine
parts of VECV as compared to vendor parts. (E.g. In case of air filter, VECV
air filter is good in quality and has operating life in comparison with vendor air
filter then too because of the lack of awareness and less price customer prefers
buying item by vendor).
 According to the distributors more than 60% parts which covered under top
500 spare parts are workshop items, rather retail and some are asked generally
in accidental cases.
  Supply of the ordered material from CSPD to distributor is not as on demanded
or ordered (no timely supply). So this leads to dumping of the ordered material
to the distributor when not in demand by any by this distributor loses interest.
 As the distributor plays with zero inventory for few of LCV and most of HCV
so they falls short when there is urgent requirement of the part then they prefer
buying it from the retailer that is Fairdale which is taking over the business of
VECV for those concerned parts.
 Business of the HCV spare parts is nil as the vehicle population is very less in
this market. The HCV is having its market in Rewa region of MP.
 Distributor suggested that owing to the non-availability and incomplete
supplies from VECV and presence of small vendors, lots of sales are lost. They
expressed anger about not even getting VOR complaint sorted out in time
which is creating bad impression about the company, measures to increase the
speed of operations at our end are suggested.
 In case running item quantity billed was less as the material was not supplied as
on demanded or required.
 At time of packing at CSPD by mistake materials are packed in wrong package.
(E.g. part of 10.60 packed under 11.10)

Apart from these comments there are various reasons lead to the fall in quantity billed
in H-1 2010 in comparison with 2009 which can be made by going though the spread
sheet attached.
 CHAPTER – 7
RECOMENDATIONS
On the basis of the findings, some recommendations to curb the image and the market
share of VECV genuine parts are being made below.

 As company’s brand image is experiencing bad downturn customer losing

interest to buy genuine parts of VECV, as there are many reasons responsible
for decrease in spare sales, till some extent they can be corrected by providing
some personal incentives in monetary terms not as in discount as they are the
last people in the supply chain of inventory and directly associated with the
customers so they should prefer selling VECV genuine parts rather vendor
parts and could be able to motivate customer to buy VECV spares and give
them knowledge about the recognition of the genuine packing as one of the
vendor is supplying the part same as VECV on the part but not on package by
which customer tends to purchase it, so retailer can tell them about VECV
genuine logo and package.

 The communication gap between distributor and CSPD and distributor and
retailer should be minimized by arraigning some formal and informal meet in
order to allow them sharing light moments, and to make them feel like a team,
and make them feel as a part of VECV family by this they can get motivated
enough to do good business for us.
 Distributors are caring angry nature because of the shortage in supply, so they
need to motivated enough to do the business and it could be done by arranging
some motivational training for them.
 As company is losing sales by 20% to 30% and the reason for this is the
warranty and replacement options provided by the vendors that too on desk
replacement, so VECV must look forward to this issue and could start
providing training to the mechanics at the retailers end and lend them some
certification so that part fitted by the certified mechanic could be replaced.
 One sincere suggestion to the company is that if possible try to supply and
make the spare parts available to the distributor before the launch of new
model, this could help to curb the brand image of company and sales of spares
and vehicles respectively.
 The most important issue to be checked is the system made by us for supply of
inventory. CSPD is only able to provide 60% of the order placed by the
distributor. Why CSPD falls short in supply of inventory is question of worry?
According to company policy it being decided that the VOR order will be
dispatched in 72 hours but on the ground reality it is possible for 10 % times
and in 80% case order is dispatched after 72 hours which leads to delay and
rest 10% cases it could take more than 10 days to be dispatched.
 It is expected that if the price of the VECV genuine spare parts will be placed
25% to 30 % above the price of the vendor part then customer will prefer
buying genuine parts.
 Tokens should be introduced for mechanics so that they should get motivated
and ask the customer to purchase VECV genuine material. They could be any
gift items or can be points e.g. after collection 1000 points or so he could be
eligible to get Rs 1000 and it could be landed to the distributors. (E.g. Rimula
is providing lunch box to mechanics and allied giving Rs 50 coupon in
package).
 Surveyor of supervisor should be appointed by CSPD so that he could be
available for the queries coming in case of warranty replacements.
 In order to increase the workshop demand for the parts which specially
demanded or replaced in workshop and showing downfall we could introduce
some Mechanic scheme to promote the sale of workshop requirement.
CHAPTER – 8
CONCLUSION
With the conclusion of study we find that there is a possibility of gaining market share
of VECV genuine parts in this region and other too associated with it but several
problems are waiting to be figured out mainly the cause of short supply and the price
difference.

In this study we observed that to gain the lost market of spare parts, the distributors
has to work passionately to tap the market demand by joining hands with retailer.

The business of spare parts is correlated with the business of selling trucks and buses
as the expectation of this fiscal year the commercial vehicle market to grow by 25% in
the current fiscal. The domestic commercial vehicle sales stood at over 530,000 units
in the last fiscal. Market leaders Ashok Leyland Ltd and Tata Motors Ltd have
traditionally cornered around 70% of the market. But new players such as Mahindra
Navistar Automotives Ltd, Daimler Trucks and Volvo-Eicher are set to challenge
market share.

It is expected Asia to overtake Europe as its largest market by 2015, led by the robust
demand in India and China. The company is gearing up for the growth. Over the next
three years, VE Commercial Vehicles plans to invest Rs500 crore to double its
monthly production to 8,000 units at its Eicher plant in Pithampur, Madhya Pradesh.

Health is Wealth”. A healthy truck reaps healthy profits for your business. Spurious parts
are injurious to the health of your precious vehicle which in turn adversely affect its
working efficiency and hence your business.