CHAPTER 1

INDUSTRY PROFILE 1.1

INTRODUCTION Dynamatic Technologies Limited produces highly engineered products for the following applications:

Automotive Sector Aerospace Sector Agricultural Equipment Industry Construction Equipment Industry

Hydraulics ydraulics is a topic of science and engineering dealing with the mechanical properties of liquids! ydraulics is part of the more general discipline of fluid power! "luid mechanics provides the theoretical foundation for hydraulics# which focuses on the engineering uses of fluid properties! ydraulic topics range through most science and engineering disciplines# and cover concepts such as pipe flow# dam design# fluid control circuitry# pumps# tur$ines# hydropower# computational fluid dynamics# flow measurement# river channel $ehavior and erosion! Aircraft hydraulic and pneumatic assem$lies comprise %!& percent of total industry shipments! The split $etween civilian and military hydraulic and pneumatic assem$lies is &' percent for civilian and (( percent for military applications! Aircraft power transmission equipment comprises %!) percent of total industry shipments! The split $etween civilian and military power transmission equipment is *% percent for civilian and ++ percent for military applications!

Aeros ace! Aerospace comprises the atmosphere of Earth and surrounding space! Typically the term is used to refer to the industry that researches# designs# manufactures# operates# and maintains vehicles moving through this air and space! Aerospace is a very diverse field# with a multitude of commercial# industrial and military applications! Aerospace is not the same as airspace which is a term used to descri$e the physical air space directly a$ove a location on the ground!

O"er"ie#! In most industrial countries# the aerospace industry is a cooperation of pu$lic and private industries! "or e,ample# several countries have a space program under the command of the government# such as -ASA in the .nited States# ESA in Europe# the Canadian Space Agency in Canada# Indian Space /esearch 0rgani1ation in India# /2A in /ussia# China -ational Space Administration in China# Iranian in Iran and S.3A/C0 in 3a4istan! Along with these pu$lic space programs# many companies produce technical tools and components such as spaceships and satellites! Some 4nown companies involved in space programs include Loc4heed 5artin# -orthrop 6rumman# EADS# and 7oeing! These companies are also involved in other areas of aerospace such as the construction of aircraft! 5any countries have air transport companies# such as Air "rance and Air India! 5odern flight vehicles must undergo severe conditions such as differences in atmospheric pressure and temperature# or heavy structural load applied upon vehicle components8 numerous matters must $e ta4en into account! Consequently# they are usually products of comple, synthesis of various technologies and sciences# including $ut not limited to aerodynamics# materials science and electronics! The 4nowledge and the process of com$ining these various $ranches of studies are what is collectively 4nown as aerospace engineering! This comple, characteristic 4eeps a single aerospace engineer from involving in the entire tas48 rather# aerospace engineering is conducted $y a team of engineers# each speciali1ing in their own $ranches of science! The development and manufacturing of a flight vehicle is $asically a process to carefully $alance and compromise $etween the a$ilities# performance# availa$le technology and costs! Aircra$% i&dus%ry! The aircraft parts industry is defined as esta$lishments primarily engaged in manufacturing aircraft assem$lies8 aircraft engine components# equipment and parts! Aircraft part esta$lishments are also included in this industry! Esta$lishments primarily engaged in manufacturing aeronautical instruments and electronic navigational equipment are not considered part of this sector and are covered in most aeronautical regulatory 9urisdictions $y other rules! The aerospace industry is divided into two main sectors: the civil sector and the military sector# the military sector has declined sharply since the end of the Cold :ar! There has also $een a decline in overall e,penditures in the aerospace industry is also due to the increasing level of glo$ali1ation! This trend has led to consolidation and massive restructuring worldwide! Internationally# the mar4et for aircraft parts in the civil aviation sector is dominated $y 7oeing ;%< per cent of the glo$al mar4et= and Air$us Industry ;>< per cent of the mar4et=! This oligopoly ;7oeing and Air$us= controls the standards that aircraft parts suppliers must meet! In addition to this concentration of companies# the aerospace component industry and mar4et is concentrated geographically in the .nited States ;&* per cent=# although Europe ;)+ per cent= and ?apan ;* per cent= are important centers! The military aircraft parts industry is dominated $y large aerospace and defence conglomerates in a small num$er of large# industrial countries such as the .nited States# "rance and the .nited 2ingdom!

The parts $usiness requires a high degree of service and local interaction with the airline companies! 3arts are more customi1ed# and are not the high volume commodity type of parts found

in the automotive sector# for e,ample! 7ecause of the international scope of the mar4et currency fluctuations# tariffs and similar import limitations# price controls and la$or regulations can have a ma9or impact on the sectors financial health! This is e,acer$ated $y the fact that the industry is capital intensive compared to other manufacturing concerns! The 7ody of an airplane is called a fuselage!

Aeros ace e&'i&eeri&'! Aerospace engineering is the $ranch of engineering that concerns aircraft# spacecraft and related topics! Aerospace Engineering was originally 4nown as aeronautical engineering and dealt solely with aircraft! The $roader term @aerospace engineering@ has replaced the former in most usage# as flight technology advanced to include craft operating outside EarthAs atmosphere! In analogy with @aeronautical engineering@# the $ranch is sometimes referred to as astronautically engineering# although this term usually only concerns craft which operate in outer space!

Curre&% %re&ds! A num$er of regulatory and mar4et access issues negatively affect the industry including the lac4 of harmoni1ation in standards around the world# e!g!# air worthiness and environmental standards8 impediments to licensing and transfera$ility of personnel $etween company sites in different countries8 and the e,istence of international su$sidy programs and various nonB tariff $arriers! The manufacture of aircraft parts and au,iliary equipment encompasses a wide variety of manufacturing processes! The industry under pressure to switch to alternative materials and processes which comply with changing domestic and international standards! As well# the industry must develop more efficient and environmentally friendly aircraft parts products to meet increasingly stringent environmental standards aimed at reducing aircraft noise and engine com$ustion emissions! 7oeing# /aytheon and Loc4heed 5artin announced an Internet trading e,change for aerospace parts in 5arch# (<<%! Aerospace and defense companies will $id# $uy and auction original airplane parts and replacement parts!

Por%er(s Fi"e Forces T)rea% o$ &e# e&%ra&%s! -ew entrants to an industry are important $ecause# with new competitors the intensity of competitive rivalry in an industry generally increases! This is $ecause new competitors su$stantial resources into the industry and may $e interested in capturing a significant mar4et share If a new competitor $rings additional capacity to the industry when product demand is not increasing# prices that can $e charged to consumers

generally will fall! 0ne result may $e a decline in sales revenues and lower returns for many companies in the industry!

In this industry# the threat from new entrants is high as in last *B& years different $rands has entered the Indian mar4et! As the industry more or less operates in a perfect competitive environment# the price for the product is almost same across $rands# which forces companies to operate at low margins C high customer satisfaction! 7ut still for local $rands itDs difficult to enter this mar4et# though the growth rate is very high! T)e %)rea% o$ su*s%i%u%e roduc%s! In this industry the threat from su$stitutes ceases to e,ist# as this product is one of its 4inds and all 0E5 need gear pumps for their products# therefore it faces a very low su$stitute threat! +ar'ai&i&' o#er o$ su liers! The $argaining power of suppliers depends on suppliers economic $argaining power relative to companies competing in the industry! Suppliers are powerful when company profita$ility is reduced $y suppliersD actions! Suppliers can e,ert their power $y raising prices or $y restricting the quantity and or quality of goods availa$le for sale! Also descri$ed as mar4et of inputs# suppliers of raw materials# components# la$our and services to the firm can $e a source of power over the firm! Suppliers may refuse to wor4 with the firm or charge e,cessively high prices for unique resources! In this industry power from various suppliers li4e iron# steel etc lies with the company that supplies it to the industry! The ma9or supplier en9oys a lot of li$erty! Some of the suppliers even service their products if it s not of the required standard! So the company has to maintain a good relationship with the suppliers# as they may shift to another manufacturer! +ar'ai&i&' o#er o$ %)e *uyer! :hile companies competing in an industry see4 to ma,imi1e their return on invested capital# $uyers are interested in purchasing products at the lowest possi$le price! To reduce cost or ma,imi1e value# customers $argain for higher quality or greater levels of service at the lowest possi$le price $y encouraging competition among companies in the industry! 7uyers are important to sellers $ecause they purchase a large portion of the suppliers industryDs total sales! Also descri$es the mar4et of outputs# the a$ility of customers to put the company under pressure and it also affects the customerDs sensitivity to price changes! In Earthmoving Industry# $uyers have good $argaining power as the price differentials are very less! The cost of shifting from one $rand to another is less negligi$le! CustomerDs rate companies on the $asis of after sales service! In the times of recession# when the $an4s are somewhat reluctant in providing loans# it has $ecome a necessity to target those customers who go for reB$uy! As these customers already 4now the product and $rand# they posses good $argaining power in terms of service! T)e i&%e&si%y o$ co, e%i%i"e ri"alry! The intensity of rivalry in an industry depends upon the e,tent to which companies in an industry compete with one another to achieve strategic competitiveness and earn a$ove average returns $ecause success is measured relative to other companies in the industry competition can $e $ased on price# quality or innovation! 7ecause of the interrelated nature

of companyDs actions# action ta4en $y the company generally results in retaliation $y competitorDs!

"or most of the industries# this is the ma9or determinant of the competitiveness of the industry! Sometimes rivals compete aggressively and sometimes rivals compete in -onBprice dimensions such as innovation# mar4eting etc! The competitive rivalry is not on the $asis of price# $ut on the quality and after sales service! As DTL is the sole player in the mar4et with a mar4et share of '*E the rivalry faced $y them is not so fierce! If we compare the rest )*E of the mar4et share where the customers are indifferent $etween the products# a high competitive rivalry e,ist to eat up others mar4et share!

CO-PANY PROFILE 1..

1...1. +AC/0ROUND AND INCEPTION OF THE CO-PANY!

Dynamatic Technologies Limited ;DTL= was incorporated on 'th 5arch )F&># promoted $y 5r! ?!2! 5alhoutra# present Chairman! DTL was esta$lished with technical colla$oration from Dowty ydraulic .nits Limited# .!2! it was then 4nown as Dynamatic ydraulics Limited! In )F'+# it indigenised the technology and ended their colla$oration with Dowty# $ecoming one of the 4ey players in the hydraulics field in India and world wide!

CompanyDs product range covers over ('<< varieties of ydraulic 6ear 3umps and ydraulic Systems# which is their forte! They also have diversified applications in the Defence C Aerospace Sectors and in 5etallurgy! :ith that start thirty three years ago# they have now come a long way with ever increasing scale of operations and plans for e,pansion! CompanyDs main manufacturing plant as well as the ead 0ffice is situated at Dynamatic 3ar4# 3eenya# 7angalore! They have two plants in Chennai and one plant in Swindon# .nited 2ingdom!

1.....NATURE OF +USINESS CARRIED! :ith a proven trac4 record spanning over a quarter of a century# they are now the largest producer of ydraulic 6ear 3umps in Asia! :ith stateBofBtheBart manufacturing facilities# and incorporation of the latest process technologies in precision engineering# they have diversified into a num$er of related areas li4e Aerospace and the Automotive Components sector# thus creating a unique# vertically integrated manufacturing structure!

In addition to leading the Indian mar4et with a share of &< percent# company also have made a mar4 in the international arena as the fourth largest producer worldBwide! They are the original equipment manufacturer for all the ma9or tractor and earth

moving equipment manufacturers in India li4e 5ahindra C 5ahindra# Eicher# 3un9a$ Tractors# TA"E# 5T# 7E5L# 7 EL# Telco# 6odre9 C 7oyce# 7a9a9# Larsen C Tou$ro# 5ac4neill Engineering# Ingersoll /and# Asho4 Leyland# industan 5otors# 6reaves# etc! In the recent past they have made inroads into the Aerospace and Defence sectors# e,panding our hori1ons! The 3ilotless Target Aircraft LA2S GA was a prestigious pro9ect for their aerospace division# where they manufactured its wings and rear fuselage! They have also $agged the -ational Award for E,cellence in Indigenisation of Defence Equipment awarded $y the 5inistry of Defence! DTL now stand as a medium scale# precision engineering# IS0 F<<) and IS0 )+<<< certified company!

1...1.2ISION3 -ISSION AND 4UALITY POLICY! 2ISION! CompanyDs vision is: Develop products and technologies in line with national priorities! Achieve glo$al competence! To operate at the international level# to thin4 glo$al and to $e the worldDs largest producer of hydraulic gear pumps! Transform the organi1ation into a 4nowledge $ased organi1ation!

-ISSION!

The CompanyDs mission statement states that: It has $een CompanyDs endeavor to 4eep a$reast of the changes# $oth technological and societal# while chal4ing out the growth chart! 7e it the IS0

F<<< certification for quality systems or the IS0 )+<<< certification for environmental standards# they $elieve that their role in society is that of a responsi$le and accounta$le organi1ation that is actively contri$uting to the society!

CompanyDs value system too reflects the commitment to quality and innovation in a societal conte,t!

Company $elieves in: Integrity! 7eing a quality driven organi1ation! 7eing a 4nowledge $ased organi1ation! /aising the standard of living of all employees! 7eing non parochial meritocracy! Conforming to the highest environmental standards!

/ 3olicy is an offshoot of this philosophy! It aims to:

:or4 towards a 4nowledge $ased organi1ation# which $elieves in equal opportunities! Transcend all $arriers of dogmatism! Align personal goals with the goals of the company# community# country and the world! Improve the standard of living of all of DTLDs employees!

4UALITY POLICY!

Dynamatic technologies limited is involved in the design and manufacture of highly engineered components and systems for ydraulic# Aerospace and Automotive applications! )! It is the policy to provide creative C innovative solutions to delight the customers at costB effective prices on a continuous $asis! (! 7y delivering superior value to the customers# they will $uild a successful $usiness model for themselves# capa$le of returning high yields to investors and improving the quality of life of all employees! >! All processes will $e eco friendly and $e designed to eliminate wastage# and all employees will strive to constantly e,pand the $oundaries of 4nowledge through imagination and diligence! +! This policy is implemented through the quality system# which operates in accordance with IS0 F<<)# the international quality standards!

1...5. PRODUCT PROFILE!

DYNA-ATIC HYDRAULICS DYNA-ATIC HYDRAULICS is AsiaAs largest producer of ydraulic 6ear 3umps# and one of the Top "ive worldwide! Dynamatic also manufactures a wide range of sophisticated ydraulic Halves and custom tailored hydraulic solutions e,tending from simple ydraulic 3umping .nits to sophisticated 5arine 3ower 3ac4s# comple, Aircraft 6round Support Systems to turn4ey industrial installations! All these products are produced at StateBofBtheBArt manufacturing facilities located at 7angalore# and assem$ly is done in an air filtered environment to avoid initial contamination!

Applications in Agricultural sector: ydraulic 6ear 3umps manufactured $y Dynamatic have varied applications including Agricultural Tractors! Dynamatic is an 0riginal Equipment Supplier to all tractor manufacturers in India including 5ahindra C 5ahindra# Eicher Tractors# 3un9a$ Tractors# Same Deut1B"ahr# Escorts Limited# 7a9a9 Tempo Limited# LCT ?ohn Deere# -ew olland India# etc! Applications in Industries: The Company en9oys an overwhelming share of the Industrial 5ar4et for ydraulic 6ear 3umps in the country! Dynamatic pumps are used in 5achine Tools and various other "luid 3ower Systems! The CompanyAs customers include 7E5L# 6odre9 C 7oyce# 5acneill Engineering# 5T# 7 EL# Telco# Asho4 Leyland amongst others!

Applications in E,ports: Dynamatic e,ports its products to over >< countries and its e,port segment is growing rapidly with the turnover growing strongly over the past few years! E,ports are e,pected to constitute )*B(<percent of the companyDs turnover# in the ne,t ( years! Dynamatic products are used as 0riginal Equipment in .SA# .2# Canada and South 2orea! The Company has developed specific products for use as 0riginal Equipment in the tractor mar4ets in .SA# 6ermany# 5e,ico and Tur4ey

DYNA-ATIC AEROSPACE DYNA-ATIC AEROSPACE3 a division of Dynamatic Technologies Ltd!# a division of Dynamatic Technologies Ltd# is a pioneer and a recogni1ed leader in the Indian 3rivate Sector for the development of comple, aero structures! Instituted in )FF*# this division is currently headed $y Air Cmde! ;/etd!= /avish 5alhotra# one of IndiaAs two cosmonauts!

Dynamatic Aerospace has closely partnered Agencies of national importance li4e 5inistry of Defense# industan Aeronautics Limited# and other defence esta$lishments on 4ey pro9ects including the La4shya# IndiaAs 3ilotless Target Aircraft# ?TB>% Intermediate ?et Trainer and Su4hoi 52I >< "ighter 7om$er! 3roducts include the :ing and /ear "uselage of the LA2S GA# Ailerons "laps for the wings for the ?TB>% and "ins# Hentral "ins# Slats# Hertical C ori1ontal Sta$ili1er# Canards and Air 7ra4es for the Su4hoi >< 52I fighter $om$er! Dynamatic Aerospace is considered to $e one of the most relia$le quality vendors to the D/D0 and was presented with the ACreative 3artnerA Award for the year )FF'BFF $y D/D0# ADE and ASIE0! The Aircraft division of AL in 7angalore also presented this division with the A AL 7est Hendor AwardA for (<<(B<>! Dynamatic Aerospace has the largest infrastructure in the Indian 3rivate sector for manufacture of e,acting Air "rame Structures and 3recision Aerospace Components! This is the first time such capa$ilities have $een $uilt in the Indian 3rivate sector! The Division is now consolidating its position through colla$orations with International Aerospace ma9ors on e,ports initiatives

DYNA-ETAL! DG-A5ETAL# a division of Dynamatic Technologies# produces high quality -onB"errous Alloy and Castings for Industrial# Automotive and Aerospace Applications! DG-A5ETAL incorporates use of the latest metallurgical processes and differs radically from other conventional foundries as its heat treatment processes are designed to ensure castings are made with no inclusions# minimal melting loss and with the effective removal of gas from the metal! To achieve raw castings of high quality# DG-A5ETAL uses sophisticated machinery li4e tilta$le gravity die casting machines# holding furnaces# impregnation plant# core shooters# sand core ma4ing facilities# lea4 testing machines and shot $lasting machines! The division is capa$le of e,ecuting Aluminum 6ravity Die Cast parts with intricate contours

AUTO-OTI2E! ?25 Dae /im Automotive Limited# a su$sidiary of Dynamatic Technologies Limited# produces high quality ferrous and nonBferrous engine and transmission components for the $urgeoning glo$al automo$ile industry! ?25 Dae /im is the single source supplier of a wide variety of critical engine and transmission parts# for the yundai Santro and Accent cars! The Company also caters to the requirements of other new generation cars and S.HAs such as# TATA Indica and Sumo# "IAT 3alio# 5ahindra Scorpio# Holvo# etc

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PRODUCT PROFILE
HYDRAULICS AEROSPACE DEFENCE

Hydraulic Gear Pumps Trac !r Hydraulics Hydraulic Suc i!" a"d Deli#ery Pumps

S$ee me al c!mp!"e" s % mac$i"ed c!mp!"e" s

Suc i!" % Deli#ery Pumps % Dis ri&u !r Mec$a"ism ' (!r Ta")s* Hydraulic C!upli"+ ' F!r Ta")s a"d Arm!red ,e$icles

DYNAMETAL

A.T050TIHE

Pr!duc i!" !( N!" Ferr!us Cas i"+ % Hea Trea me" Facili ies-

3roduction of engine and transmission components for automotive applications

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1...6. AREA OF OPERATION

Dynamatic Technologies Limited has its operations in India as well as in overseas!

0LO+AL

Dynamatic Technologies Limited has acquired the ydraulic 7usiness Division ;Swindon .nit= of Sauer Danfoss Limited# .2#through its su$sidiary Dynamatic Limited# .2! NATIONAL -ATI0-AL 7/A-C ES: The company has its $ranches in the following cities! -ew Delhi Ahmeda$ad Chennai Coim$atore Secundera$ad 5um$ai 3une Calcutta

1...7. O8NERSHIP PATTERN! Dynamatic Technologies Limited ;DTL=# a pu$lic company was incorporated on 'th 5arch )F&># promoted $y 5r! ?!2! 5alhoutra# present Chairman! DTL was esta$lished with technical colla$oration from Dowty ydraulic .nits Limited# .!2! it was then 4nown as Dynamatic ydraulics Limited! In )F'+# it indigeni1ed the technology and ended their colla$oration with Dowty# $ecoming one of the 4ey players in the hydraulics field in India and world wide!

The $oard of dynamatic comprises of nine directors# three of whom e,ecutive directors and si, are nonBe,ecutive directors including the chairman of the company# with the ma9ority of them $eing independent directors 12

C)air,a& 9 Fou&der! 5r! ?!2! 5alhoutra Direc%ors! 5r! Hi9ay 4apur ; management consultant= Dr! 2! Aprameyan ;distinguished technocrat= S! 2rishnaswamy ; /etd!Air Chief 5arshal= 5r! -!/! 5ohanty ;distinguished technocrat= Dr! 7! Seshanth ;company e,ecutive=

Preside&% a&d 'rou CFO! 5r! H! Sunder E:ecu%i"e direc%or a&d COO! 5r! -! /a9agopal CEO a&d ,a&a'i&' direc%or! 5r! .dayant 5alhotra!

1...;. CO-PETITORS INFOR-ATION!

A few renowned companies which are manufacturing )! 5ico (! Eaton >! /e,roth! +! Catching *! Team ydraulics Company Ltd!

ydraulic 6ear 3umps are:

ydraulics ydraulic Company Inc!

%! Colum$us &! Sun

ydraulics ydraulics

'! 5y1a4

In the Aerospace industry D!T!L is the monopolist as there are no other competitors in Airframe structures and 3recision aerospace components and D!T!L is catering more towards the Indian Aerospace industry and its clients are mainly !A!L!

13

1...<. I&$ras%ruc%ural $acili%ies! Aiming to achieve and sustain product e,cellence# DTL has cut no corners in esta$lishing comprehensive worldB class facilities for its entire range of products# the main assem$ly shops# the manufacturing and testing operations! DTL has got well equipped class rooms with the facilities of LCDDs and 0 3Ds# which are used to train the employees and trainee students!

I&%er&al Co,,u&ica%io&! Internal communication is usually through Inter 0ffice 5emos# which are sent to the required personIsIdepartment! If the communication is intended for all the people in the company# it has to $e put up on the notice $oard! They have three notice $oards# one on the ydraulics Shop "loor# one on the aerospace floor# the other on the first floor landing near the canteen and the third in the Aerospace 5achine Shop!

Tele )o&es a&d I&%erco,! Company has three telephone lines! All incoming and outgoing calls are sourced through the E3A7J at the reception! A few departments have direct e,ternal lines or can dial K<D to access e,ternal lines!

E=,ail!

Almost all the departments have access to eBmail! Chec4 out with their Departmental ead whether the department has access to the Internet! -ormally# $ased on the requirement of the department# their own personal email id with Ldynamatics!net address is created within > wor4ing days!

4uali%y Policy Cards!

All employees are required to have one of our quality policy cards at all times within their premises! The 3ersonnel Department will give the card at the time of 9oining!

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1...>. ACHIE2E-ENTS 9 A8ARDS: CompanyDs Achievements and awards are: AL 7est Hendor Award for Dynamatic Aerospace B (<<>!

DTL receives -ational Award for E,cellenceB (<<>! In (<<)# Dynamatic was awarded the status of A /ecogni1ed InBhouse /CD .nitA# $y the Department of Scientific and Industrial /esearch ;DSI/=# 6overnment of India! L/MA approves DTLDs Muality 5anagement SystemB (<<<! Dynamatic e,ports its products to over >< countries and its e,port segment! Dynamatic is the only Indian manufacturer of pumps in this segment and therefore# has a cost advantage over its competitors! It e,pects e,panding activity in this segment over the ne,t decade! Dynamatic AerospaceN has the largest infrastructure in the Indian 3rivate sector for manufacture of e,acting Air "rame Structures and 3recision Aerospace Components! Dynamatic is the mar4et leader in the field of hydraulics! Dynamatic $ags maiden order from ?ohn Deere# 6ermany O (<<>! Dynamatic Technologies Limited has acquired the ydraulic 7usiness Division ;Swindon .nit= of Sauer Danfoss Limited# .2# through its su$sidiary Dynamatic Limited# .2# on )* ?une (<<&! Efficient colla$oration for customer satisfactionB (<<>!

15

1...1?. 8OR/ FLO8 -ODEL @END TO ENDA:

:or4flow model of materials management department:

3urchase order I 9o$ order is sent to

3urchase Division

Hendor

Stores

Muality Control If

If re9ected

Accepted

Accounts

Costing

1...11. FUTURE 0RO8TH AND PROSPECTS!

16

DTL is growing rapidly with the turnover growing strongly over the past few years! E,ports are e,pected to constitute )*B(<percent of the companyDs turnover# in the ne,t ( years! The Company also e,pects to acquire $etter technologies to support overall $usiness and gain overall inorganic $usiness growth with a $etter synergic effect! Company loo4s forward to wor4ing closely with -orthrop 6rummanDs Electronic Systems sector to help meet the advanced technology aerospace and defense product and service needs identified $y the Indian ministry of defence going forward# a worldBleading provider of advanced military radar# electronic warfare and other avionics systems! !

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CHAPTER .!-c/ENSY(s ;S ,odel All the &s elements can $e found in the company strategies# corporate plans# organi1ation structure and other documentations! According to the model# the seven $asic dimensions# which represent the core of managerial activities# are Structure# S4ills# Style# Strategy# System# Staff# Shared values!

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OR0ANIBATIONAL DESI0N:

Company has $een divided into various functional areas each headed $y a 6eneral 5anager ;65=! A few departments have Deputy 6eneral 5anagers ;D65= or Assistant 6eneral 5anager ;A65= or Senior 5anager too! The various departments are as $elow: De ar%,e&% 3roduction Muality Assurance 5aterials /esearchC Development Headed +y 5r! 3!S! /amesh O S65 0perations 5r! !S! /adha4rishna O Senior 5anager 5r! 3!S! /amesh O S65 0perations 5r! 3!2! /ay Chaudhuri O S65 Engineering 5r! -! 5urali O 65 "inance "inance 5r! D!S! Sathyanarayana O D65 Costing

5ar4eting Legal C uman /esources

5r! 6!H! 6urura9 O 65 5ar4eting 5r! 7hanusimha! S O A65

0verseeing the entire operations they have: 5r! .dayant 5alhoutra 5r! -! /a9agopal CE0 C 5anaging Director E,ecutive Director C C00# ydraulics C Dynametal

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OR0ANIBATION STRUCTURE:

CEO & Managing Director

resident & Group C#O

Executive Director & COO, Hydraulics & Dynamaetal

Executive Director & COO, Automotive

"ice president & COO, Aerospace

ersonnel & Administration

GM

Marketing
Corporate lanning

SGM operations

GM Dynametal

AGM Marketing

AGM Materials

Secretarial AGM Exports H! AGM C SGM !&D

Corporate Communications

AGM Marketing

AGM roduction

AGM Maintenance

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DETAILED STUDY OF FUNCTIONAL DEPART-ENTS OF THE CO-PANY!

FINANCE DEPART-ENT! "inance department is concerned with the essential finance activity for organi1ation to carry out other activities in effective way! This helps the organi1ation to achieve soundness in wor4ing and dealing with others! "inance is required from the $eginning of the organi1ation and further for successive stages!

Fu&c%io&s o$ %)e Fi&a&ce De ar%,e&%

ead office Collections In case of collections in 7angalore 0ffice# firstly mar4eting dept collects money in the form of cash IchequeIDD! 7ased on this financeIAccounts dept raises receipt voucher for cash receipts and in other cases chequesIDD are deposited into $an4! 7ased on the a$ove# concerned vouchers are prepared to update receipts from customers in the case of CashBCash receipt voucher and in other cases O 7an4 receipt voucher! 7ill ad9ustments are done on the $asis of collection advice received from mar4eting deptIcustomer! In certain cases# specially collections from 0E customers are received directly in accounts through courier etc and the same is accounted accordingly!

7ranch Collections In case of collections at $ranches# money is deposited in respective $ranches and the same is accounted in 7angalore $ased on the wee4ly collection statements received from $ranches! 7ill ad9ustments I matching is done on the $asis of wee4ly collection statement only! In case of e,port direct reali1ations# ;i!e!# e,cluding the $ills negotiated $ac4ed $y I!C= $an4 will give the credit after converting the "C to rupees C also will issue "I/C to the company! The company accommodates the details of "I/C in each receipt narration as the same is required for the purpose of e,port o$ligation!

7ills DiscountingBE,port 7ills C "actoring O Domestic 7an4 will negotiate the documents after verifying the a$ove documents C give credit to DTL account! 21

Entry will $e passed to the a$ove effect crediting to $ill discounting C on due day credit will $e given to party account $y de$iting $ill discounting account !In case of e,ports# if there is and difference $etween the rate at which income is $oo4ed C the actual amount received will $e accounted as e,change fluctuation! In case of direct e,port reali1ation# 6/ form needs to $e su$mitted to $an4 once the money reali1ed!

-AR/ETIN0 DEPART-ENT! 5ar4eting is a comprehensive term which includes all resources and a set of activities necessary to direct and facilitate the flow of goods from producer to customer in the process of distri$ution! It is to satisfy customerDs demands! It is the creation and delivery standard of living to society !The Company first determines the customerDs wants and figures out how to deliver the product to satisfy those wants! uman efforts# finance and management are tools for mar4eting!

O*Cec%i"es! To analy1e mar4eting opportunities!

To satisfy the customerDs wants as the $usiness e,ists only due to the e,istence of customerDs demands!

To distri$ute the products in time!

To ma,imi1e product variety and customer choice!

To improve the quality of life consisting of the quality# quantity# range and accessi$ility of the goods!

HU-AN RESOURCE DEPART-ENT! The wor4force at the Dynamatic is competent# dynamic and committed to delivering premium quality to their customers! The present employee strength is ++'# of which >(' are wor4men and )(< are officers and managers! The company has close to )<< engineers and a professional from various disciplines on is rolls! 3ersonnel are recruited after $eing su$9ect to meticulous tests and grueling interviews to assess their

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competence and e,pertise! Even so# freshly recruited technicians have to undergo intensive# handsBon training $efore assuming responsi$ilities!

PRODUCTION DEPART-ENT! 3roduction department plays a very important role in the entire organi1ation as such8 it acts as a main centre of the whole organi1ation $y conveying the raw materials into finished products! This department is responsi$le in carrying out the production activity evenly and in most efficient manner!

O*Cec%i"es! To follow up the daily production schedule as per the plan!

To maintain the ethical standards and safety of employees!

To maintain cost of production as low as possi$le!

To upgrade technical efficiency of production!

To maintain integrated relationship with all other departments!

To maintain the quality of the product!

-ATERIALS -ANA0E-ENT DEPART-ENTD 5aterials management department is responsi$le for CoBordination of planning# purchasing# moving and controlling determined services to the customer at minimum cost! 5aterial planning is done in a systematic way! The main function of the department is to identify the requirements of direct and indirect materials and to 4eep appropriate stoc4 of which is consumed regularly so that there is no interruption in production!

3urchase Section: 23

3urchase section is responsi$le for ma4ing availa$le various direct and indirect materials that are consumed $y the factory regularly! The stoc4 of these materials is reviewed every year $ased on previous yearDs consumption and current year production plan! Harious registers# such as direct and indirect materials register# printing and stationary register etc are maintained! The purchase indents from various departments are registered in the respective registers! Stores Section: The stores section is responsi$le for collection of material# loo4ing after insurance# offering for insurance etc! The main function of this section is to 4eep proper account of materials in its custody!

RESEARCH E DE2ELOP-ENT DEPART-ENTD The companyDs focus on /CD has ena$led the company to foray into providing new services and launch new products! The /esearch C Development center at Dynamatic 3ar4 is completely electronic# utili1ing stateBof O art parametric >D design programs and 4nowledge $ased e,pert systems! Dynamatic has transformed itself into a 4nowledgeB $ased organi1ation through its sustained /CD efforts! In (<<)# Dynamatic was awarded the status of /ecogni1ed in B ouse and /CD .nit8 $y the Department of Scientific and Industrial /esearch ;DSI/=# 6overnment of India!Dynamatic has set up a virtual research la$ in TE:2S7./G! England# using colla$orative product development technology# over the :e$!

S/ILL! Applicants with less than a yearDs relevant e,perience are appointed as trainees! After training# the employee will $e on pro$ation for the prescri$ed period of time! The performance of the employee determines the duration of the training and the pro$ation! E,perienced candidates are appointed as pro$ationers! The management will decide the period of the trainingIpro$ation!

Some of the important training programs conducted include:

Training on environmental issues! 24

 7asics of hydraulics and its application in pumps! 3ro9ect management! 3roduct design and development! Computer aided analysis! Muality management system! "irst aid techniques and fire fighting! Computer literacy! Disciplinary issues and procedures! InterBpersonal s4ills! Customer relationship management! Muality in Aerospace! Aircraft fasteners and installation techniques! Training on *S quality systems! Inculcated disciplines on the legal requirements! Training as an incentive!

STYLE! The organi1ation follows participative style of decision ma4ing process: As a process of good corporate governance for corporate affairs and all matters requiring discussion I decisions $y the $oard I committee# the company has a policy for $oard and committee meetings! This policy ensures that the decision ma4ing process at $oard I committee meetings is done in an informed# systematic and in the most efficient manner!

All divisions Idepartments in the company are required to plan their functions well in advance# particularly with regard to matters requiring discussions I approval I decision in the $oard I committee meetings! All such matters are communicated to company secretary in advance so that it can $e included in agenda for discussion# at the $oard I committee meetings their of!

Developing and using top down I $ottom up communication channels: 25

The communication needs were evolved over the years and refined $ased on e,periences gained $y leaders and the requirements of organi1ation! "eed$ac4 for the improvement is ta4en from the employeeDs perception survey!

Top down communication: Communication meetings ;unit heads to functional heads# functional heads to 5anagers and e,ecutives# e,ecutives to supervisors and wor4ers=! Interoffice memos! EBmail and intranet we$sites! 7ulletin $oard of departments! -otice $oards! .pward communication: 3articipative forum!

5eeting with union C associations!

STRATE0Y! Strategy is a long term goals that descri$es how a firm should operate to achieve its o$9ectives! The company follows many strategies one among them is :aste Elimination!

SYSTE-! INTERNAL CONTROL SYSTE- AND THEIR ADE4UACY! The company has deployed a comprehensive internal audit system# which is commensurate with the scale of operations! Competent and qualified professionals# who are e,ternal to the companyDs $usiness# conduct regular and detailed audits# $oth at the manufacturing locations and its $ranch offices! The $oard level audit committee of the company meets at regular intervals to review internal control systems and ta4e stoc4 of the situation from time to time!

STAFF!

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Staffing is the process of acquiring human resources for the organi1ation and assuring that they have the potential to contri$ute to the achievement of the organi1ationDs goals!

Staffing is selecting people for specific organi1ational positions and developing in them the a$ilities and s4ills that they would need to $e effective in those and su$sequent assignments! The staffing function applies to the whole organi1ation# i!e! it cuts across all organi1ational levels through the process may $e different for different 4inds of 9o$s!

The total num$er of staff in the company is ++'# in which (< O Are top e,ecutives including CE0# 5D Etc! )(< O 5iddle level managers which include >(' O :or4men PemployeesQ! The strength of DTL is the e,perience! 5any of the employees wor4ing in the organi1ation are employed wor4ing in the organi1ation are employed for more than )< years and the recruitment process in the last )< years has $een very less! Every employee is carrying with him a lot of e,perience! 0ther important strength of DTL is the employees association with the company# almost every employee wor4ing in DTL is proud to $e wor4ing here which is a very important thing for the company! 0ther strengths include highly s4illed and efficient employees! 0DDs and supervisors!

-os% i, or%a&% role o$ e, loyees i& %)e or'a&iFa%io&! There is no such most important role in DTL as every employeeDs wor4 is important! Still# only on some ground rules supervisors play very vital in the organi1ation! They are directly responsi$le for every wor4 performed in DTL they report to the superiors!

-os% i, or%a&% eo le %o %)e success o$ %)e *usi&ess9or'a&iFa%io&! As said a$ove# no single person is important as such in the success of an organi1ation! ItDs a total team effort and every person is equally important for the success of the organi1ation! Still on some grounds we can conclude that unit heads also play an important role! They play an important role and are also responsi$le for the over all performance of the unit as they delegate the authority and get the wor4 done!

T)e ,os% i, or%a&% co&cer& $or %)e Guali%y o$ s%a$$!

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The most important concern a$out the quality of the staff is the punctuality# sincere ness# and productivity and last $ut not least their attitude! These factors directly affect the output of the organi1ationBperformance!

S%re&'%)s o$ %)e or'a&iFa%io&(s la*our $orce! La$or force $eing the most important attri$ute of any organi1ation# must $e properly made use of and motivated! The strength of the la$or force in DTL is their commitment and attitude! They have a positive attitude# and they 4now what they are supposed to do to ma4e the organi1ation a profit ma4ing one! They contri$ute well to the success of the organi1ation!

SHARED 2ALUE! DynamaticDs long standing commitment to high standards of corporate governance and ethical $usiness practices is a fundamental shared value of its $oard of directors# management and employees! The companyDs philosophy of corporate governance stems from its $elief that timely disclosures# transparent accounting policies# and a strong and independent $oard go a long way preserving shareholderDs trust while ma,imi1ing long term shareholder value! :hilst simultaneously ena$ling the company to fulfill its o$ligations to other sta4eholders such as customers# suppliers# financiers# employees# the government and to the society at large! The company firmly $elieves that such practices are founded upon the core values of transparency# professionalism# empowerment# equity and accounta$ility! E, loyee Par%ici a%io& Pro'ra, @EPPA! All the employees are $rimming with ideas! There are many times when there o$viously is a $etter way to do something# $ut the employees donDt 4now what to do a$out it! This is where the E33 helps $ring out the creativity in them! They should not hesitate to drop the suggestion# dou$ting its worth! After all many of the great inventions came a$out $ecause of small ideas! So# the ne,t time they feel that something can $e done to improve the wor4place and optimise their efforts!

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CHAPTER II !S8OT ANALYSIS

STREN0THS The company is AsiaDs largest producer of the top five world wide! ydraulic 6ear pumps and one of

Company is now supplying hydraulic gear pumps to all )+ tractor manufacturers in India! 0ver '*percent of all agricultural tractors and construction equipment produced in India are powered $y pumps produced $y Dynamatics ydraulics! The company has relentless drive to eliminate operational ineffiencies# introduction of more value added products the companyDs net profit has grown $y *(percent! The improved overall performance has $een leveraged $y the company to negotiate su$stantial reductions in financial costs! The company imparts training to wor4men for wor4ing on multiple machines along with com$ination of reengineering of processes# which has constantly increased the productivity levels! Company has leveraged the deep relationships and large mar4et share $uilt O up over the years with e,isting customers# to offer additional products which incorporate stateBofBtheBart features at attractive price levels! The e,tensive training programs includes *s quality system in the company! Si,BSigma pro$lemBsolving techniques have $een employed! E,ports continue to $e the growth driver! Company has now $een approved as a glo$al strategic source $y the worldDs leading agricultural and construction equipment manufacturers such as ?ohn Deere# Case -ew olland# CLAAS# ?C7# etc

8EA/NESS! 3ower intensive# dependant on power and any miscarriage here results in underButili1ation of capacity! -eeds updating with the times in terms of plant and machinery! -o funds raised on a short term $asis which have $een used only for long term investment! 29

Hariation of share prices of the company in stoc4 mar4et!

or%u&i%ies!

The automotive components industry is poised to witness significant change over the ne,t decade! The outsourcing $oom in auto component industry offers great opportunities for growth! Company presently operates predominantly in the highway vehicle segment which is characteri1ed $y high volumes and thin margins! owever# growth opportunities availa$le in this segment ma4e it very attractive for any $usiness! Company wishes to grow rapidly in this segment and counter the pricing pressures $y adding glo$al customers li4e ford# -issin C 3SA and $uild higher valueBadd in its e,isting supplies $y graduating to supplying complete assem$lies wherever possi$le rather than only parts! Company is continuing to develop numerous variants of pumps used in the industrial sector# with an aim of increasing penetration in this lucrative and growing mar4et!

:ith an aim to trap into the rapidly growing infrastructure sector# company is putting in serious /CD efforts# to develop a range of castB iron $ody pumps! This will open up new revenue streams for your company!

THREATS!

Enormous pricing pressures from customers can seriously pressuri1e margins which appear to $e the $iggest threat to this industry! :ith the customs duty levels continuing to drop ;and pro9ected to reach :T0 levels $y (<<'B<F=# the pricing structure may have to $e suita$ly modified to counter e,pected imports!

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