CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-1-
EXECUTIVE SUMMARY

Hindustan Aeronautics Limited is a major public sector undertaking engaged in the

design, manufacture and overhaul of variety of aviation products from small aircraft to
sophisticated fighters, transport aircraft, their power plants, avionics and accessories.
Over the six decades, HAL has spread its wings to cover various activities. Today
HAL has 16 production units and 9 research and design centers spread over at Bangalore,
Nasik, Koraput, Kanpur, Lucknow, Korwa, Hyderabad and Barrackpore. Its products track
record consists of 12 types of aircraft from in house R & D and 13 types by license
production. The company has well trained, highly skilled and experienced personal
belonging to Production, Management, Quality, Finance, Customer services and Commercial
activity. With particular reference to Aero Engines, HAL has two dedicated production
centers – at Bangalore and Koraput. HAL has so far produced about 3352 aircraft (which
include 11 types of indigenous design), 3583 engines and overhaul over 8141 aircraft and
27267 engines.
HAL has also two joint venture companies, BAeHAL Software Limited and Indo-
Russian Aviation Limited (IRAL). Apart from the two, other major diversification projects
are Industrial Marine Gas Turbine and Airport Services. Several co-production and Joint
Ventures with International participation are under consideration.
HAL has engaged & succeeded in number of R & D programs for both the military
and civil aviation sectors. HAL has good infrastructure facilities and sole unit having
monopoly power for manufacturing its products and also built an organization in such a way
that strength of the company to manufacturing like Dhruv-Advanced Light Helicopter
(ALH).Tejas-Light Combat Aircraft (LCA). Intermediate Jet Trainer (IJT). & various
military and civil upgrades. The deliveries of Dhruv were affected to Indian Army, Navy, Air
force and Coast Guard in March 2002, in its first year of production that is a unique
achievement. The HAL has been collaborated with different countries for importing and
exporting of materials, components design and drawings.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-2-
 In this study I tried to cover scenario of HAL, Engine Division, the work culture in
the division etc. The various department and their effectiveness were individually studied and
their relevance is stated. The objective of the study is to identify the strength and weakness of
the organization analyzing the function of each department and study the growth, objectives
and achievements of each department. During this study various department heads were met
and relevant data were collected. Various factors like company’s profile, quality of products,
marketing strategies adopted by H.A.L and after sales service facilities was observed. Based
on the information collected SWOT analysis was prepared.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-3-
 CHAPTER-1

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-4-
INTRODUCTION

An organizational study helps us to study how different departments in an

organization works, how they are connected with each other, how together they work to
achieve the organizational goal of a firm or an organization. An MBA graduate should know
how different employees are working together for a common goal. He or she should know
how the job flows from different hierarchical levels. This report basically consist the work
culture of the organization, this report also highlights the functions, objectives and
organizational chart of few important departments of the firm.
This report contains industrial background, company background, division’s profile
detailed study of different departments, SWOT analysis findings, conclusion and
suggestions. The detailed departmental study consists functional areas, important objectives,
and hierarchical levels etc.

OBJECTIVES OF THE STUDY

The main objectives of the study are:-

 To study how the work goes in an organization.
 To get the practical experience with corporate world.
 To come across the different types of situations in the corporate world.
 To study how we should coordinate among the employees and top level management,
what are different HR activities, organizational goal etc.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-5-
SCOPE OF THE STUDY

As this study is done as a general, it is not related with a particular field. HAL is a
very big organization and has so many divisions. So this study is restricted to a particular
division i.e. Engine Division, HAL, Bangalore Complex. It consists of only important
functional departments.

LIMITATIONS OF THE STUDY

While doing the detailed study of different departments we are facing few problems
which restrict our study. Such as:-
 Six weeks are not enough for the study of whole organization.
 Company people are no giving proper information’s.
 The reliability of information’s given by them.
 Details restrictions due to security reasons.

METHODOLOGY OF THE STUDY

For the generation of a report we have to first collect the data from all the possible
sources. After collection it has to be format in a particular order according to the
requirements. The data made in this report has two sources they are:
 Primary data: Primary data has been collected by Interaction with administrative
executives, employees and other concerned people.
 Secondary data: The secondary data has been collected from
HAL library books, employees hand book, newspapers, Internet,
company manual etc.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-6-
 CHAPTER-2

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-7-
INDUSTRY PROFILE:

Revolutionized by liberalization, the aviation sector in India has been marked by

fast-paced change in the past few years. From being a service that few could afford, the
sector has now graduated to being a fiercely competitive industry with the presence of a
number of private and public airlines and several consumer-oriented offerings. The market
was galvanized a couple of years ago by the introduction of lower price tags which ensured
that people could travel at the fraction of the original price of air travel. It was spurred further
by the entry of Air Deccan, India's first budget airline, which offered hard-to-believe tariffs.
This was the trigger point for the sector to move from having simple economy, business and
first class fares, to multiple slab tariffs such as apex fares, internet auctions, special
discounts, bulk purchases and last day fares. Some of the tariffs offered are so low that they
have brought airline fares neck-to-neck with upper class railway fares. Little wonder then
that the consumer prefers air travel to the railways. The fare reduction has given the sector a
huge boost with domestic and international traffic growing by 24.2 per cent and 18 per cent,
respectively in April-December, 2005. Private airlines now account for 68.9 per cent of
domestic traffic. The boom in the aviation sector in India can be gauged by the fact that in
one year, the number of people seeking pilot licenses has multiplied three times. In April
2005, it was 300. In April 2006, the number rose to 1045. In the last financial year, the civil
aviation industry has achieved the biggest ever growth in aircraft movement and passenger
traffic.

Passenger traffic in the domestic airports increased by 22.3 per cent to 59.54 million,
while aircraft movement increased by 14.2 per cent to 730,000. Jet Airways tops the list of
domestic and national carrier operators with 8,168 flights operating till June 2005. Indian
Airlines ranks second with 7,562 flights, followed by Sahara (3,225 flights), Air Deccan
(2,889 flights), Spice Jet (483 flights) and Kingfisher Airlines (267 flights).

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-8-
 Aircraft manufacturer Airbus said, “India is one of the world’s most promising
markets and it is predicted that 100 million new urban middle-class consumers will become
potential air travelers by 2010.” The increase in passenger traffic calls for upgraded
infrastructure facilities. The international airport in Delhi and Mumbai are being modernized
and upgraded through private sector participation. In the joint venture (JV), the Airports
Authority of India (AAI) and other Government PSUs will hold 26 per cent equity. The
balance 74 per cent will be held by the strategic partner. Foreign direct investment (FDI) in
this transaction has been capped at 49 per cent. In addition to these 10 non-metro airports,
AAI has identified 15 more non-metro airports, namely, Agatti, Aurangabad, Bhopal,
Bhubaneswar, Coimbatore, Indore, Khajuraho, Nagpur, Patna, Port Blair, Rajkot, Trichy,
Vadodra, Varanasi and Vizag, for development.

In aviation industry fighter aircrafts are also one of the major part. A fighter aircraft
is a military aircraft designed primarily for attacking other aircraft, as opposed to a bomber,
which is designed to attack ground targets, primarily by dropping bombs. Fighters are
comparatively small, fast, and maneuverable. Fighter aircraft are the primary means by
which armed forces gain air superiority. At least since World War II, air superiority has been
a crucial component of victory in most modern warfare, particularly "conventional" warfare
between regular armies, and their acquisition and maintenance represent a very substantial
proportion of military budgets in militaries that maintain modern fighter forces. The history
of fighter aircrafts can be divided into few eras like after world war I, from 1919 to 1938,
after world war II, then generation of jet fighters (1944-1953), 1953 to1960, 1960 to 1970,
1970 to 1990 and 1990 to present. India came into existence in this field in 1960 with the
aircraft HAL HF-24 MARUT. India’s HAL TEJAS was also in the list of notable names.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
-9-
ACQUISITIONS

The India story dominated the Paris Air Show in mid 2005 with several existing and yet-to-
be-launched airlines surprising the world with hefty order announcements. The virtually
unknown low-cost start-up, IndiGo, lifted the tally of Indian deals to US$ 13 billion. The
Delhi-based airline ordered a full fleet of 100 jets in the single-aisle A320 family.

 Low-cost carrier Spice jet signed a US$ 700-million deal for ten aircraft with Boeing,
even as Jet Airways and state-owned Air-India and Indian Airlines placed orders
worth US$ 3 billion for aircraft engines.
 General Electric said it had won an order worth more than US$ 2.2 billion from Air-
India for engines for the airline's new Boeing 777 and 787 fleets. The company said
in a statement that Air-India had placed an order for the GE90-115B engine for eight
777-200LRs and fifteen 777-300ERs. In addition, the airline has ordered for the
GEnx engine to power twenty seven 787-8 aircraft.
 Indian, as Indian Airlines is called now, signed a deal worth US$ 500 million with
CFM International to purchase engines for its newly acquired fleet of Airbus aircraft.
The CFM56-5b engine will power Indian's new fleet of 43 Airbus A320s scheduled
for delivery between late 2006 and 2010.
 The other deal at the world’s largest air-show was an order for A380 super jumbos
and A320s by Kingfisher Airlines.

Domestic air travel in India is predicted to grow 20 per cent over the next five years. Boeing
has raised its 20-year market forecast for India for aircraft purchases from US$ 25 billion to
US$ 35 billion. Both Airbus and Boeing are waiting for the next big order, expected from Air
India. The airline is evaluating medium and large capacity aircraft and is expected to order 50
wide-body jets, worth almost US$ 5 billion at list prices. The aviation sector is likely to see
the launch of many new airlines, including Premier Airways, Star Air and East West Airlines
this year. The first of these, Premier Airways, is formed by a group of ten NRIs in the US.
The airline will be based in Chennai.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 10 -
NEW POLICY

    The liberalization in civil aviation industry began in 1986 with the introduction if Air Taxi
system to boost development of tourism. Though there were several restrictions relating to
seat capacity, airports, timing and fare, the scheme was liberalized over a period of time.
Even the fare was totally deregulated, allowing air taxi operators to charge any fare. With
Open Sky Policy many private operators began operation in the domestic sector. The carriage
increased from a modest 15,000 passengers in 1990 to more than 0.4 million in 1992. Of the
total of 12.23 million passengers carried on domestic sector, private carriers carried about 5.7
million passengers.

    The civil aviation industry got a major boost with the announcement of Airport
Infrastructure Policy in November, 1997 which envisages development of international hubs
and regional hubs to provide a hub and spoke arrangement connecting all airports. Under the
policy, infrastructure development of airport has been opened up for public and private
participation. It allows 74% foreign equity participation in the airport infrastructure with
automatic approval and 100 % equity on case-to-case basis.

A new policy on domestic air transport has also been evolved. Salient features are:-

 40% foreign equity participation in domestic airlines,

 100% equity participation for NRIs/Overseas Corporate Bodies.

 Foreign airline equity, either directly or indirectly is not permissible.

 Operators to have freedom to determine fares for each sector.

 Domestic carriers to be allowed to fly international routes.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 11 -
“WE BELIEVE THAT OUR SUCCESS
DEPENDS ON OUR ABILITY TO
CONTINUALLY REDUCE THE COST
AND SHORTEN THE DELIVERY
PERIOD OF OUR PRODUCTS AND
SERVICES.WE WILL ACHIEVE THIS
BY ELIMINATING WASTE IN ALL
PROCESSES IN EVERY AREA OF
WORK.”

-HAL

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 12 -
 CHAPTER-3

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 13 -
COMPANY PROFILE:

Hindustan Aeronautics Limited (HAL) came into existence on 1st Oct 1964. The
Company was formed by the merger of Hindustan Aircraft Limited with Aeronautics India
Limited and Aircraft Manufacturing Depot, Kanpur.
The Company traces its roots to the pioneering efforts of an industrialist with
extraordinary vision, the late Seth Walchand Hirachand, who set up Hindustan Aircraft
Limited at Bangalore in association with erstwhile princely State of Mysore in December
1940. The Government of India became a shareholder in March 1941 and took over the
Management in 1942.
Today, HAL has 16 Production Units and 9 Research and Design Centers in 7
locations in India. The Company has an impressive product track record -12 types of aircraft
manufactured with in-house R & D and 14 types produced under license. HAL has
manufactured 3550 aircraft (which includes 11 types designed indigenously), 3600 engines
and overhauled over 8150 aircraft and 27300 engines.
HAL has been successful in numerous R & D programs developed for both Defence and
Civil Aviation sectors. HAL has made substantial progress in its current projects:

 Dhruv, which is Advanced Light Helicopter (ALH)

 Tejas – Light Combat Aircraft (LCA)
 Intermediate Jet Trainer (IJT)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 14 -
  Various military and civil upgrades.

Dhruv was delivered to the Indian Army, Navy, Air Force and the Coast Guard in
March 2002, in the very first year of its production, a unique achievement.

HAL has played a significant role for India’s space programs by participating in the
manufacturing structures for Satellite Launch Vehicles like

 PSLV (Polar Satellite Launch Vehicle)

 GSLV (Geo Stationary Launch Vehicle)
 IRS (Indian Remote Satellite)
 INSAT (Indian National Satellite)

There are three joint venture companies with HAL:

 BAeHAL Software Limited
 Indo-Russian Aviation Limited (IRAL)
 Snecma HAL Aerospace Pvt Ltd

Apart from these three, other major diversification projects are Industrial Marine Gas
Turbine and Airport Services. Several Co-production and Joint Ventures with international
participation are under consideration.
HAL’s supplies / services are mainly to Indian Defence Services, Coast Guards and
Border Security Forces. Transport Aircraft and Helicopters have also been supplied to
Airlines as well as State Governments of India. The Company has also achieved a foothold in
export in more than 30 countries, having demonstrated its quality and price competitiveness.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 15 -
 EVOLUTION AND GROWTH OF THE COMPANY
The Company's steady organizational growth over the years with consolidation and
enlargement of its operational base by creating sophisticated facilities for manufacture of
aircraft / helicopters, aero engines, accessories and avionics is illustrated below.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 16 -
MISSION:

“TO BECOME A GLOBALLY COMPETITIVE

AEROSPACE INDUSTRY WHILE WORKING AS AN
INSTRUMENT FOR ACHIEVING SELF RELIANCE IN
DESIGN, MANUFACTURE AND MAINTAINENCE OF
AEROSPACE DEFENCE EQUIPMENT AND
DIVERSIFYING TO RELATED AREAS, MANAGING
THE BUSINESS ON COMMERCIAL LINES IN A
CLIMATE OF GROWING PROFESSIONAL
COMPETENCE.”

VISION:

“ TO MAKE HAL A DYNAMIC , VIBRANT, VALUE

BASED LEARNING ORGANISATION WITH HUMAN
RESOURCES EXCEPTIONALLY SKILLED , HIGHLY
MOTIVATED AND COMMITTED TO MEET THE
CURRENT AND FUTURE CHALLENGES .THIS WILL
BE DRIVEN BY CORE VALUES OF THE COMPANY
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 17 -
FULLY EMBEDDED IN THE CULTURE OF THE
ORGANISATION.”

VALUES OF HAL:
 Customer Satisfaction
We are dedicated to building a relationship with our customers where we
become partners in fulfilling their mission. We strive to understand our customers’ needs
and to deliver products and services that fulfill and exceed all their needs.
 Commitment to Total Quality
We are committed to continuous improvement of all our activities. We will
supply products and services that conform to highest standards of design, manufacture,
reliability, maintainability and fitness for use as desired by our customers.
 Cost and Time Consciousness
We believe that our success depends on our ability to continually reduce the cost
and shorten the delivery period of our products and services. We will achieve this by
eliminating waste in all activities and continuously improving all processes in every area of
our work.
 Innovation and Creativity
We believe in striving for improvement in every activity involved in our business
by pursuing and encouraging risk-taking, experimentation and learning at all levels
within the company with a view to achieving excellence and competitiveness.
 Trust and Team Spirit

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 18 -
 We believe in achieving harmony in work life through mutual trust, transparency,
co-operation and a sense of belonging. We will strive for building empowered teams to
work towards achieving organizational goals.
 Respect for the Individuals
We value people. We will treat each other with dignity and respect and strive for
individual growth and realization of everyone’s full potential.
 Integrity
We believe in a commitment to be honest, trustworthy, and fair in all our
dealings. We commit to be loyal and devoted to our organization. We will practice self
discipline and own responsibility for our actions. We will comply with all requirements
so as to ensure that our organization is always worthy of trust.

STRATEGY:

 To be in total alignment with Corporate Strategy.

 Maintain Human Resource at optimum level to meet the objectives and goals of the
company.
 Competence mapping, analysis and up gradation of knowledge and skills including
training, retraining, multiskilling, etc.
 Create leadership with shared vision at various levels in the organization.
 Focused development of core competence in high-tech areas.
 Building cross functional teams.
 Bring company wide awareness of Mission, Values, and organizational goals.
 Personnel policies on performance based criteria, ensuring growth, rewards,
recognition and motivation.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 19 -
OBJECTIVES OF HAL:
BASIC OBJECTIVES-
 To serve as an instrument of the national policy to achieve self reliance in the design,
development and production of aircraft and aeronautical equipment, to meet the
country’s changing and growing needs with special emphasis on military
requirement.
 In fulfillment of this objective, the company shall regard itself fundamentally
responsible for design and developments relying, however, upon such relevant
facilities as are available in other national institutions but always holding itself
basically responsible for the growth and furtherance of the country’s aeronautical
capability.
 To conduct its business economically and efficiently that it can contribute its due
share to the national efforts to achieve self reliance and self generating economy.
 To develop and maintain an organization which will readily respond to and adopt the
changing matrix of socio-techno-economic relationships and wherein a climate of
growing professional competence, self discipline, mutual understanding, deep
commitment and a sense of belonging will be fosters and each employee will be
encouraged to grow in accordance with his potential for the furtherance of the
organizational goals.

SPECIFIC OBJECTIVES-
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 20 -
  Ensure quality of personnel at all levels and provide them the right work
environment, job satisfaction and professional challenge.
 Provide a healthy blend of employees who have growth with the organization and
those selected from outside.
 Ensure employment of minimum number of personnel and avoid surplus.
 Provide adequate opportunities for personnel to improve the level of their
professional knowledge.
 Personnel with talent and potential for growth to be developed to shoulder higher
responsibilities.
 Progressively introduce participative style of management.
 Ensure uniformity in principal conditions of service.

FINANCIAL HIGHLIGHTS:-

Hindustan Aeronautics Limited (HAL) has cruised past the Rs.5000 crore mark for
the first time with a sales turnover of Rs.5375 crores ($1.21 billion) during the Financial year
2005-06. The value of production has also gone up by 16.4% at Rs.5750crores, while the
profit of the company (Profit before tax) soared to Rs. 1002 crores, which is an increase of
32% over the last year’s performance. Contracts worth Rs.17800 crores (4 billion USD) were
concluded during the year

The highlights are given below:

Rupees in crores
Particulars 2004-05 2005-06 Growth
(provisional)
Sales 4534 5375 18.54%
Profit before tax 758 1002 32.18%
Profit after tax 501 665 32.73%
Gross Block 1417 1881 32.74%
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 21 -
CUSTOMERS OF THE COMPANY

INTERNATIONAL CUSTOMERS DOMESTIC CUSTOMERS

 Airbus Industrie, France  Air India

 APPH Bolton, UK  Air Sahara
 BAE Systems, UK  Airports Authority of India
 Chelton, UK  Bharat Electronics
 Coast Guard, Mauritius  Border Security Force
 Corporate Air, Philippines  Coal India
 Cosmic Air, Nepal  Defence Research & Development
 Dassault Aviation, France Organisation
 Dowty Aerospace Hydraulics,  Govt. of Andhra Pradesh
UK  Govt. of Jammu & Kashmir
 EADS, France  Govt. of Karnataka
 ELTA, Israel  Govt. of Maharashtra
 Gorkha Airlines, Nepal  Govt. of Rajasthan
 Hampson, UK  Govt. of Uttar Pradesh
 Honeywell International, USA  Govt. of West Bengal
 Island Aviation Services,  Indian Airforce
Maldives  Indian Airlines
 Israel Aircraft Industries,  Indian Army
Israel  Indian Coast Guard
 Messier Dowty Ltd., UK  Indian Navy
 Mistubishi Heavy Industries,  Indian Space Research Organisation
Japan  Jet Airways
 MOOG, USA  Kudremukh Iron ore Company ltd.
 Namibian Air Force, Namibia  NALCO
 Peruvian Air Force , Peru  Oil & Natural Gas Corporation Ltd.
 Rolls Royce Plc, UK  Ordnance Factories
 Royal Air Force, Oman  Reliance Industries
 Royal Malaysian Air Force,  United Breweries
Malaysia
 Royal Nepal Army, Nepal
 Royal Thai Air Force,
Thailand
 Smiths Industries, UK
 Snecma, France
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 22 -
  Strongfield Technologies, UK
 The Boeing Aircraft
Company, USA
 Transworld Aviation, UAE
 Vietnam Air Force, Vietnam

ACHIEVEMENTS & AWARDS:

HAL has won several International & National Awards for achievements in R & D,
Technology, Managerial Performance, Exports, Energy Conservation, Quality and
Fulfillment of Social Responsibilities.
 HAL was awarded the “INTERNATIONAL GOLD MEDAL AWARD” for
Corporate Achievement in Quality and Efficiency at the International Summit (Global
Rating Leaders 2003), London, UK, by M/s Global Rating, UK in conjunction with
the International Information and Marketing Centre (IIMC).

 HAL was presented the International – “ARCH OF EUROPE” Award in Gold

Category in recognition for its commitment to Quality, Leadership, Technology and
Innovation.

 At the National level, HAL has won the “GOLD TROPHY” for excellence in Public
Sector Management instituted by the Standing Conference o Public Enterprises
(SCOPE).

The Company scaled new heights in the financial year 2004-2005 with a turnover of
Rs.4534 Crores and export over Rs.150.05 Crores.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 23 -
 SIGNIFICANT PROJECTS UNDERTAKEN AND IMPORTANT
MILESTONES:

YEAR MILESTONE

1950 Manufacture of Vampire Jet Aircraft under license from DC Haville of UK.

1956 Design and development of Pushpak – a Light Aircraft to meet the

requirements of flying clubs in India.
1958-59 Design and development of Krishak- an aircraft to cater to Defence
Requirements.
1959 Aircraft development of Advanced Jet Trainer Card HJT-16 (KIRAN), The
first Indian design and built Jet Trainer.
1959 Aircraft manufacturing Depot at Kanpur established for manufacture of
Hawker Siddley HS-748 for the requirements of Indian Airlines and the
IAF. The Rolls Royce, Single ‘DART’ Engines for this was manufactured
at the engine factory at Bangalore.

1960 Jet Engine Factory was setup in Bangalore for manufacturing orphans
engines used in MARUT and GNAT Aircrafts.
1962 Agreements with SNIAS of France for production of Alonette III (Chetak)
helicopters.
1962-63 Aeronautics India Limited was formed in August 1963for manufacture of
MIG-21 Aircraft under collaboration with Erstwhile USSR.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 24 -
IMPORTANT PROJECTS UNDERTAKEN:

YEARS PROJECTS

Design and development of Basant, an agriculture aircraft for spraying

fertilizers and pesticides.

1972-78 Development of ‘GNAT’ Fighter aircrafts at Bangalore.

1979 Agreement entered into with British Aerospace for the manufacture of
Jaguar aircrafts at Bangalore.

1983 Formation of Lucknow Division for the manufacture of Aircraft

Instruments and Accessories.
1985 Manufacture of Denier passenger aircraft Garrett Engines to power this
was manufactured in Engines Division, Bangalore.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 25 -
ORGANISATION CHART:

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 26 -
BOARD OF DIRECTORS:-

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 27 -
 CHAPTER-4

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 28 -
 The Engine Division, which is ISO-9002 certified, was set up in 1957 to manufacture
Orpheus turbo jet engines under license from Rolls Royce. In 1959, another license
agreement was signed with Rolls Royce to manufacture Dart engines to power HS-748
passenger aircraft and overhaul Avon engines fitted on Canberra & Hunter aircraft. Since
then, the division has grown from strength to strength. It is now engaged in the manufacture
of Artouste engines for Chetak/Cheetah helicopters, Adour engines for Jaguar aircraft and
Garrett engines for Dornier aircraft. Engine division also undertakes repair and overhaul of
various aero engines operated by Indian Air force, Indian Navy, Indian Army, Coast Guard,
Border Security Force, Corporate sector, State Government and other civil customers. The
division has manufactured more than 2,100 aero engines and overhauled & repaired 11,000
engines.

The division, during four decades of its existence, has acquired state-of-art-
technologies for manufacture, repair and overhaul of engines. It has a well equipped CNC
shop comprising over 25 machine tools. Facilities also include Electron Beam Welding,
vacuum Brazing, Electric Discharge / Chemical forming machines and others. The division
has also set up shops for special coating processes to combat high temperature and
atmospheric corrosion conditions, protection against surface erosions, such as Plasma Spray,
Aluminium Silicon diffusion coating, Sermetal coating.

Engine and Test bed R & D centre, which is part of the Engine Division, has specialized in
the development of small Gas Turbines & Engine Test Beds. The ETBRDC is equipped with
necessary modern infrastructures. The R&D centre has developed a gas turbine engine for
Pilot less Target Aircraft and jet Fuel Starter for starting the engine of Light Combat Aircraft.
The R&D centre has also designed and installed engine test beds for Russian and western
origin aero engines on turnkey basis.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 29 -
FACILITIES IN ENGNE DIVISION
Engine Division has extensive manufacturing facilities consisting of conventional
machines as well as CNC facilities. Some of he CNC facilities are :-
 7 Axis automatic NC NGV grinding centre with facilities like an auto loading &
unloading by Robo and integrated CMM
 5 Axis machine centers both single spindle and twin spindle
 4 Axis and 3 Axis machines
 Vertical turret lathes with live spindle
 Disc lathe with touch probe facilities
 Twin spindle vertical grinder
 Jig boring
 Turn mill centre
 CNC Gear Grinder
Other facilities cover Fabrication and Coatings welding machineries, non-conventional machining
facilities, few of these are
 Electron Beam Welding
 Robotic Plasma Spray Facility
 CNC Electrical Discharge machines
 Wire EDM
 Electro chemical forming
 Chemical size reduction
 Sermetal and other coatings
 All types of electro plating facilities
 Vacuum brazing
 Special welding features such as Fusion welding, Manual, Automatic Circumferential
welding, Longitudinal welding, Orbital welding, Resistance welding (Spot welding,
Stich welding, Seam welding)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 30 -
The division can manufacture varieties of parts ranging from gears, casings, blades,
impellers, stators. For each type of engine produced a dedicated assembly line and test cell
exists thus facilitating uninterrupted support to all customers.

DEPARTMENTS IN HAL

DIRECT DEPARTMENTS INDIRECT DEPARTMENT

Machine shop blades. Finance and accounts department.

Sheet metal and welding. Purchase department.
Process shop. IT department
Heats treat shop. Stores.
Tool room. Plant maintenance.
Production equipment. Design.
Assembly and overhaul. Production engineering
Avon overhaul and salvage. Inspection.
Test house. Laboratory.
Adour fabrication shop Standards room
CNC Personnel and Administration.
Adour assembly shop. Metallurgy.
Technical accommodation. Kaveri project offices.
CNC Extension. Security and fire
Kaveri. Vigilance.
Proto type shop.
Quality department.
CHAPTER – 5

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 31 -
 CHAPTER-5.1

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 32 -
 Finance is lifeblood of every organization. Finance is the basic foundation of all kinds
of economic activity. Therefore, efficient management of every organization is closely linked
with efficient management of finance. It expresses the strength and weakness shows through
financial performance of every business organization. But in HAL government in favor of
nation welfare takes everything which related to finance decisions. The decision like capital

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 33 -
budget, dividend decision, working capital management, and investment to fixed assets and
other financial decision which corporate office has established under preview of government
and also aims to meet the requirement with its product, supplying mainly to the defense
organization of our nation.

HAL is running as a cash rich government sector undertaking. Government itself

holding the entire HAL shares capital (300 crores) and major financial activities are
organized by its corporate office and also controlling all division of HAL.

The engine division being carrying a 300 crores turnover in the every the year the that
turnover 80% finance go in to purchasing of materials from foreign countries 20% of profits
declared as a dividend in the year 2002-03.

The finance department of HAL is divided in different sections namely:-

 Material accounting section

 Book keeping section
 Bills payable section
 Pay roll section
 Bills receivable section
 Cash section
 Finance section
 Cost accounting section

MATERIAL ACCOUNTING SECTION

The main functions of this section includes –

 Maintenance of material ledger for all material held in the stores.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 34 -
  Accounting of the receipts of all material by various classed and issues of all material
drawn on work-orders.
 Reconciliation of the balances with general ledger.
 Quantity reconciliation of the Bin-card balances material ledger balances.
 Accounting of inter-divisional transfer of material and its reconciliation. Raising debit
advises against contractors and others for material issued/sold and accounting thereof.
 Maintenance of loan registers for material issued as loan and follow up for return.
 Scrutiny of slow, non moving and redundant inventories.
 This section receives various documents and sends the same to computer/data
processing section for processing and obtaining necessary accounting output
statements.


Receiving reports(RR):- This section takes the pricing of RR on its copies priced by their
bills payable section and sent the same for processing on day to day basis. These priced RR
form the basis for accounting receipts to various inventory accounts.

Material acquisition (MR):- This section receives the MA/Issue vouchers are scrutinized
and sent for processing and pricing at weighted average rates.

Stores Credit Notes (SCN):- SCN in respect of return of excess materials drawn are
received from stores department for scrutinizing and then processing. Items manufactured on
stock orders and credited to the stores are not priced by quantity records are maintained since
the value of these items help under WIP.

Stock Transfer/Stock Re-Classification (ST/SR):- The above advices with the comments
for their averages/shortages are sent for processing and pricing at the weighted average rates.

Stock verification notes:- SVN received from the stores are similar in their accounting
procedure to ST/SR.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 35 -
Accounting procedures:- The accounting of the receipts of materials by various issues
thereof to various work orders and expenses accounts is done by the generation of the
following output statement received by the computer section-

 Material issue analysis statement

 Stock transfer/stock re-classification statement.
 Stock verification statement
 Samples/ condemned stores statement.

BOOK KEEPING SECTION

The function of book keeping section are as follows :-

 Maintenance of journal and general ledger.

 Preparation of trial balance, P/L accounts, balance sheet.
 Maintenance of capital assets ledger and allocation register.
 Preparation of fixed assets and depreciation schedules.
 Furnishing data for determination of income tax liability.
 Disposal of surplus/condemned plant and machine and other assets.
 Reconciliation of control accounts of the divisions/corporate office.
 Liaison with audit authorities.

Accounting procedures:- The accounting aspects of book keeping comprises of the

accounting of capital assets:-

 Depreciation.
 Maintenance of journal and general ledger.
 Preparation pf trial balance, P/L accounts, balance sheet.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 36 -
  Furnishing data for determination of tax-liability.
 Disposal of surplus/condemned plant and machinery and other assets.
 Reconciliation of inter-divisional control accounts.
 Accounting of semi-perishable equipment/miscellaneous equipment.

CASH SECTION

This section is responsible for all payments of Cash/Cheques and accounting of it in

the books. The main functions of this section are:-

 Receipts of cash, postal orders, Cheques, bank-drafts, etc and issue of official receipts
of the same.
 Banking of all receipts.
 Drawing of cash from bank to cater for daily needs.
 Payments of vouchers by Cash/Cheques.
 Writing of cash/ bank book.
 Preparation of bank reconciliation statement.
 Safe custody of cash, Cheques books, bank guarantees, fixed deposit receipts and
other investment etc.

PAY-ROLL SECTION

The main functions of pay-roll, cover the following:-

 Placements of time punching cards in the time care racks for recording attendance.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 37 -
  Receipts of approved leave application, OT authorities, attendance sheets, employees
gate pass.
 Maintenance of leave records and filling of attendance data to computer with
reference to the documents received, where applications are sent directly to time
office by respective departments.

Pay-roll

 Disbursement of salaries and wages.

 Payment and recovery of advances.
 Recovery of dues from employees.
 Payment of travel and LTC advance and adjustment thereof.
 Remittance of amounts recovered from employees to various agencies.
 Accounting of payroll transactions.
 Maintenance of employee card.

Accounting procedure:- Salaries and wages and other expenses paid to the employees is
accounted in the following accounting journals.

 Salaries and wages journal

 Travel expenses journal
 LTC expenses journal.

BILLS PAYEABLE

Bills payable (Inland)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 38 -
 This section deals with the aspects of supplies and services rendered by inland
vendors and contractors to the company:-

Inland vendors-

 Payments and accounting of advances to other vendors.

 Payments and accounting of advances to other vendors.
 Payments and accounting of final bills.
 Bank dealings with relation to suppliers.
 Adjustment/recovery of advances.
 Accounting/adjustment of earnest money and security deposit from suppliers.
 Accounting and pricing of receipts vouchers.
 Maintenance of commitment register for budgetary purposes.

Bills payable (foreign)

This section deals with the aspects of supplies and services rendered by foreign vendors and
contractors to the company:-

Foreign vendors:-

 Payments and accounting of customer duty, freight bills, agency commission bills etc.
 Payments and accounting of advances to suppliers and services obtained from
collaborations and others.
 Adjustment/recovery of advances.
 Accounting and pricing of receipt vouchers.
 Opening of LC and dealing with banks for obtaining foreign exchange release and
payments thereof.
 Maintenance of deferred liabilities and commitment register for budgetary urpose.

Foreign suppliers are paid as mentioned in P.O./License agreement by:-

 Letter of credit (LC)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 39 -
  Sight drafts
 Advanced payments
 Direct payments
 Small invoices valued upto $500.
 Payments to suppliers from USSR.


BILLS RECEIVABLE SECTION

This section is responsible for preparing and submission of invoices to customers for
supplies made and services rendered and follow up of recovery of amount and its accounting.
The functions of this section are:-

 Scrutiny of sales orders including expert sales.

 Preparation of invoice for work done/to be done and services rendered.
 Review of closed work-orders for which invoice are to be prepared.
 Recording of invoice rendered.
 Accounting for sales of equipment and services rendered.
 Compilation of sales tax returns and payments of sales tax.

The following are the registers and subsidiary registers maintained in this section:-

 Sales journal for- manufacture of equipment, overhaul of equipments, manufactures

of spares, miscellaneous.
 From 530(A425) register.
 Invoice register.
 Stage payments register for manufacturing, overhauling, RMS orders.
 Dispatch advices register.
 Sundry debtor’s ledger.
 Claims/accounts receivable ledger.

COSTING SECTION

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 40 -
 The system of cost accounting followed in HAL is batch costing. It is designed for the
purpose of carrying work in HAL. The others are standard costing.

Batch costing:- In this system all the components minor assembly, sub assemblies etc.
require for batch of aircraft/engine/equipment are manufactured on batch orders. Though
job costs/job tickets are issued for manufacture of individual components cost is recorded
separately and labor and material costs are booked on work orders. In this system the cost
relation to all components in a completed batch determined by dividing total cost
recorded on the batch work order by the number of units produced in the batch.

Job costing:- This system is followed in the case of repair/overhaul of aircrafts:

engineers, equipments etc, and for manufacture of spares of HAL/IAF stores, RMS
orders and miscellaneous jobs. In this system individual work order is issued for overhaul
of each project and for manufacture of each item of spares.

Standard costing:- It is a technique for control of cost, it should be extended to

manufacturing project, including fabrication of detailed components, sub-assemblies,
major assemblies and final assemblies. It can be extended for periodical overhaul of
major products like air frames, engines avionics, wheel assemblies and high value
rotables where work schedules are available. Standards for labour and material should be
fixed for the purpose of deriving variances under each category for control.

BUDGET

The budgets prepared in HAL include the capital budget and the revenue budget. It is
prepared on a three tier basis and it consists of revised estimates (RE), budgeted estimates
(BE) and forecast budget (FC).

The finance section prepares the capital budget for concurring financial decisions.
The costing section prepares the revenue budget. A part from the above, this section also
prepares training budget, over time budget and welfare budget.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 41 -
 ORGANISATIONAL CHART

EXECUTIVE DIRECTOR

AGM (PURCHASE)

DGM (IMM)

SENOIR MANAGER
CHIEF MANAGER CHIEF MANAGER (IMM)
(STORES)

SENIOR MANAGER MANAGER

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 42 -
 CHAPTER-5.2

INTRODUCTION

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 43 -
 Marketing is an important activity for any organization irrespective of its nature, size
and type of industry in which it operates. Marketing and selling are often mistaken as
synonyms but hold a complete different meaning individually.
The main motives behind the functioning of marketing department in HAL –
 Customer satisfaction:- The department is concerned with building long term
relationship with customers with the customers by understanding their needs and
delivering products and services that fulfill and exceed all their requirements.
 Commitment to total Quality management:- The department is committed to supply
product and services that confirm to standards of design, manufacture, reliability,
maintainability and fitness for use as desired by the customers.
 Cost and time consciousness:- The department is concerned with continuously
reducing the cost and shortens the delivery period for the supply of products and
services.
 Innovation and creativity:- The department has a concern for improvement I every
activity involved in business by pursuing and encouraging risk taking,
experimentation and leaving at all levels within the company with a view to achieve
excellence and competitiveness.

MAIN OBJECTIVES
1. To make market research and study the customer requirements to current and future
economy.
2. To ensure the customer enquiry efficiently connected into a contract or order, with
proper identification of customer requirements, so that ultimately customer
satisfaction is achieved, by regular correspondence with the customers.
3. To execute the order well within the time, cost and at the desired performance
taking, into account the technologies level by utilizing the available resources
effectively and efficiently and coordinating with various functional groups.

FUNCTIONS

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 44 -
 Exploring new customers
One of the important function of marketing department is to find new customers for
the products. This is mainly done through browsing the net. Thorough internet, the department tries
to identify new customers, who are interested in the company products and services and influence
them to contract with the company. The other means of exploring new customers is through
answering verbal enquires from the prospective customers.

Expansion of the business

The company is widening its scale of operation with its new and prospective
customers for domestic as well as export business. It is also finding new means to expand business
by diversifying into different fields in recent years. The main area in which it has diversified is in
the software field. It has started a software company in collaboration with British Aerospace in the
year 1999-2000 to take advantages of the opportunities available for the software companies in the
Aeronautics. It has also diversified into Industrial and Marine Gas Turbine Business.

Receipts and Screening of Enquiries from the customers

The activity involved in the receipts and screening of enquires from the customers
include the following:-
 Manufacturing department receives the tenders/enquiries issued by the customers and
details of defence, civil and export customers are recorded separately.
 The prices are prepared as per the approval guidelines in case of items covered in the
approved price lists. But delivery of the items shall be verified from production engineering
before sending.
 If items are not covered in the approved price lists, the enquiry is forwarded to the
respective production engineering to confirm that the requirements are adequately defined
and also to ensure that they are within the capability of the division..

Preparation of estimates
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 45 -
 SUPPLY OF SPARES
The production engineering furnishes the raw material require for fabrication and also
the lead time. In case of items that could be spared from stock/work in progress, the same
will be indicated. The material planning group of IMM indicates the cost of raw material.
The management service section gives HAL-fabricated items.
REPAIR AND OVERHAUL OF ENGINE AND ROTABLES
The production engineering department (overhaul and assembly) furnishes estimated
work content (material requirement and labor hours), which is generally done after recipt of
the item and strip examination.
SUPPLY OF TOOLING ITEMS
The tool planning department furnishes the standard man hours required to
fabrication and delivering lead times.
MISCELLANEOUS SERVICES
The respective department furnishes the estimated work content in terms of material
and standard man hours including man days in case of field services.

Submission of Quotation
The procedures involved in case of submission of quotation are:-
 The marketing section computes the price based on the above inputs and the
standard man hours rate in accordance with the approved formula.
 The price proposed is then put to the competent authority for approval and the
quotation is forwarded to the customers.

Follow up on Quotation and Negotiations for Orders

The marketing department after the submission of quotations keeps contact with the
customers to influence them to place the orders with the company. The department therefore
responses to any further queries placed by the customers and make sure that the customer is
satisfied with the information provided and explained to him about the details furnished
regarding his clarifications. Thus the department tries to negotiates with the customers to
contract with the company. The company also participates in the negotiation meeting held by
the customers to clarify the terms and conditions to get the orders.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 46 -
Receipts of orders and vetting of orders (contract review)
Once the formal order is received, the Deputy manager scrutinized the order to check
whether it confirms the terms and conditions of the quotations.
The procedure involved in the contract review are :-
 The review is documented in contract review form.
 If there are any deviations, it is brought to the notice of the customer for the remedial
actions and issue of amended sales order.
 If there is no deviations , the order is acknowledged consisting a contract.
 In case order received without quotation, the same is scrutinized as in case of enquiry.
 In case of RMS orders placed by IAF, Navy and army, it is governed by GOI and
Ministry of Defence.

Issue of sales order

The authority for approving the various sales proposals is governed by the Delegation
of Powers approved by the Board of Directors and circulated by the corporate office at
divisional levels. GM has sub-delegated the powers to approve price proposals. A sales order
is issued by making an entry into sales order register and the date is maintained. A sales order
is issued by making an entry in the sales order format (form no. 26530) as per annexure.
The sales order is addressed to the production engineering agencies including-
 Concerned shop manager
 Quality manager
 Material planning
 Stores
 Costing
 Bills receivable section
 Customer service department

Execution of co-ordination
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 47 -
 The procedures involved in execution of orders are –
 The items are manufacture as per the specifications in the sales order and are then
sent to inspection section.
 After the final clearance by the inspection section, the items are delivered to the
stores section by the production engineering department along with dispatch route
card and inspection certificate.
 The stores department (shipping) check the correctness of the physical material and
packs the material, prepares the dispatches by road/rail/air etc as per the stipulated
delivering instructions.
 The shipping department then endorses the details of the dispatch advice format and
forwarded the dispatch document to the customer under a covering note, a copy of
which is endorsed to the production engineering, accounts and marketing department.

Attending customer’s complaints

The marketing department after executing sales order received feedback from the
customers regarding the items supplied queries or complaints if any. In case of complaints
from the customers, it verifies as to I what aspect the customer is dissatisfaction and tries to
take suitable corrective action and assures the customers that he will be supplied with items
as expected by him. If there are any deviations in quantity supplied or delivery schedule as
the case may be, it tries to rectify the mistake by supplying the right quantity at the specified
dates. In case of any discrepancies it sends a regret letter for the inconvenience caused to the
customer stating the reason for the delay.

Providing after sales service

The marketing department with the coordination customer support department
provided after sales service to the customers so as to retain them and to maintain the
company’s image and also to build the confidence in the company. The after sales service
include-
 Supplies of spares, technical snag rectification, repair party arrangement etc.
 Providing technical advices to the customers.
 Providing bulletin or technical letters issued by the original designer or manufacturer.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 48 -
  Providing for inspections, overhaul of engines of certain schedules.
 Sending technical expert teams to war fields for providing necessary repair and other
help during war times.
 Providing training to the technicians of the customers.

Follow up for payments

The marketing department should see that the customer to whom the items are
supplied makes payments within the stipulated time. It should keep contact with the
customers and send reminder letters to those customers who fail to pay the amount in
coordination with the finance and customer support department.

Some secondary functions of marketing department

 Disposal of surplus and scrap material (if not handled by central salvage)
 Issue of sales bases and also to facilitate withdrawal of necessary items.
 Obtain advance CCPS/License for duty free importing of raw material against export
orders and discharges of export obligations.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 49 -
 CHAPTER-5.3

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 50 -
INTRODUCTION:-
The strategic goal of HR department of HAL is to create an atmosphere of technological
and managerial excellence to become globally competitive Aerospace industry. With the changing
environment, rapid technological changes characterized by a paradigm shift from licensed
production to R& D based production duly balanced with co-development/co-production
technological, up-gradation etc, greater customer demand focused diversification to civilian and
export markets. The overall objective of the HRD plan is to build a vibrant and learning
organization, so as to meet the challenges of quality & excellence; recruitment and retention of
competent human resources and develop high commitment and a sense of belongings to the
company. Accordingly, the company’s HR objectives, strategies and policies have been identified
and indicated as follows:-

OBJECTIVES
 To ensure availability of total quality people to meet the organization goals and
objectives.
 To have a continues improvement in knowledge, skill and competence (managerial,
behavioral and technical).
 To promote a culture of achievement and excellence with emphasis integrity,
credibility and quality.
 To maintain a motivated workforce trough empowerment of individual and team
building.
 To enhance organizational learning.
 To play a pivotal role directly and significantly to enhance productivity, profitability
and improve the quality of work life.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 51 -
STRATEGY
 To be in total alignment with corporate strategy.
 Maintain human resource at optimum level to meet the objectives and goals of the
objective and goals of the company.
 Be competent in mapping, analysis and up gradation of knowledge and skills
including training, re-training, multi-skilling etc.
 Cultivate leadership with shared vision at various levels in the organization.
 Build cross-functional teams.
 Create awareness of mission, values and organizational goal throughout the company.
 Introduce/implement personal policies based on performance that would ensure
growth, rewards, recognition, motivation etc.

FOCUS OF HR POLICY
 Competence building
 Commitment
 Motivator
 Employee relations.
In the backdrop of above , the focus of HRD initiatives at HAL emphasize the following:-
HR planning- outsourcing of low tech and medium tech jobs
 Fresh induction only in critical/highly specialized areas based on requirements due to
increase in work load and super annuation profile (Annexure2) in the workmen cadre,
induction will be restricted to direct workmen only.
 Improving the existing qualification profile by focusing on induction of
professionally qualified personnel and diploma holders, hence focus of recruitment
would be to recruit people with a combination of knowledge, skills experience and
attitude in line with the organizational requirements through appropriate man power
plan both short term (contract appointments) and long term recruitment programme.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 52 -
Training and development- there are two building halls for training in the division which
can accommodate around 45 persons. Audio-visuals aids such as color TV, VCRs, slide
projectors and OHP are available for training program. Programs conducted in the division in
addition to various other deputation/ sponsorship program conducted b outside agencies,
training centers and the staff college of HAL are –
 Skill up gradation program
 Productivity improving program
 Personality development program
 Organizational development program/team building
 Management development program and Awareness program.

Training program
Training is one of the most important tools for developing human resource. Hence,
identification of training competency profile in terms of vision mission of the company
would be the strategic point of the training and developing strategy of company. The
following objectives have been set n this regard.
 To provide training to all employees at regular intervals in a plan period of 5 years.
 Training to become an integral component of individual professional evolution by :
 Updating knowledge to avoid obsolescence
 Enhancing professional creativity
 Enable employees to shoulder higher responsibility
 Creating a business trend and strategic thinking to take up new business challenges
(creation of Centre of Excellence etc)
The goal of training will be to progressively achieve 7 days training per employee per
year with a budget of 2% of annual wage bill, keeping in view the organization
requirement and goals and objectives of training, the following have been identified
as the key, focus area of the training- technology, tooling, quality, information
technology.
Further to facilitate the development of soft skills (change of mindset, managerial
development etc) training would be in imparted on a continuous basis. Tie-ups with Centre of
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 53 -
Excellence like IITS, NDC AND FIAS, France etc for imparting training, would give prime
importance.

PERFORMANCE APPRAISAL:
Approving people for meeting the company goals would be the prime focus of
performance management. The new performance appraisal system based on work planning
and commitment (mutually agreed tasks) self-review and performance analysis, performance
review and feedback would ensure that the focus would be on value adding activities rather
than on routine activities which bear no relationship with the organization goals and
objectives. Identification of low performers and resultant corrective action throughout the
company would be given priority. Similarly faster career growth opportunity would be
provided to high performers.

REWARD SYSTEM
The focus of the reward system in the country is to promote team work and cultivate a
sense of achievement and excellence in the organization. This is in addition to the existing
scheme of reward for an individual who innovatively and creatively makes exemplary
contributes in the key through area of company that would lead to its achieving overall
excellence. Coupled with the above schemes like “interdivisional competition” and profit
sharing schemes have been institutionalized in the company for team reward.

SCHEME FOR LEARNING AND CERTIFICATION FOR EXECUTIVES

A learning organization is essential for survival in the present era of liberalization and
globalization. Therefore knowledge is the only core competence of organization for coping
with changes. Since individual knowledge is the starting point for organization knowledge, it
is only the employee who can convert knowledge into efficient action.
In the above lines the philosophy among other initiatives like institutionalizing
learning counters in division etc. HAL has also introduced the scheme for learning and
certification for executives as starting point for building individual knowledge. The scheme
provides an opportunity for the junior and middle management cadre executive to broaden
the perspective by not only learning about all functions and procedure in their respective
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 54 -
discipline but also in related areas and overall knowledge about the organization and its
environment. So far approximately 45% of executives have been certified. It is proposed to
expand the coverage of this scheme further, if required, by linking, the scheme to some kind
of reward mechanism. Lastly the HRD plan will also include time to time OD Interventions
to address specific requirements of the company.

Incentive schemes-

Wage incentives are one of the means of sharing directly the benefits of higher
productivity. The scheme has been designed basically to motivate employee in three stages
based on performance of individual shop and division.

The benefits of the schemes are-

 Increased production
 Reduction of waste of all types of employees
 Reduction in unit labor cost
 Improved quality
 Reduced down time of machinery and equipment
 Less accident and improve safety
 Reduced absenteeism.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 55 -
 ORGANIZATIONAL CHART OF THE DEPARTMENT

CHEIF
MANAGER

PERSONAL SENIOR
OFFICER MANAGER MANAGER
(HRD) (P&A)

PER.
PER.
OFFICER MANAGER SENIOR
MANAGER MANAGER
(HRD) (IR) OFFICER
(WC)

DEPUTY DEPUTY EXECUTVE

PER. WELFARE CANTEEN SECURITY
SAS MANAGER MANAGER CANTEEN
OFFICER OFFICER STAFF GUARD
(L) (A) STAFF

CHIEF
ASSIT. PER. HORTICULT R&D
SUPRITEND SAS
OFFICER URE SECTION
ENT

CHIEF ASSIT.
SUPRITEND SUPRITEND
ENT ENT

SAS-I CLERK

COMPUTER
SAS-II
ASSIT.

CLERK

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 56 -
 CHAPTER-5.4

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 57 -
INTRODUCTION

The engine division’s Production Department is conducting with activities of

production, planning and control. This states the manufacturing, repair and overhaul of Aero
Engines and their components. It includes spares, Accessories, Ground handling equipments,
tools and test equipments and also services includes technical assistance & training of
customers personal in operations and maintains of Aircrafts and other engines.

The main objective of this department is projecting the future production task in
accordance with available direct man power machine capacity and monitoring performance
in shop floor activities. It ensures effective and monitoring performance in shop floor
activities. It ensures effective utilization of production facilities and inventory control.

This department is equipped with three types of manufacturing process they are:

 Production based production is used in the pipe line, gear shop and blade shop etc.
 Process based production is used in the hear treatment etc.
 Transfer line based production is used in continuous process designed activities.

The management of task of production department through following steps they are:

 Centre planning
 Shop scheduling
 Shop progress.
 Store credit.
 Dispatch.
 Offloading Sub Contract.
 Annual physical verification.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 58 -
OBJECTIVES :-

1. To determine the most efficient and economical method of providing a

component or assembly.
2. To decide the most efficient built sequence possible during the processing of :
a. Sub-assemblies.
b. Routine assemblies.
c. Stage assemblies.
d. Assemblies.
e. Major assemblies.
3. To ensure the requirements of production tools.
4. To ensure availability of plants and machineries suitable for manufacture of
components.
5. To identify the requirements of all type of material in time to meet delivery
schedule.
6. To identify availability of required heat treatment, protective treatment
facilities.
7. To satisfy necessary interchangeability requirements.
8. To illustrate complicated components/assemblies by way of operation
sketches during processing.
9. To liaise with interconnectivity department for evolving a method of
producing a part/assembly with quality and cost in mind.
10. To ensure availability of ground test equipments and special tools required
for manufacture.
11. To satisfy the customer needs by way of technical vetting/furnishing cost
quantities for spares requirements.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 59 -
OPERATION PROCEDURE:-

1. Input documents.

2. Preparation of drawing breakdowns.

3. Allotment of rationalized code number.

4. Preparation of process sheets.

5. Special process.

6. Quality betting of master process sheets.

7. Drawing discrepancy reports.

8. Production query.

9. Production permit.

10. Process Sl_No..Summary.

11. Final material summary.

12. Planning breakdown.

13. Shop-floor planning.

14. Processing of modification.

15. Equipments rotables servicing.

16. Preparation of cost estimates.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 60 -
 FUNCTIONS
1. Resource planning
Planning and procurement of plant and machinery, ground handling, testing and
inspection equipment etc. is a part of the function of method department. A separate group
assigned with this task:

2. Capital Budget:-
This budget is meant for planning and commitments for various capital facilities that
is plant and machinery, civil works and other infrastructural services needed to achieve
performance objectives. The expenditure to be incurred for the commitments that are likely
to materialized during the budget. All capital requirements along with the justifications by
the various departments will be sent to planning and material procurement group who in turn
project the same at the time of capital budget proposal to the management annually.
Plant and machinery are procured under the following capital head:-
 New project.
 Improvement/rationalization.
 Replacement.
 Welfare.
 Technology improvement/developments.

3. Manufacturing facilities
CNC Shop- the divisions has extensive manufacturing facilities consisting of conventional
machine as well as CNC facilities. Some of the CNC facilities are s follows:-
 Seven axis automatic CNC NGV grinding center with facilities like an auto loading
and uploading by Robotics and integrated CMM.
 Double axis machine centers both single spindles and twin spindles.
 Four axis and three axis machine.
 Vertical torrent lathes with line spindle.
 Disc lathe with touch probe facilities.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 61 -
  Twin spindles vertical grinder.
 Jig boring.
 Turn mill center.
 CNC Gear Grinder.

4. Engine test facilities

Besides capabilities in design and commissioning of engine test beds on turnkey
basis, test facilities for testing of the following aero-engine component have been
established- compressors, combustion chambers, turbines. An online data acquisition is being
used to augment testing and performance anaysis in real time.

5. Other facilities cover fabrication, coating, welding machineries and non conventional
machines facilities. Few of these are:-
 Electron beam welding.
 Robotic plasma spray facility.
 CNC electrical discharge machine.
 Wire EDM.
 Electro chemical forming.
 Chemical size reduction
 Segmental and other coatings.
 And all the types of electroplating-
o vacuum brazing.
o Special welding features such as fusion welding, manual, automatic
circumferential welding, longitudinal welding, resistance welding etc.

The division can manufacture varieties of parts ranging from gears, casings, blades,
impeders, stators, for each type of product assembly line and test cell exist. Thus facilities
uninterrupted supports to all customers.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 62 -
 CHAPTER-5.5

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 63 -
 General requirements: HAL has established, documented, implemented & maintains as
QMS to continually improve its effectiveness by:

 Identifying the processes needed for the QMS & their application through the
Division.
 Determining the sequence & interaction to these processes. The interaction of the
processes identified in the respective process procedure & as Flow Chart as under
 Determining criteria & methods needed to ensure that both the operation & control of
these processes needed are effective.
 Monitoring, Measuring & analyzing these processes.
 Implementing actions necessary to achieve planned results & continual improvement
of these processes, this is achieved by PDCA approach in each procedure & by the
identified procedure for this activity.

HAL’s QMS comprises of the Core & Support Business Processes, which take inputs
& converts them into value added outputs that satisfy customer’s needs & expectations.
Every business process is aligned to deliver the Business Goals & is linked to key
performance Indicators, which are used to monitor the achievements. The Core Business
Processes represent how market opportunity is turned into profitable outcomes through
satisfied customers. Its effectiveness is maintained & enhanced by Support Processes.
The core & support processes cross original boundaries, which enable everyone to have a
clear focus on the requirement that have to be satisfied for the business to be successful.
Each process has an owner who has the prime responsibility for ensuring that the process:

 Achieves its objectives.

 Is under continual review for improvement.

The structured documentation of the management system identifies what activities are carried
out in the business & provides as base line from which improvement can be identified & best
practices implemented. Special Purposes are not outsourced. However manufacturing
processes which are outsourced, the quality management system of the division.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 64 -
BUSINESS PROCESS:

B) Core business process:

Management process.

Marketing process.

Planning & Project management.

Product Realization Process.

Delivery & Invoicing process

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 65 -
B) Support Process:

Spare as important as our Core Business Process the company have 6 support processes as
show below:

Procurement & Provide & manage

Sub-contracting process information.
(IMM Process).

Provide & Manage Customer Support

people process. Process.

Infrastructure Monitor
Provisioning & Measure &
Maintenance Process. Improvement

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 66 -
Management responsibility:

HAL’s top management defines, develops & implements the Quality Management
System. The G.M. is the head of the division ensures that employees at all level within their
groups understand the goals & objectives of programmes & circulars.

Planning QMSP:

When a new product, project or contact is evaluated for adoption into Engine
Division – HAL’s quality system, the appropriate staff members meet to define & document
how the requirements for quality will be met. The integrity of the QMS is maintained, when
changes to QMS are planned & implemented.

Internal communication:

HAL communicates the effectiveness of its QMS periodically to staff through:

 Departmental meetings.
 Notice boards.
 Management Review meetings.

Resource management:

1) Provision of resources: HAL has determined & provided resources needed:

 To implement & maintain the QMS & continually improve its effectiveness &
 To enhance customer satisfaction by meeting customer requirements.

The resources could be Man, Machine, Material & Method, apart from accessibility to
information & time for performing the activities. Provision of resources is taken up as a core
business process, namely management process vide process procedure.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 67 -
 2) Human resources: HAL determine the necessary competence for personnel
performing work affecting product quality, by periodic reviews by the concerned
departmental heads / group’s In-charge. Based on the requirements & introduction of
any new processes, equipment & technology, whenever required, training is provided
or actions taken to satisfy those needs, after which effectiveness of actions taken is
evaluated. It is ensured that our employees are made aware of the relevance &
importance of their activities & how they contributed to the chievement of the quality
objectives.

Engine Division: HAL maintains appropriate records for education, training, skills &
experience.

2) Infrastructure: HAL determines, provides & maintains the infrastructure needed to

achieve conformity to product requirements, including the supporting services for
transportation & communication.
3) Work environment: HAL determines & manages the work environment needed to
achieve conformity to product / overhaul / repair requirements. The products are
properly handled & stored & environmental & other safety requirements for products
& processes are ensured. These are addressed under process procedure for product
Realization Process.

Quality measurement, analysis & improvement of the product:

HAL determines the monitoring, measurement, analysis & improvement processes, including
methods such as statistical techniques that are needed to :

 Demonstrate conformity of the product.

 Ensure conformity of the QMS.
 Continually improve the effectiveness of the QMS.This process is carried out as a
product process namely monitor, measurement & improvement process provide
process procedure & detailed procedures are also available in the departmental
procedures.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 68 -
 CHAPTER-5.6

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 69 -
PURPOSE: -
To establish a procedure for carrying out after scales serving functions.

SCOPE: -
This department provides for after sales service function for both Indians and
overseas customers.

OBJECTIVE: -
The objectives of customer service department are
 To provide technical and logistics support through the “exploitation” of HAL
products ensuring high quality reliability.
 Identifying the needs of the customer by way of requirements of publication, spares,
repair/overhaul, ground support and test equipment and updating to improve the
efficiency of the product.
 Understanding the areas of concern on the products and taking prompt action to assist
the customers to the extent possible.
 Having a system of information feedback from the customer and take prompt
corrective action to resolve customer complaint.

FUNCTIONS
 Technical support
 Deputation of parties
 Logistics support (itemized support)
 Training needs

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 70 -
RESPONSIBILITIES
The customer support department shall be responsible for the after sale servicing for
all Indian customers such as IAF, Indian Army, and Indian Navy, cost guard etc. the
customer support department provides timely service to the customer for the following
categories of several functions:
 Customer complaints.
 Defect investigation
 Repair assistance
 Field representation
 Modification complaints.
 Incident/ accident investigation.
 Logistics support.
 Repair/overhaul of rotables.
 Customer training.
The customer support department initiates a sale order to facilitates further processing of the
servicing function to be carried out either at the customer operating unit or at HAL.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 71 -
 ORGANISATIONAL CHART

AGM
(CSD)

SENIOR SENIOR
SENIOR MANAGER (AOG
MANAGER MANAGER
MANAGER & GENOME
(ARTIST & DART (ADOUR,
(RMS ORDERS) PROJ.)
PROJ.) GARRETTE)

ENGINEER ENGINEER ENGINEER

(ARTISTS & (ADOUR, (WARRENTIES,
DEF.INVESTGN) ORHEUS) SPARES)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 72 -
 CHAPTER-5.7

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 73 -
 HAL has decided to take up IT as a business initiatives with its existing expertise in
IT and rich domain knowledge in servicing and allied areas, HAL can leverages itself to
diversify into the new economy section of InfoTech and IT enable services. The company is
strengthen its IT linkages within the organization and is evaluating its approach towards
emerging opportunities in IT, including e-business which is fast transforming the traditional
ways of transitory business.

With these strategic initiatives and continues effort to enhance its competitiveness by
reducing cycle time and costs, improving quality opportunities in the environment, HAL is
on its way to achieve its vision of being a world class innovation, competitive and profitable
enterprise providing total business situation. Computerization in HAL commenced at the
very inception of the company in the series. Initially the manufacturing units were depended
on the technology transferred from the collaborations supplied system/procedures and
computer programs with suitable adaptation. The system and procedures formulated. Days
laid a strong foundation for the development of IT base in the years that followed.

Over the years, technology was gradually upgraded in line with the functional needs
of the company and suitability and suitability adapted to the changes in the scenario. Today,
computerized system base supported by state of art IT. The major units have centralized
mainframes computers; where as minor ones have got mini-computers system. The front end
user friendly desktop personal computers are used in each of the units extensively.

In the data communication area, all the units and linked up through wide area
corporate data network. Each of the major units have set up its campus wide backbone
network supported by LAN for inter office/department connectivity for systems integration.

The company has a professional outlook towards IT strategies and strengthens in IT

infrastructure in line with the future business required. A core group of IT personnel is
available in each of its unit with proper support and direction from a similar apex body at the
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 74 -
 corporate level. The enterprise wide computerized system, web enabled technology, e-
commerce concepts, collaborative and concurrent engineering simulation modeling and video
conferencing are some of the newer areas considered for absorption today for meeting the
business challenges of the future.

ERP systems are being introduced on whole division, which is under process in
engine division. After the success achieved in the other division like Aircraft division,
Helicopter division and corporate office who ERP is already installed. IFS one among top
fortune 500 companies is doing the installation and designing for engine division.

ORGANISATIONAL CHART

SENIOR
MANAGER

TECH.
ASSIT. ENGINEER
ENGINEER
ENGINEER (MATERIAL, DATA
(HARDWARESYS
(DATA MANAGER A/C,PLANNING, PROCESSING
TEM,
MIGRATING TO IMM, SALES, OPERATOR
ADM.BACK-UP,
ERP) QUALITY. ETC)
TACH.)

MATERIAL
PAYROLL ATTENDENCE INENTIVES BILLS PAYABLE
LEDGER

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 75 -
 CHAPTER-5.8

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 76 -
OBJECTIVES AND FUNCTIONS

Manufacturing Inspection

This department is responsible for inspection and sub assemblies manufacture in

house/out source including indigenized items. The type of inspections carried out is-

 Dimensional inspection
 Non-destructive testing
 Process inspection and protective treatment.
 Calibration of instruments and gauges.
 Leasing with customer inspection (military, civil and export) for approval acceptance
and certification of components.
 Coordinating with design liaison for disposition of non conforming components.
 Providing inspection support to indigenization activity.

Assembly inspection

The assembly inspection is presently carrying out the following tasks. Inspection of
transmission components for production CAT-B engines, major servicing, rotables, and RMS
orders belonging to both military, civil and export orders. Defect investigation and
transmission components of military, civil and outside agencies. Defect investigation of
structural components and systems. Accidents/incident investigation, servicing,
categorization of accident engines and components repair/overhaul at operating units.
Support to indigenization program.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 77 -
STEPS FOR QUALITY IMPROVEMENT

 Annual quality improvement plans.

 Internal quality audits.
 Quality cost consumption
 Advance quality system
 Supplier control
o Training of vendors
o Annual quality audits
o Support for technical/qualified issues
o Vendor rating and performance assessment.
o Periodic appraisal of quality requirements.

Future strategies

 Analyzing internal failure cost to minimize refection and rework.

 Plans to minimize external failure costs.
 Enhance investments on prevention costs by-
o Training and development
o Process control
o Quality improvement project.
o Vendor development
o Better inspection and test facilities.

Steps in corrective and preventive action response

 Description of defect finding.

 Correction of defects
 Findings of root cause
 Corrective action verification plan.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 78 -
  Follow up.

ORGANISATIONAL CHART OF THE DEPARTMENT

GENERAL
MANAGER

DGM

CHIEF MANAGER

MANAGER MANAGER DEPUTY MANAGER

(ALH) (VIEW ROOM) (METROLGY)

ASIIT. ENGINEER
ASIIT. ENGINEER
DEPUTY MANAGER (GEAR ASSIT. ENGINEER
(VIEW ROOM)
INSPECTION)

ENGINEER

ASSIT. ENGINEER
ASSIT. ENGINEER
(STRUCTURE)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 79 -
 CHAPTER-5.9

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 80 -
INTRODUCTION:

The purchase department plays an important role in an organization. The main

objectives of the purchase department is timely procurement and supply of material to the
departments on time as non-receipt of material in time may results in production hold-ups
and receipt of material ahead of time would be a burden to the cash flow of the company, as
the opening cycle would become longer and the realization from such projects will be less as
compared to what was estimated and at to the inventory carrying cost. It is important to have
the right source who is well equipped to meet the requirements of the company as an when
the need arises, to achieve that each department in HAL engine division shall carry out
intensive market survey and prepare a register of approved supplies.

OBJECTIVES:

 To buy competitively and wisely authorized supplies to desired specifications from

approved / reliable sources at the available reasonable prices within the time schedule
to support production plans & other requirements.
 To ensure that fair & open purchase practices are followed and a healthy & good
relationship develops with suppliers to foster the commercial interest of HAL in the
local, relationship develops with suppliers to foster the commercial interest of HAL in
the local, national and international market.
 To ensure timely formulation and commitment of purchase budget, including foreign
exchange requirements.
 To serve as information centre on materials knowledge – Prices, Sources of supply,
Specification etc,- to all other departments.
 To ensure that investment made on inventory is at an optimum level.
 Training of purchase personnel in the latest techniques of materials management.
 To keep management apprised of the likely shortfalls in purchase performance by
introducing appropriate reporting systems with a view to seek management’s
intervention in time.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 81 -
FUNCTIONS

 Creation of a comprehensive & continuously updated register of selected reliable

vendors.
 Maintenances of vendor evaluation & rating records.
 Market survey with a view to establishing/ developing new reliable & better sources
of supply by providing information on latest products / developments.
 Analyzing bids / offers for decision-making by the competent Authority.
 Arranging negotiations with the parties when necessary.
 Issue of purchase orders in time.
 Timely release of Foreign Exchange, obtaining technical Clearance & Import License
when required.
 Follow-up of Purchase Orders till the arrival of materials at destination & to ensure
after sales service during warranty & post-warranty periods.
 To work out periodically procurement lead time for various categories of items form
International & Local markets & advice the same to user departments so that they
take timely action in initiating purchasing request.
 Maintaining library of product catalogues & manufactures/distributors price lists etc.
 Maintaining up to date information regarding sales tax, excise & customs duty-rates
etc.
 Submit MIS reports on performance of purchasing organization.
 Entering into service contracts for Transportation, Customers Clearance and other
miscellaneous services like repairs to capital equipment / plant, advertising, printing,
packing, tailoring, maintenance service contracts, material handling services etc.
 Entering information contracts for sub-contracting prototype development, trial
orders etc.
 Finalization & operation of license agreement.
 To ensure that objective of purchase are realized & exceptional cases are brought to
the notice of Divisional heads / management.
 To be alert & responsive to the changes in production programmed & change in
requirement of material.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 82 -
Classification of materials:

For efficient purchasing it is necessary that the relevant classification of materials are
properly understood, so that purchasing methods may be adopted for the purchases in
question. Broadly, the following classifications are pertinent to HAL purchases:

 Capital equipment: Capital equipment consists of machine tools, plant, test

equipment, office equipment, workshop / office furniture, vehicles etc. The
requirement of capital items for the Division is sanctioned by the Board in the annual
capital budget. Purchase department is responsible for ensuring timely commitment
of annual purchase budget.
 Production material: Production Materials are those which are directly consumed in
production. These are raw materials, consumables, components, spares & accessories,
castings & forgings etc., which go into the manufacture / repair / overhaul of
Aircraft / engines & other systems.
 Commercial materials: All other types of materials which are directly used in
production but are required for the functioning of the organization are classified as
commercial materials. Those may be future sub- categorized.

The different kinds of requisition raised by different departments:

 MRP: Material Purchase Request.

 CRP: Capital Purchase Request.
 MSR: Material Sub-Contracting Request.
 UFR: Urgent Purchase Request.
 PPR: Petty Purchase Request. (If it less than Rs 200.)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 83 -
 CHAPTER-5.10

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 84 -
 This department meant for activities when the engine divisions unable to
manufacturing engine parts due to some reason some critical components or material or work in
progress that are used to manufacture the aero engines. In this situation engine division of HAL
offers sub-contracting to get required material components through tenders.

OBJECTIVES

 To determine components which are hitherto being imported & are found feasible for
indigestion, are taken up for development, manufacture & supply through
Outsourcing supplies, Also off-loading in house manufacturing of engines
components.
 To carry out these operations in a consistent manner and efficiently.
 The performance of outsourcing section directly depends on the performance of
suppliers in providing right quality supplies.

o The right time.

o The right & economical prices.

Hence the basis task is to identify suppliers possessing the requisite capability, technology &
quality control system, for award of contracts.

FUNCTIONS:

 Sources Identification & Assessment.

 Recommendations on parts feasible for Outsourcing.
 Receipt of MRP’s from the planning groups indicating the requirements.
 Call the suitable vendors to the Division, show the parts, drawing & process.
 Preparation & Floating of Enquires to only vendors expressed their interest in taking
up manufacturing of parts.
 Receipt & Processing of orders / offers.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 85 -
  Placement of Purchase Orders.
 Issue of Raw materials, Special Gauges & Tools.
 Follow-up with vendors & progressing & Receipts of Supplies.
 Inspection Clearance Co-ordination.
 Processing of supplier’s Bills for Payments / Recoveries.
 Vendor performance rating.
 Repeat ordering.
 MIS Data.

ORGANISATIONAL CHART

AGM MANUFACTURING

DGM BLADES &

OUTSOURCING

SENIOR MANAGER SENIOR MANAGER

ADOUR & GARRET PTAE, AMAGE, KAVERI

DEPUTY MANGER DEPUTY MANAGER

AROSTE, GONENE, AVON ORHEUS, DART LP ENGINE, GTSO

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 86 -
 CHAPTER-6

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 87 -
STRENGTH:-

 MONOPOLY:- HAL enjoys monopoly over the producers of aircrafts, engines and
helicopters in India to support defence and transportation. Since HAL stands with
huge investment this itself is a big strength to the company and the country. HAL also
fetches huge returns to the nation.
 TECHNOLOGY:- With increased sophistication in design and configuration of
aircraft machinery has also taken a very high technology leap. CAD/CAM features
will be extensively used thereby reducing manufacturing cycle time.
HAL can be considered as an embodiment of the nation’s aspiration to attain self
sufficiency in modern technologies as represented by production of aircraft and allied
equipment, while progressively building up the capabilities to undertake the Nova design
and developement of aircraft’s engine and system.
 JOB SECURITY:- HAL offers employment opportunities for thousands of people thus
raise the living standard of the people. Job security is one of the blessings bestowed by
HAL on its employees.
 DEFENCE MARKET:- HAL with its products and services, fully engaged in providing
backbone around which the IAF has built a tough physical presence well able to take care
of the multifarious tasks demanded of it. So Indian Defence market can be considered as
the main strength of HAL.
 SKILLED AND DEDICATED MANPOWER :- Induction of young technicians in
multi skills and transferring the skills from the highly skilled technicians before they
retire.
 NAVRATNA COMPANY:- HAL is one of the Navratna Companies. So it has goodwill
and market image.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 88 -
WEAKNESS
 ABSENCE OF MARKET STRATEGIES:- Though HAL produces a wide
range of products, it is yet to be backed by effective marketing strategies. It can
be seen as an obstacle for future prospects in the aerospace market.
 ENCUMBARANCE:- HAL too faces the problems which are common to public
units like strict government regulations in technical upgrading etc.
 LICENSE DEPENDENT:- It is largely dependent on its license in international
business transaction.
 Investment made in R&D is inadequate.
 As in other government organizations, excess of manpower than required in the
organization.

OPPORTUNITY
 GROSERY MARKET:- The aerospace market has the growing in a rapid pace and
there are untapped areas and markets to be explored further. This opens a level plain
field for HAL.
 TIE-UPS:- HAL has been associated with the technological advancements in the
industries and has brought tie-ups with majors like Rolls-Royce and various others.
 HIGH PENETRATION POTENTIAL IN THE FOREIGN MARKETS:- The
foreign market for the products like ALH and LCA are found to be expanding and it
creates a room for HAL to penetrate the foreign markets.
 Has entered into a licensed agreement with U.K for servicing of DART engines in
South East Asia.
 New initiatives in R&D like ALH (advanced light helicopters), LCA (light combat
aircraft) MIG and JAGUAR update programs provide scope for further expansion of
the business.
 Has started new projects like KAVERI engines, unmanned target aircrafts.
 Has scope for diversifying its activities in the manufacture of engines for multi-ole
and civilian aircrafts.
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 89 -
THREATS
 GLOBAL COMPETITERS:- Competitors like Boeing air bus, lock head martin etc
has potential edge and they are established in the design and development of aircrafts
and others are having high aircraft technologies.
 LOW PRODUCTIVITY:- As it takes six months for engine to complete
manufacturing. This long process tells of its low productivity.
 LOW MOTIVATION:- The employees are not motivated to perform the gap most
efficiently, as they are not identified, appreciated and reinforced.
 THREAT FROM MNC’S:- Ever since Mr. P V Nasimha Rao has signed LPG.
After Globalization trade and commerce has lead to the flooding in MNC’S into
Indian economy. They provide huge salary and amenities that the government could
not afford. This attracted the efficient employees into those companies.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 90 -
 CHAPTER-7

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 91 -
FINDINGS

Every report has its own conclusion and there so also is the same here it has always

been in practice in the academic work of this nature to analyze and come out with some

conclusion that tend to pass the judgment on the efficiency and effectiveness of any

enterprise under study.

 The company products are stable and efficient with proper inventory and working

capital management.

 The workers are committed to their work and duties.

 There have been good initiating measures undertaken by the company to upgrade the

quality and efficiency of its products and machinery.

 The finance position of the company is good though there are some indirect losses.

 There is a good coordination among all departments of the company.

 The company’s commitment towards its customers, employees and other shareholders

and the society in general are tremendous.

 Few things like company infrastructure, canteen facilities, etc should be checked at

regular time interval, so that the company can get the benefits properly.

 Absence of some HR terms like job specification, job distribution, job rotation etc.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 92 -
SUGGESTIONS

The suggestion for effective growth of the organization is an attempt to provide

better management solution from the available resources. The suggestion below should not
be a criticism over the existing system.
 The profits generated by the organization can be utilized to improve the work life of
the employee by providing better infrastructure facilities within the organization.
 The subsidized canteen facilities have resulted in high expenditure which reflect the
cost and ultimately profit therefore a recession of canteen charges can be considered.
It can be thought to discontinue by way of outsourcing.
 The organization structure must be flattened for quicken decision making which will
result in higher profit ability.
 Define individual goals to achieve the corporate objective.
 Long procedure has to be reduced.
 Proper incentives schemes for the efficient work of efficient must be introduced.
 The company should implemented and practice the TPM philosophy in all
departments of the factory, which is currently being maintained in few lines of the
factory.
 The company should go for job rotation in the factory where in the employee is
rotated to another job where similar skills are required in the factory. This would
enable an employee to familiarize with different work system in the factory, and
subsequent help to the management in filling the emergency vacancies at any time
besides uninterrupted career growth for such job rotated employees.
 Registering slow growth. It should concentrate on three critical factors:-
o Powerful consumer insight
o Intense focus
o Top quality innovation
The suggestion can be validated and adopted if it is in accordance with the company’s
policies.

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 93 -
CONCLUSION
The objective of this study is to assume and learn the various functional aspects of the
organization and possible comments on its activities.
In the context of this report, it can be said that the production of the company’s product is
stable and efficient with proper inventory and working capital management.
The workers are committed to their work duty. There have been good initiating measures
undertaken by the company to upgrade the quality and efficiency of its products and
machinery. The firm’s commitment towards quality is worth appreciating. Good coordination
among all the departments of the division. Financial position of the organization as whole is
sound. The commitment of the company towards its consumers, employees, shareholders and
society as a whole is very high.
If you are willing to work diligently towards your goal, you will surely succeed. The good
things in life can be yours if you have truly a strong motivation for achieving them. One’s
attitude determines one’s future. This is what every one learns from a good corporate like
HAL.
Work is the key to happen. We line in deeds not in years in thought not in breath, in
feelings and not figures on the dial. This is moral I learnt in HAL.
“Security is tile priceless product of freedom. Only tile strong can be secure anti only
in freedom can men produce those material resources who can secure them from want at
home anti against aggressive from abroad”.
- B. E. Hutchinson

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 94 -
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 95 -
BIBLIOGRAPHY

BOOKS:-

 Kotler Philip & Keller Kevin Lane , ‘Marketing Management’ Twelfth Edition 2006,
Pearson Education (Singapore) Pte. Ltd.
 Krishnaswami O.R. & Ranganatham M, ‘Methodology of research in social sciences’
Second Revised Edition, 2006, Himalaya publishing House.

JOURNALS, MAGAZINES & BOOKS.

 CORPORATE PLAN (DRAFT)

 EMPLOYEE HANDBOOK
 PERSONNEL MANUAL
 ISO 9000:2001 MANUAL OF P & A DEPARTMENT
 ISO 9000:2001 MANUAL OF MANAGEMENT SERVICE DEPARTMENT

WEBSITES.

 www.hal-india.com
 www.google.com

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 96 -
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 97 -
WORK IN ENGINE DIVISION

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 98 -
PRODUCT PROFILE:

ADOUR MK 811: GARRETT 331 – 5:

Artouste III B DART 533 - 2 AND

536 - 2T

ORPHEUS 70105
CMR INSTITUTE OF MANAGEMENT STUDIES
DEPARTMENT OF MANAGEMENT
- 99 -
 ADOUR MK
804 E

AVON

GNOME 1400 – IT

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 100 -
Financial Statement (2004-2005),(2005-2006) HAL, ENGINE DIVISION

1. EARNINGS OF HAL ENGINE DIVISION:

Particulars 04-05 05-06

Sales: (Crores)
Inland 4383.75 5155.05
Export 150.05 186.19
Total Sales 453380 5341.50
Charge in Work In Progress 450.75 575.12
Total 4984.55 5916.62
Outsourcing

2. SAVINGS OF HAL ENGINE DIVISION:

Particulars 05-06 04-05

P.B.T 1126.29 757.53
(Less) Tax 355.15 256.47
P.A.T 771.14 501.06

3. HAL OWN:

Particulars 05-06 04-05

Net Block 730.34 525.87
Other Capital Asset 4375.40 3477.04
(Less) Working Capital 521.81 368.72
Total 4583.93. 3634.24

4. HAL OWE:

Particulars 05-06 04-05

Equity 120.50 120.50
Reserves and surplus 3050.58 2508.06
Total 3171.08 2628.56

Financial Statistics (2004-2005),(2005-2006)

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 101 -
 Particulars 05-06 04-05
V.O.P 5916.62 4984.55
Value Added 2603.13 2298.38
Dividend (Inclusive Tax) 228.62 113.92
R&D 433.59 306.63
Gross Margin 1408.15 974.46
Gross Block 1694.58 1417.27
Inventory 4809.74 3708.64
Sundry Debtors 1404.13 406.20
Capital Employed 2191.23 1507.65
Net Worth 1440.85 882.07
No. of Employees 29668 29807

FINANCIAL RATIO:

Particulars 04-05 05-06

Sales/Employee 1521052 1800426
Value added/Employee 771087 877424
PBT to Sales 16.71 21.09
PBIT to Sales 53.04 53.59
PAT to Capital Employee 56.81 53.59
Debt Equity Ratio 0.14 0.12
EPS 41.58 64.00
Dividend as percentage of Equity 94.54 189.73

OUTGOING OF HAL ENGINE DIVISION:

Particulars 04-05 05-06

Cost of Materials 2680.17 3313.19
Manpower Cost 808.78 837.69
Net Operating Cost 917.87 752.98
Net Financing Cost (Less) 250.96 452.37
Deprecation (Less) 65.16 77.31
Total 4227.02 4529.10

CMR INSTITUTE OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT
- 102 -