SUMMER TRAINING REPORT

on
“Capital Budgeting”
AT

JCB India LTD

Submitted in partial fulfillment of the requirement of degree in

Masters of Business Administration from MDU, Rohtak

UNDER THE GUIDANCE OF SUBMITTED BY:-

Mrs. Kavita Arora Name : MUSKAN
Class : MBA 3RD sem
Roll No. :
Reg. No. 17F2340077

DELHI INSTITUTE OF MANAGEMENT

[Approved by AICTE & Affiliated to M.D.U, Rohtak]
 ACKNOWLEDGEMENT

Summer training is one of the most important parts of the curriculum of any
professional course both as link between theory and actual industrial practices.
I therefore consider myself fortunate to receive this training in an esteemed
organization JCB INDIA LIMITED.

I would like thank the management of JCB INDIA LTD. for the wholehearted
co-operation and guidance extended by them which made my summer training
project possible. I am very grateful to my project guide Mrs. Kavita Arora For
his support
and suggestion, which led to completion of this project.

I am also thankful to all the employees working in the finance department for
their continuous help and advice at different times.

MUSKAN
 DECLARATION

I, MUSKAN, MBA 3RDsem. of the Delhi Institute of Management

Faridabad hereby declare the project entitled “Capital Budgeting” is an
original work and the same has not been submitted to any college for the award
of any other degree. The report of a project undertaken from 23rd June to 23rd
July 2012.

The main objective of preparing this project report is to understand the scenario
of finance management. And also understand their budget impact. The feasible
suggestions have been duly incorporated in consultation with the supervisor.

MUSKAN
TABLE OF CONTENTS

Chapter No. Topics

1. Introduction

2. Company profile

3. Research methodology

4. Data analysis and Interpretation

5. Findings and Conclusions

6. Suggestions and
Recommendations
7. Bibliography
8. Annexure
a)Questionnaire
b)List of figures
 CHAPTER – 1

INTRODUCTION OF THE
TOPIC
 Capital Budgeting

1.1 Meaning
Capital budgeting is the technique of making in long term assets. The process in
which business determines whether projects such as building a new plant or
investing in a long-term venture are worth pursuing. The benefits of which
will be available over a period of time longer than one year. Also known as
“investment appraisal”.

1.2 Definition by
Milton h. Spencer
“Capital budgeting involves the planning of expenditure for assets, the return
from which will be realized in future time periods.” Thus, a capital budgeting
may be defined as the firm’s decision to invest its funds in the long term assets
in anticipation of an expected flow of benefits over the lifetime of the assets.
These benefits may be either in the form of increased sales or reduced costs
capital budgeting decision regarding expansion, acquisition, modernization and
replacement of the long term assets.

1.3 Features
 In capital budgeting decision, funds are invited in long term
assets.
 These funds are invested in present times in anticipation of
future funds.
 Future profiles will occur the firm over a series of years.
 Capital budging decisions involve a high degree of risk because
future
benefits are not certain.
 1.4 Importance of Capital Budgeting
 Such decision affects the profitability of the firm
Capital budgeting decisions affect the long term profitability of a irm because
of the fact that they relate to fixed assets. A correct investment decision can
yield profit otherwise incorrect decision can endanger the survival of the firm.

 Long term periods

The decision of capital budgeting will be felt by firm over a long time and,
affects the future cost structure of the firm

 Irreversible decision

Capital budgeting decision are not easily reversible without heavy financial
loss to the. This is because it is very difficult to sell the second hand plant.

 Risk

Investment in fixed assets may change the risk complexion of the firm. This is
because different capital. Investment proposals have different degrees of risk. If
adoption of an investment proposal increased average gain, but causes frequent
fluctuation in the profit of firm, the firm will become more risky.

 Most difficult to make

Capital budgeting decision are among the most difficult decision to be taken
by a firm. This is because they require an assessment of future events
which are uncertain and different predict. For eg. Estimating the future cash
inflows.
 1.5 Kinds of capital budgeting
Accept-reject
decision

mutually Priority order

competitive decision
decision

1.6 Capital Budgeting Phases

The phases of the capital budgeting process include:

 Description of the need or opportunity;
 Identification of alternatives;
 Evaluation of the options and the relevant cash flows of each;
 Selection of best alternative; and
 Conducting a post-completion audit of the projects.

1.7 Identifying Capital Budgeting Needs

The first step is to identify the need or opportunity. This is usually done at the
mid-management level and is the result of a shared vision of company goals and
strategies coupled with a “where the rubber meets the road” perspective of
local”
clients needs, tastes and behavior. They see a need or opportunity and
communicate it to senior management, usually in the form of proposals which
both include identification of the need or opportunity, and potential solution
and/ or recommendations. Senior management then evaluates the merit of each
proposed opportunity and makes a determination of whether or not to look into
it further.

While project need identification is usually a de-centralized function, capital

initiation and location decisions tend to remain a highly centralized undertaking.
The reason for this revolves around the need for capital rationing, especially
whenfunds are limited and upper-management wishes to maximize its
returns/benefitsfrom any capital projects undertaken.The information needed to
make this determination usually comes from bothinternal and external sources,
and is based on both financial and non-financialconsiderations. Interestingly
enough, the factors examined in this process can be both firm-specific and
market-based in nature. It is that this point that companiesshould be seeking
qualified financial guidance since the consequences of both a poor decision and
of the implementation of a good decision can be far-reaching.

1.7 Risk Analysis in Capital Budgeting

Decisions

Conceptually, a capital budgeting decision is simplicity itself. The analyst

determines the upfront cost of a project, as well as the periodic future ash
flows resulting from the project. Those cash flows are then used to calculate
ither the net present value(NPV) of the project- using the firm’s weighted-
average cost-of- capital(WACC) as a discount rate –or the internal rate of
return(IRR) for theoject. If the NPV is positive, or if the IRR exceeds the
WACC,the firmundertakes the project; otherwise it doesn’t.

The difficulty in making capital budgeting decisions arises as a consequences

of the difficulty in determining the upfront costs, the periodic cash flows, even
the proper WACC. All of these quantities must be estimated, and all he ensuing
stimates will contain some degree of uncertainty; the process in
inherently risky.
 Rules of capital budgeting decision

Capital budgeting is investment decision-making as to whether a projectis

worth undertaking. Capital budgeting is basically concerned with the
justification of capital expenditures.Current expenditures are short-term and are
completely written off in the sameyear that expenses occur.Capital Budgeting is
the process by which the firm decides which long-terminvestment to make.
Capital budgeting projects, i.e., potential long-terminvestment, are expected to
generate cash flows over several years. The decision to accept or reject a capital
Budgeting project depends on an analysis of the cashflows generated by the
project and its cost,. Popular methods of capital budgeting include net present
value(NPV), internal rate of return(IRR), discounted cashflow(DCF) and
payback period. The following three Capital Budgeting decision rules will be
presented:
 Payback period
 Net Present Value(NPV)
 Internal Rate of Return(IRR)

 Payback period method

Meaning
It is the simplest and most widely method. This method calculates the number
of years require to payback the original investment in a project. In other words it
is the period which is required to recover the original investment in a project.
 Payback period = Investment / constant annual cash flow

Evaluating the payback period

Merits

 It is the simple to calculate.

 It appropriate for firm suffering from liquidity.
 It is benefits to invest in short term financing.

Demerits

 It ignores the time value of money.

 It ignore the cash flows after the payback period.
 It ignores the profitability of the project.

 Net profit value(NPV)

Meaning
It is one of discounted cash flow techniques. Under this method, present
value of cash outflow and cash inflow is calculated. The present value of cash
outflow is subtracted from the present value of cash inflow.

NPV= present value of inflow – present value of outflow

Thus,
 In other words, if the investment is made at the beginning of the project,
NPV
will be calculated by following formula.

NPV=(cash inflow in 1st year*1/(1+r)) + ( cash inflow in 2nd

year*1/(1+r))+……………….+( cash inflow in n year*1/(1+r)n) –
(initial
cash outflow * 1/(1+r)0))

Here r = rate of return

N= expected life of the proposal.

Evaluating

If NPV is positive, project may be accepted, otherwise rejected, if

NPV is
zero, the project may be accepted only non financial benefits are
their.

Merits

 It takes time value of money.

 Final life of the project is taken into consideration.

Demerits
 It is difficult to understand and implement.
 It is difficult in fixing the required rate of return.

NPV Example
Assume you have the following information on project X:

Initial outlay-$1,100 Required return=10%

 Annual cash revenues and expenses are as follows:
Year Revenues Expenses
1 $1,000 $500
2 2,000 1,000

Draw a time line and computer the NPV of project X.

Example: Consider the previous investment project analyzed with the

NPV rule.
The initial cost is $600 million. It has been decided that the project should
be
accepted if the payback period is 3 years or less. Using the payback rule,
should
this project be undertaken?

Year Cash Flow Accumulated cash

flow

1 $200.00 $200.00

2 220.00

3 225.00

4 210.00
Example: Calculating the payback period: the projected cash flows a
proposed investment are listed below. The initial cost is $500. What is the
payback period for investment?

year Cash flow Accumulated Cash

Flow

1 $100.00 $100.00

2 200.00

3 500.00

Comparison of IRR and NPV

IRR and NPV rules lead to identical decision when the following
conditions are
satisfied
  Conventional Cash Flows: the first cash flow ( the initial investment
)is
Negative and all the remaining cash flows are positive.
 Project is independent: A project is independent if the decision to
accept or
reject the project does not affect the decision to accept or reject any
other
project.

When one or both of these conditions are not met, problems with using
the IRR
rule can result.
 Internal rate of return (IRR)

Meaning

It is also Known as time adjustment rate of return. It is based on

internal
facts of a proposal. It is determined entirely by the cash inflow and
cash
outflows of the project irr is usually the rate of return that a project
earns.

In other words, it is the rate which npv of the project is zero.

Evaluating

If IRR exceeds the rate of return, the project would be accepted. If

it is
less than expected rate of return, project will be rejected.

The formula of calculating of IRR is

IRR = lower discount rat + NPV at lower discount rate / NPV at

lower
Discount rate – NPV at higher discount rate * difference in
discount rate

Merits
  It takes into consideration the time value of money.
 It is consistent with the overall objective of maximizing the
shareholder wealth.

Demerits

 It involves tedious calculation.

 It becomes difficult to accept or reject the proposal.
IRR illustrated
Initial outlay = -$200

Year Cash Flow

1 50
2 100
3 150

Find the IRR such that NPV = 0

0 = -200 + 50 + 100 + 150

(1+IRR)1 (1+IRR)2 (1+IRR)3

200 = 50 + 100 + 150

(1+IRR)1 (1+IRR)2 (1+IRR)3

A capital Budgeting decision rule should satisfy the flowing

criteria.

 Must consider all of the project’s cash flows.

 Must consider the time value of money
 Must always lead to correct decision when choosing
among
mutually Exclusive Projects.
NPV

NPV(k)

IRR

K1 Discount rate K2
NPV(k2)0

Figure .1 NPV vs. IRR independent projects

NPV

$1 363.64

B
$954.55 A
 0 k0 20% 21%
Discount rate

Figure .2 NPV vs. IRR: Dependent projects

NPV

$3,409.00

$1,230.50

0 20% 21% 30%

Discount rate
 Figure .3 scale of investments

1.10 Limitation of capital budgeting

 Capital budgeting increases the cash outflow.

 It effects the revenues , saving and costs.
 The life of the project is long time.
COMPANY
PROFILE
WELCOME TO JCB
INTRODUCTION

JCB India Ltd. is a world class construction equipment manufacturing company which
is one of the top three manufacturers and having its world headquarters in England and
India headquarters at Ballabgarh, Mathura road, Faridabad, (Haryana). This company
was founded by JOSEPH CYRIL BAMFORD, therefore the name set for the company
as JCB. JCB employs over, 8000 people on 4 continents and sell their products in 1
countries through 1500 dealer depot locations. JCB have invested heavily in their
research and development and has best finest engineering facilities across the globe,
produces over 300 machines and maintains a reputation for unrivalled customer
service. Engineering excellence and innovations are hallmarks of JCB. JCB India is
streamlining their facilities in India as per world standards.

The JCB INDIA Ltd. Is at third position worldwide in construction equipment

manufacturers and had a growth of 12% in the year 2007 and produced 72000
machines in a year.

Hitachi 14%

Other
Manufact… JCB
53%

Table2.2; Source: JCB INDIA Ltd

 Komatsu 9%

Tata JD 7%

L&T Case 6%

Terex 4%

HM 2%

CAT 2%

Volvo 2%

Others (BEML/IR/Kob/Hyn) 1%

The above figure is showing the market share of JCB in all the products in
INDIA.
JCB INDIA Ltd. has the highest market share of 53%. It is the leader of
the market. Other 43% is shared by various organizations which are
clearly mentioned in the table 1.2. We can say that JCB has very less or no
competition in the market and enjoying its first mover advantage.
In comparison to JCB, Hitachi is only having 14% market share which is
even not comparable.
BACKHOE
LOADERS

Figure: 2.2; Source JCB INDIA past data

Tata JD 9%

L&T Case 9%

Terex 5%

CAT 2%

Table: 2.3; Source JCB INDIA past data.

The above table and figure depict clearly about the share of production of
BACKHOE LOADERS is 75% comparative to all other 4 companies. The
company is putting their best efforts to achieve more share in this area.
In the area of HR JCB INDIA is streamlining its activities with today’s world.
There are various activities are undertaken for the betterment and engagement
of employees.

Figure: 2.3; Source: JCB INDIA

The above graph depicts about the growth path of JCB INDIA. It had 42%
growth in the year 2005-2006, and 58% growth in the year 2006-2007. This
shows that they must have changed their policies and adopted new techniques
for their up gradation. There is a change of 16% in a year. There is always a
better scope for JCB and it has streamlined its activities with today’s
requirement.

JCB INDIA DEALERS, SERVICES AND PARTS

350
300
250
200
150
100
50
0
1987 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Dealers 9 32 35 37 38 37 39 38 39 40 45 50
Depots 12 104 114 120 134 140 142 142 179 197 255 297
 Fig. 2.5; Source JCB INDIA

Machines of JCB
Backhoe loaders
 Vibratory single Drum
 Wheeled Loaders
 Generators
 Skid steer loaders
 Telescopic Handlers
 Tracked excavators
 Compact Excavators (Mini/ Midi)

Organization Chart

MD VIPIN SONDHI

EVP HR EVP EVP EVP AVP

RAJEEV FINANCE PRODUCT MANUFACTUR QUALITY
KAPOOR SRIKANT SUPPORT ING G.
SAPTAR B.MANI SUBIR SUNDARAM
CHAUDHARY
 EVP SALES EVP PRODUCT
AND ENGINEERING
MARKETING SANJEEV
ARJUN ARORA
MIDDHA

DGM HR GM HR DGM HR CSR HR CM HR

DHEERAJ HARISH SUJAN KEHKASHAN ABHISHEK
VERMA KHERPAL MUKHERJEE ARORA

CM MANAGER TRAINING ASST. CM

ASHOK MAJOR MANAGER MANAGER WELFARE
AHUJA SATPATI HR HR B S BATRA
NEELAM MUKTA
DHAKA KALRA

ASST.
ASST.
MANAGER
MANAGER
HR
NAMRATA
VAID ARORA
GUPTA
JCB INDIA LIMITED – A PROFILE
Company : JCB INDIA LIMITED

Product Range : Excavators Loader

Front End Loaders

Articulated Loading Shovels

Tracked Excavators

Skid Steer Loaders

Models : Eleven

Equipment Population: Over 35000

Manufacturing Location : Ballabgarh, Haryana

JCB India Offices : 21

Dealership Outlets : 150

JCB India Limited Rs. 2500 crore manufacturer of earthmoving and

construction equipment is a fully owned subsidiary of JCB Excavator (UK)

J.C. Bamford Excavators Limited of United Kingdom is ranked in the

top 3 manufacturers

of earthmoving and construction

equipment in the world and is considered one of Britian most success stories.

JCB is the world number one producer for backhoe loaders.

JCB India Limited started operation in 1979 as a joint venture between the

Escorts group and JCB Excavator (UK)..

COMPANY INFORMATION

" Our mission is to grow our company by providing innovative, strong and high performance
products and solutions to meet our global customers' needs."
In every corner of the world you'll find a JCB machine. JCB is one of the world's top three
manufacturers of construction equipment. We employ around 7000 people on 4 continents
and sell our products in 150 countries through 1,500 dealer depot locations.

Throughout our 64 year history, we have always invested heavily in research and
development, keeping JCB at the cutting edge of innovation.

Today, JCB has some of the finest engineering facilities across the globe, produces a range of
over 300 machines and maintains a reputation for unrivalled customer service.

JCB, a truly world-class company.

J C Bamford Excavators Limited

Registered Office: Rocester Staffordshire England ST14 5JP
Registered No. 0561597

ASSETCARE

CAREER OPPORTUNITIES

As JCB is an extremely fast-moving, forward-looking company, we expect a great deal from

our employees. As well as the technical expertise appropriate for each position, those who are
successful possess a number of qualities and skills, such as:

 Enthusiasm – get out of life (and  Self-motivation – Carpe Diem –

work) what you put in. seize the day

 Can-do attitude – a problem is an  Team-player – together we can

 opportunity and a challenge. achieve this

 Commitment – follow it through  Innovation and creativity – from

to the end. small acorns…

 Resilience – we all learn through  Problem-solving and decision

our experiences-good and bad. making – right first time

 Flexibility – where there is a will,  Communication – getting the

there is a way. (right) message across – either verbally or in
writing
 Sense of humour – working can be
fun-and very effective  Commitment to continuous
learning – create your own capacity for future
development.

ENVIRONMENTAL RESPONSIBILITY

As a world leading manufacturer, we take our environmental responsibilities very seriously.

All our factories aim to eliminate polluting releases, promote high standards of energy
management and to prevent, recycle or safely dispose of waste. Plus, every JCB product is
designed for maximum energy efficiency and minimum environmental impact.

As well as helping to preserve global resources for future generations, we create

environments for communities to enjoy today.

Our worldwide Headquarters in the United Kingdom, where 175 acres have been landscaped,
has been hailed as one of the most impressive examples of industry and nature in total
harmony.
 175 acres of landscaped grounds at World HQ.
 £7m invested into fume-free paint plants
 Company-wide re-cycling initiative
 Environmental policy supported throughout the company
 All factories strive to minimise polluting releases
GLOBAL SUPPORT NETWORK
To deliver our promise of world class customer support, JCB has continued to invest in a
comprehensive global network of dealers who really deliver the support you need.

JCB boasts over 1,000 dealer depots worldwide, and 92 dealer depots in the UK. Operating
out of those UK depots are 357 service technicians, all JCB-trained, and 265 service vans.

JCB dealers understand that this is a business about relationships, as well as machines. We
aim for customer satisfaction every time, and understand that this means supporting the
machine throughout its life.

 1500 JCB dealer depots worldwide

 92 JCB dealer depots in the UK
 821 service technicians
 660 service vans in the UK
GROUNDCARE

At JCB, we understand that this is a specialist industry requiring specialist machines. So

we’ve created a range of small, manoeuvrable and economical machines that answer your
specific grounds care needs. From public parks and stately homes to golf courses and sports
grounds, the breadth of applications covered by the JCB Groundcare range, is simply huge.

JCB Groundcare machines all come with our unrivalled reputation for world-class quality,
innovation and reliability built in.

INDUSTRIAL

JCB produces a range of machines for use in industrial applications such as distribution and
logistics, ports and terminals, builders' merchants and general manufacturing. Products such
as the Teletruk combine productivity, safety and innovation to deliver unique solutions for
the most demanding environments.
JCB India is a part of the world renowned and legendary company J C Bamford Excavators
Limited (JCB), one of the prominent players in the construction equipment industry and
amongst the 3 largest players in the world, producing over 300 different models, which are
sold in over 150 countries.

Amit Gossain Achal Paul

Associate Vice President Buzz Communication
Marketing & Business Development M: 91-9810162377
JCB India [email protected]
M: 0129-4299000
[email protected]

JCB India Limited, India’s largest manufacturer of Earthmoving and Construction equipment
is a fully owned subsidiary of JC Bamford Excavators Limited (U.K).

J.C. Bamford Excavators Limited U.K. is ranked as the world’s third largest manufacturer of
earthmoving and construction equipment and is considered one of Britain’s a most impressive
success stories. JCB is also the world number one producer for backhoe loaders. It produces
over 300 different models, which are sold in over 150 countries

JCB India Limited started operations in 1979 as a joint venture company. In 2003 JCB, UK
acquired 100% shares in the joint venture and today JCB is the fastest growing company in
the Indian earthmoving and construction equipment industry. The company is a pioneer in the
industry and has been recording excellent growth rates. The company has ambitious
development and expansion plans through launching revolutionary products and adherence to
world class JCB corporate identity norms. Today in India, JCB has a park of over 80,000
machines and out of every two Construction equipments sold in India, one is a JCB.

JCB India has the World’s largest Backhoe Loader manufacturing facility at Ballabgarh in
Haryana which was recently expanded and subsequently inaugurated by Sir Anthony
Bamford. It has two manufacturing facilities at Pune comprising of:
 Plant-1, is a component manufacturing plant and is export-oriented. It caters to the
needs of JCB factories both in India and abroad.
 Plant-II, is a Heavy Line manufacturing plant that produces Excavators, Wheel
Loading Shovels and Vibratory Compactors. It has India’s largest Parts & Technical
Training Centre for construction equipment in India.
 JCB India therefore offers a diverse range of unmatched Backhoe Loaders. Wheeled
Loaders, Excavators, Skid Steer loaders, Telehandlers, Compactors and Pick and
Carry Crane:

Backhoes
 Our choice of superlative Backhoe Loaders includes 3DX (76 HP). 3DX Super (96
HP) and 4DX (96 HP) depending on the customers requirements and applications
 Wheel Loaders
 The options in the exceptional two wheeled loaders are 430Z (127 HP. 1.7 cu.m),
432ZX (150 HP, 2.3 cu.m) and 456ZX (216 HP, 3.3 cu.m).
  Excavators
 Our best and India's finest Excavator range includes JS 80 (8 ton), JS 140 (14 ton), JS
200 (20 ton). JS 210 LC (21 ton) and JS 330 (33 ton) and recently launched JS200HD
(Quarry Machine) suited to diverse weight requirements
 Skid Steers
 We also have 3 different Robotic Skid Steer Loaders, viz. 160/170/190 all of which
come with a wide range of attachments to suit specific customer needs
 Telehandlers
 We have two models in telehandlers namely 506C and 528S which are widely used in
construction of multi-storyed buildings, material handling at ports, industrial purpose,
etc.
 Compactors
 We have two models of compactor called Vibromax VM115 and VMT 850, which are
widely used in construction of roads and highways.

JCB India designs and develop the products on the basis of needs and requirements of the
customers as well as on the growing infrastructure needs of the country. All machines are
high quality products, at par with the world's best and built to withstand extreme vagaries of
climate, while delivering their optimum performance.

JCB India believes in extraordinary customer satisfaction, as they are the principal force
guiding all JCB initiatives and endeavors. We implement this mission through our
comprehensive Network of 48 dealers and 320 outlets, which provide expert servicing for our
world-class machines. Our Product Support makes a diligent and persistent effort to ensure
that every JCB machine is in best operational conditions at all times. We have a dedicated
parts center in Ballabgarh and parts depots in Chennai, Pune and Kolkata.

Engineering excellence and innovation are the hallmarks of JCB and we are streamlining our
facilities in India as per world standards. With the valued input from our customers, JCB
India will continue to innovate and produce equipment and services to best suit the needs of
our markets. This indomitable spirit and our unwavering commitment to serve while keeping
pace with the changing tastes of our customers, has helped in winning our customers over,
time and
 COMPANY PROFILE
Since 1998 the two ranges have been grouped as the 2000 and 3000 series. The
smaller models have a lighter cab, familiar to those who know JCB's backhoe
loaders, and three of them feature optional four wheel steering. The four
models have outputs of 115, 125, 135 and 148 horsepower DIN from Perkins
1000 series engines. The larger models have engines of 150 and 170
horsepower and have an updated version of the original cab. The prelaunch in
1998 brought better engine performance and some updating in the area of the
hydraulics, but the product is largely as it has been for the last nine years.
The machines are now assembled in the Heavy Products factory at Cheadle.
Assembly was moved from the smaller Cecily Mills site to the main production
facility in Cheadle in 2001.
This was because many of the components used on the Fastrac are common to
the new articulated dump truck, and so it made commercial sense to produce
both products in the same factory. Production rose to 1,300 units in 1996, only
to be depressed severely by the crisis in British agriculture. The Fastrac has
won a following in the UK but it has not sold abroad in large
Numbers so far, except in Germany, France and Australia.
While one of the product’s attractions is that there is a wide range of potential
customers, the drawback is that they are not the usual users of traditional JCB
machines. The company overcame this problem by establishing a separate
company, JCB Land power, to both produce and
Sell the product. JCB Land power developed a separate dealer organization
alongside the existing network.
The Fastrac has been sustained by a network that also offers the telescopic
rough terrain lift truck, Farm master wheeled loaders and skid-steer loader to
this sector. As with construction, it is important to offer the dealers a catalogue
of products to sell Off-Highway Research

HISTORY:

The First product to carry a JCB logo was in 1953.This was a Backhoe loader
which people nowadays refer to as a JCB In 1960 JCB introduced the famous 3C
machine. This was a massive seller in its day, selling over 3000 in 1964. The new
3C machine provided the operator of the machine with facilities for boiling a
kettle in the cab. Mr. JCB visited every purchaser of new 3C himself and
presented them with their kettle. Mr. JCB? customer visits became legendary and
the 3C was an overnight success.

The First product to carry a JCB logo was in 1953.This was a Backhoe loader
which people nowadays refer to as a JCB.

The JCB Load all machine was introduced in 1978 by JCB. A JCB Load all
weighs 11,090 kgs or 24,449 Lbs
STORY OF JCB:
An amazing new Exhibition called ‘The story of JCB’ has now been opened at
JCB World headquarters in Rochester Staffordshire. The Permanent exhibition
covers a total of 2500 Sqm and takes people through a series of ’14 Zones’
depicting the company’s incredible history. Starting in the 1820’s when the
Bam ford family were blacksmiths in Uttoxeter the exhibition leads through to
the present day and JCB‘s latest earthmoving machines.

The centerpiece of the exhibition is a life size skeletal model of a JCB200

tracked excavator, built using steel rod and created by renowned artist Benedict
Radcliffe. The jaw dropping artwork took 5 months to complete, used around
one kilometer of steel rod and weighs around two tones - a tenth of the weight
of the machine it represents!

The exhibition also covers sections on how the JCB name was built into a
global brand, JCB military products and the development of the JCB engine and
its record breaking Diesel ax Car. A total of ten remarkable JCB machines are
dotted throughout, which had to be specially craned through the roof as the
exhibition took shape! They include one of the company’s first products- A
hydraulic tipping trailer and a 1962 JCB 3 backhoe loader which has been fully
restored. A lovely new JCB shop selling all sorts of JCB merchandise completes
the exhibition space.

It is hoped that the ‘The story of JCB’ will inspire future generation of young
engineers just like Mr. JCB
SYMBOL OF JCB
TOOLS MANUFACTURE BY JCB
HIGH SPEED TRACTOR

JCB developed the first and still the only high speed tractor. The Fastrac is
designed to combine all the benefits of a normal tractor with road versatility.

A JCB Fastrac tractor can travel as fast as 65kph or 40mph on a road The JCB
Fastrac has won numerous awards including the Prince of Wales award for
Innovation.

ARTICULATED DUMP TRUCKS

Production and Sales
JCB originally launched two machines in 1988, at the height of the last
economic boom, in the 11-16 tonne sector. Initially production levels were
above 100 units, but the downturn in demand in the early 1990s, allied to the
restriction on production space at the Rocester factory caused by the
introduction of other new machines, meant that the product became only of
marginal interest. Introduction of other new machines, meant that the product
became only of marginal interest.
Production levels declined and in 1992 the company decided to withdraw it
from the market. In May 2000 the company announced the launch of two
models with a capacity of 12 and 16 tonnes. This came as a surprise to many
industry observers, given the previous experience and the fact that this segment
of the market had not grown significantly in the intervening eight
years. However, the launch of these two machines is believed to be the prelude
to the introduction of further models that will take JCB to the heart of the
volume sectors of the articulated dump truck market.
The new models are built at Cheadle alongside the wheeled loader and Fastrac
models.
INDUSTRIAL LIFT TRUCKS:

Production And Sales

The Teletruk industrial lift truck, with a single telescopic arm, was unveiled in
1997 and causedmuch interest in the traditional industrial lift truck industry. In
fact it is just the latest extensionof the JCB product range, in much the same
way the Fastrac was in 1991.
Here the company has identified a sector that, while being separate from the
construction industry, has similarities with a number of other sectors supplied
by existing JCB products. It is a large volume market, and one with a small
number of high profile suppliers. It is also a marketOff-Highway Research
where product innovation has been limited over a long period of time. The
company believes that its highly innovative new product will capture a
significant share of the market. The model range is currently limited, compared
with those offered by the competition, but the company has identified a
particular niche where it believes its direct sales method and after care support
are well suited. Has identified a particular niche where it believes its direct sales
method and after care support are well suited.
The product design, based on JCB's knowledge of the telescopic rough terrain
lift truck market, is completely new to the conservative industrial lift truck
sector, where the masted lift truck dominates. This mirrors the situation in 1977
when JCB launched its telescopic rough terrain lift truck into a skeptical
marketplace. Twenty years later the company is a world leader and the sector is
now totally dominated by the telescopic variety. It anticipates a similar
situation will take place in certain sectors of the industrial lift truck market. The
company naturally hopes the change will not take as long but it is committed to
the new product and realizes the long-term benefits of being successful. The
product has the potential to be the largest selling machine within the whole
range, but it still remains at the stage of selling the concept to a wide audience
of skeptics.
The product is built at the Cheadle factory but if it achieves its anticipated
volumes, probably in excess of 5,000 units per year, then either a new factory,
or an extension to the existing site solely for the Tele trunk is likely to be
required.
The product range currently consists of three sizes that are available in either
diesel or LPG variants. The unique forward reaching boom allows a quick hitch
attachment system to be used which enables the machine to work in a wider
variety of applications than the traditional industrial forklift. The machine also
has a unique transmission that can have hydrostatic drive Research torque
converter responses memorized in the programme, so the operator can select the
exact requirements for the operation being carried out.
COMPONENT SUPPLY:
One of JCB’s main manufacturing strategies is to increase its component
commonality across its full range of equipment. As the product range has
expanded this strategy has become increasingly difficult to achieve, but it has
succeeded in supplying a very high proportion of its machines with similar
components. The policy has reduced unit costs by purchasing in high volumes,
and as a result it has given the company one of the most competitive product
ranges in the industry.

JCB AROUND THE WORLD:

The JCB company began in Rocester in Staffordshire but we now have huge
manufacturing plants on four continents:

 The UK & Germany in Europe

 Savannah, in America
 Brazil, in South America
 India, in Asia
 China, in Asia

ORGANIZATION CHART OF JCB

CHAIRMAN & MANAGING DIRECTOR


DIRECTORS

EXECUTIVE DIRECTORS

 GENERAL MANAGERS

ADDITIONAL GENERAL MANAGERS

DEPUTY GENERAL MANAGERS

SENIOR MANAGERS

MANAGERS

SENIOR EXECUTIVES

EXECUTIVES

SUPERVISORS

CLERKS
OBJECTIVE OF THE STUDY

Broad Objectives:
To know about overall about the JCB company and also known each and every
part of selection process of that company

Specific Objectives:
 To focus on measure element of selection process.
 To focus on the process of selection personals.
 To focus on the updates and better methods of modern technique.
CHAPTER- 3

RESEARCH METHODOLOGY
RESEARCH:
Research can be described as a systematic and organized effort to investigate a
specific problem that needs a solution. It is a process of planning, acquiring and
analyzing relevant data and information. Research provides the needed
information that guiles managers to make decisions.

RESEARCH METHODOLOGY:
 A science of studying how research is done scientifically.

 A way to systematically solve the research problem by logically adopting

various steps.
 Methodology helps to understand not only the products of scientific inquiry
but the process itself.
 Aims to describe and analyze methods, throw light on their limitations and
resources, clarify their presuppositions and consequences, relating their
potentialities to the twilight zone at the ‘frontiers of knowledge’

PREPARING THE RESEARCH DESIGN:

It is necessary for researcher to define conceptual structure which research
would be conducted. The function of research design so as to provide for the
collection of relevant evidence with minimum expenditure of efforts, time and
money. In this project the research design was as follows.

 The time available for project was about one month.

 There was no cost factor related to researcher.
 The means of obtaining the information was through questionnaires.

SAMPLE DESIGN:
The method used for sample technique is convenient sampling method.

SAMPLE SIZE:
40 employees i.e. 20 employees from each department.

TOOLS OF ANALYSIS:
I have used Questionnaire Method. Some of the software’s used for making
this project will be Ms Word and Ms Excel. The Data collected is shown
through Graphs and Pie Charts.

DATA COLLECTION:
. The data are collected from both primary and secondary sources.
Primary Data
Primary data collected through face to face interview, observation, and by
participation in the selecting process.
Secondary Data
The secondary data is collected from website, magazine, memorandum,
journals, books and some other relevant sources.
Both primary data and secondary will be used to generate this report. Primary
data sources are scheduled, survey, informal discussion with professionals.
Secondary data sources are the data used previously for the analysis and the
results are undertaken for next process.

LIMITATIONS:
 The respondents were limited and cannot be treated as the whole population.
 The respondents may be biased.

 Time was the major constraint.

 The accuracy of indications given by the respondents may not be consider

adequate.

nvestment decision. Investment decision can be done in long term

invest and
short term invest.

Distribution of shareholding as on 30th September, 2010

Category % age to the capital

1. Promoters and Promoter Group 26.77
2. Foreign Institutional Investors 29.67
3. Domestic Institutional Investors 18.01
4. Public & Others 25.55
Total 100.00

Shareholding pattern as on 30th September, 2010

Range of holding Number of shareholders % of Total

001to100 42528 61.63
101to500 21591 31.29
501to1,000 2757 3.99
1,001to5,000 1705 2.47
 5,001to10,000 180 0.26
10,001to50,000 133 0.19
50,001to1,00,000 34 0.05
Above 1,00,000 84 0.12
Total 69012 100.00
 3.7 Limitation of the study

Certain problems that are arisen during the research may tend
to act as
limitation of the study. These are:
 This data does not cover the whole budgeting impact.
 Shortage of time was a big constraint for the study.
CHAPTER –4

DATA ANALYSIS
AND
INTERPRETATION
DATA ANALYSIS

The term analysis means the computation of certain measures or indices along
with searching for patterns of relationship that exists among data group.
Merely collection of data cannot be the aim of any research activity but with the
help of collected data a researcher tries to draw the conclusions made
generalization, establishes relationship between two or more variable, test
the hypothesis. Under the processes of analysis of data some statistical methods
are used to make data meaningful and self explanatory. The process of analysis
of data made the data to speak about themselves. By analysis, mean the
determination of certain indices or measures along with searching for pattern of
relationship that exists among the data group.

INTERPRETATION

Interpretation means drawing inferences from the collected facts after the
analytical study. According to C. William Emory, interpretation has two major
aspects namely establishing continuity in research through linking the results
of a given study with those of another and the establishment of some
relationship with the collected data. Interpretation is the device through which
the factors that seem to explain what has been observed by researcher in the
course of the study can be better understood. nInterpretation provides a
theoretical conception which can serve as a guide for further research.
4.1 capital budgeting decision affect the profitability of the firm

Categories Total no. of respondents

Yes 50
No 25
Others 25

25%

YES
NO
50%
OTHERS

25%

Fig. – 4 Profitability of the firm

Interpretation : The responses of the respondants are 50% the decisions

affect the profitability of the firm.
4.2 Decision are taken by any organization

Categories Total no. of respondants

Yes 45
No 30
Others 25

25%
45%
YES
NO
OTHERS
30%

Fig. – 5 Decisions taken by organization

Interpretation: The response of the respondents is 45% in favor of

decision taken by organization.
4.3 Funds are invested in the long term asset

Categories Total no. of respondents

Yes 70
No 20
Others 10
10%

20%
YES
NO
OTHERS

70%

Fig. -6 Funds invested in long term assets

Interpretation: The 70% respondents are response in invested in the

Long term assets which are beneficial of the company.
4.4 Future profits are not certain

Categories Total no. of respondents

Yes 40
No 50
Others 10

10%
40%
YES
NO
OTHERS

50%

Fig. -7 Profits are not certain

Interpretation: Future profits are not certain is considered by 40% from

The point of view of the respondents.
4.5 The process of decision are lengthy

Categories Total no. of respondents

Yes 45
No 40
Others 15

15%

YES
45%
NO
OTHERS

40%

Fig. -8 Lengthy process

Interpretation: Capital budgeting decisions are very lengthy process is

viewed by 45% respondants.
4.6 Involve high risk

Categories Total no. of respondants

Yes 30
No 30
Others 40

30%
40%
YES
NO
OTHERS

30%

Fig. -9 Involve high risk

Interpretation: The responses of the respondants is 30% in favor of

involvement of risk in capital budgeting decision.
4.7 Capital budgeting decision is a difficult decision

Categories Total no. of respondents

Yes 55
No 30
Others 15

15%

YES
NO
OTHERS
30% 55%

Fig. -10 Difficult decisions

Interpretation: 15% respondents are in favor of the difficulty in

capital budgeting.
4.8 Capital budgeting decision is easy to change

Categories Total no. of respondants

Yes 60
No 35
Others 05

70
60
50
40
30
20
10
0
YES NO OTHERS

Fig. -11 Easy to change

Interpretation: The responses of the respondants is 60% considered that

capital budgeting decisions are easy to change.
4.9 Process should be simple and easy to predict

Categories total no. of respondants

Yes 20
No 70
Others 10

80

60

40

20

0
YES NO OTHERS

Fig -12 Simple process

Interpretation: Only 20% respondants are responses that procedures of

capital budgeting decision should be simple and 70% are said that its
procedures are not very easy.
4.10 Require large amount of funds

Categories Total no. of respondants

Yes 25
No 35
Others 40

40

30

20

10

0
YES NO OTHERS

Fig. -13 Large amount of funds

Interpretation: Only 25% respondants are responses that requirement of

funds are large in the company.
CHAPTER-5

FINDINGS
AND
CONCLUSIONS
 FINDINGS

 Most of the respondents of JCB say that selection policy is linked to

productivity.

 Manpower selection has been rationalized by way of automation as said

by most of the respondents at JCB.

 Executives of JCB say that positions are clearly defined in the

recruitment process.

 Most of the executives of JCB say that they were in support of the
selection policy of their organization.

 In JCB selection policy is done by the support of the top management.

 In JCB most of the managers prefer personal interviews.

 CONCLUSIONS

The conclusion of the whole report is the capital budgeting is veryimportant part
of firm. Through capital budgeting, we find the budget of the firm. We find that
how much the firm invest in a particular assets, how we maintain the budget of
firm.

Emerging as a dynamic organization, focusing on strategic, seizingopportunities

for generating and building upon past success. My view about compensation
&benefits is that it is better descriptive statements of and ineffective behaviors’
varying from least to most effective. So, a rater must indicate which behaviors
on eachscale best describes an employee’s performance, But there are some key
areas which should be taken into consideration.

Thus, in short it can be said that budgeting decision are the beneficialpart of the
firm. It maintains the finance an to help in developing the firm.
 CHAPTER-6

SUGGESTIONS
AND
RECOMMENDATIONS
 SUGGESTIONS

 Carefully estimate expected future cash flows.

 Select a discount rate consistent with the risk of those future cash
flows.
 Compute a “base-case” NPV.
 Identify risks and uncertainties. Run a sensitivity analysis.
 Exists whenever enterprises cannot, or choose not to, accept all
value-
creating investment projects.
 Relax and eliminate the budget constraint.
 Manage the process rather than the outcomes.
 Develop a corporate culture committed to value creation.
 RECOMMENDATIONS

 Preference should be given to the most eligible candidate, irrespective of

whether candidate is internal or external.

 Preference should be given to the most eligible candidate, irrespective of

their sex.

 It should be suggested that the Company should pay the travel expenses
to the candidate.

 But with changing times and changing needs the policies should be
flexible.
 CHAPTER-7

BIBLIOGRAPHY
 Bibliography

Books
 Goel R., Financial Management, A vichal Publishing
company, Edition
2nd, 2011.
 Eugene F. Brigham, Fundamental Management, South
Esteem, Edition
2nd, 1998.

Websites

 www.ecel.com
 www.crisil.com
CHAPTER-8

ANNEXURES
 QUESTIONNAIRE

Question :1 Do you think capital budgeting decisions affect the

Profitability of the firm for the long time period?
Yes No Don’t know

Question :2 “Capital budgeting decision are the long term decision,” “Do you
think such decision are taken by any organization?
Yes No Don’t know

Question :3 Do you thing organization’s funds are invested in long term

Assets?
Yes No Don’t know

Question :4 “In capital budgeting decision, future benefits are not certain.”Are
you satisfied of these statement?
Yes No Don’t know

Question :5 Do you think capital budgeting decisions are the lengthy

procedures?
Yes No Don’t know

Question :6 Do you think capital budgeting decision involve a high degree of

risk?
Yes No Don’t know
Question :7 Do you think capital budgeting decision are the most difficult
decision which is to be taken by the firm?
Yes No Don’t know

Question :8 Do you think once capital budgeting decision are taken, it is

easy to change?
Yes No Don’t know

Question :9 Do you think the procedures of capital budgeting decisions

Should be simple or easy to predict?
Yes No Don’t know

Question :10 Do you think capital budgeting decisions require large amount
of funds?
Yes No Don’t know