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EXECUTIVE SUMMARY
In the field of management practical work plays a vital role, it is this practical knowledge which drives one to his or her ultimate desire. In the similar way company can achieve its ultimate goal only if it has sufficient service which contents prospective workers. Title of the project: Logistics Management in VRL Logistics Limited at Varur. This fruitful venture was accomplished by undertaking the study at VRL Logistics Limited, which is well known for its quality and in time service. The pioneer provides service in goods transportation, passenger transportation and courier service. The Logistics chain starts from suppliers or consigner, the strength of the chain would emerge from the relationship that are nurtured between the consignee (person to whom the goods are delivered) and transporter of each line and the flexibility would be a result of the transparency of communication, speed of reaction and the focus on core competence.
Need for the study:
To study the various aspects involved in the Logistics management. Objectives of the study: i. ii. iii. To study the various costs involved in the Logistics management. To the importance of warehousing in Logistics management. To know overview of freight movement.
The necessary information about the project was given by the company. Some of the study was depended on observation.
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Findings:
The effective pricing strategy of VRL Logistics Limited. The various kinds of services offered by them. The material handling in the Varur TPT. The capacity of the warehouse. The strategies of the VRL logistics Limited. Factors affecting road transportation.
Suggestions:
i. ii.
It should emphasize on warehousing facilities provided. Transhipment labours should be given sufficient training to handle the goods.
iii.
The company should build relationship with industries for more contracts.
iv.
TPT labours may be divided into three shifts for the efficiency. At present they are working in two shifts of 12 hours each.
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INTRODUCTION TO LOGISTICS
Logistics is a broad, far-reaching function which has a major impact on a societys standard of living. In a modern society, we have come to expect excellent logistics services, and tend to notice logistics only when there is a problem.
The difficulty in shopping for food, clothing, and other items if logistics systems
do not conveniently bring all of those goods or items together in one place, such as a single store or a mall. The challenge in locating the proper size or style of an item if logistical systems do not provide for a wide mix of products, colours, sizes, and styles through the assortment process. The frustration of going to store to purchase an advertised item, only to find out the stores shipment is late arriving. There are only few of the issues for granted which illustrate how logistics touches many facets of daily lives. Because of the magnitude of the impact of logistics on society and individuals, a macro approach is taken to understand the logistics management. Logistics is called by the many names, including the following:
Business logistics Distribution Logistical management Supply chain management Supply management
What these terms have in common is that they deal with the management of the flow of goods or materials from one point of origin to point of consumption, and in some cases even to the point of disposal.
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The Council of Logistics Management (CLM) describes logistics management as The process of planning, implementing and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to the point of consumption for the purpose of conforming to customer requirements. KEY LOGISTICS ACTIVITIES Outlined below are the key activities required to facilitate the flow of a product from point of origin to point of consumption. All of these activities, listed below, may be considered part of the overall logistics process. Customer service Demand forecasting/planning Inventory management Logistics communication Material handling Order processing Packaging Plant and warehouse site selection Procurement Return goods handling Traffic and transportation Warehousing and storage While all organization may not explicitly consider these activities to be part of logistics activities, each activity affects the logistics process.
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Warehousing costs Warehousing and storage Plant and warehouse site selection
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1. To understand the logistics management. 2. To study the role of infrastructure in logistics management. 3. To study various documents maintained while transportation of
goods.
4. To study manpower used and material handling in loading and
unloading of trucks.
5. To study various costs involved in logistics and steps to reduce
those costs.
6. To study the booking and delivery process maintained in
organization.
7. To study the importance of warehousing in logistics. 8. To know the potential for logistics industry in fourth coming years.
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LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR METHODOLOGY Its not only the data; it is the way in which we collect the data. So methodology is the sequence in which the data are collected. The tools for collection of data for the present project work are the primary data and secondary data. The information furnished in this report has been collected primary data as well as secondary data. The primary data is collected through the interaction with the managers, supervisors, drivers, and labours of the company. The secondary data has been collected from annual reports and company website.
INDUSTRY PROFILE
INDUSTRY OVERVIEW Healthy economic growth, rise in the production of key commodities, infrastructure investments and growth in import-export have led to growth in freight movement in the past 5 years, with roadways dominating freight movement on account of higher flexibility, reach and customer preference. Domestic freight transportation service (DFTS) refers to transportation of goods within India; Here the mode of transportation also mainly refers to roadways and railways, as they carry nearly 90 per cent of the cargo in volume terms. The domestic freight transport services may be characterized as a large growing sector. The size of the DFTS sector in India, comprising mainly transport by roads, railways, coastal shipping and pipelines is estimated at 1,590 billion tonne kilometres (btkm) in volume terms and at Rs. 1,990-2,010 billion in value terms in 2006-07. In volume terms, as per CRISIL Research it is estimated that the sector has grown at 10.5 per cent per annum during 2001-02 to 2006-07, whereas during 2006-07 to 2011-12, it is forecast to grow at 10.1 per cent per annum, and reach a projected size of 2,569 btkm by 2011-12.Going forward, given the buoyancy in the economy and expected completion of infrastructure projects, the overall freight movement is expected to remain strong. As a result, roadways will further gain market share, backed by its inherent advantages of flexibility and due to the growth in demand from redistribution segment.
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owing to its plus points such as greater coverage, higher flexibility and door-to-door delivery. The sector will enjoy the benefits out of its inherent advantages despite higher effective cost. Other factors like lower risk of handling loss, lesser loading and unloading of goods, investments made in the NHDP and relatively higher customer orientation as perceived by users also give road freight transport an edge. INTRODUCTION Transportation is the process of moving goods and passengers from origin to destination in the timely and cost efficient manner possible with the available modes of transportation. MODES OF TRANSPORTATION: In order to transport material from one place to another transporters have to use Rail, Road, Air, Water and Pipe Line as the modes of Transportation. A brier introduction to the various mode of transportation is as follows Rail: Used for delivery of a wide range of goods including coal, iron ore, cement, food grains, fertilizers, steel, petroleum products and other heavy goods. Road: Used by suppliers to deliver goods in a cost effective manner. Many transport companies have expertise for fast delivery, packaging etc. for making scheduled delivery.
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including gases. Due to quite low operating cost it is one of the preferred modes of
INDUSTRY CLASSIFICATION
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DRIVERS THAT INFLUENCE FREIGHT MOVEMENT The overall freight movement in the country depends significantly on the growth in industrial, agricultural production and imports. This is also reflected in the high degree of correlation (>0.99) between GDP (industrial plus agriculture) and imports (called adjusted GDP) versus freight movement during 1971-72 to 2006-07.Besides economic growth, the investments made in infrastructure of transport segments also are an important driver of freight movement in a particular mode of transportation. Even though economic growth is the most significant driver for freight movement in a broad sense, the extent of influence specific demand drivers will have on a particular mode of transport may vary. For instance, freight movement in coastal shipping mainly depends on the extent of import-export in the country, while, rail and road freight movement has been significantly influenced by the hub and spoke model of freight distribution.
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REVIEW OF FREIGHT MOVEMENT During 1991-92 to 2006-07, the total freight movement is estimated to have increased at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,990-2,010 billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted GDP during the same period. Further, when the adjusted GDP growth declined from 7.3 per cent in 1996-97 to 2.3 per cent in 1997-98, demand for freight movement also declined from 5.2 per cent to 4.4 per cent. Similarly, over the past years, while adjusted GDP growth increased at a CAGR of 7.3 per cent, freight movement during the same period has increased at a CAGR of about 10.5 per cent.
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DOMESTIC ROAD FREIGHT TRANSPORTATION SERVICE: Overview Going forward, given the buoyancy in the economy and expected completion of infrastructure projects, the overall freight movement is expected to remain strong. As a result, roadways will further gain market share, backed by its inherent advantages of flexibility and due to the growth in demand from redistribution segment. On the other hand, railways share will decline on account of capacity constraints, until the dedicated freight corridors are completed. In 2006-07, road transport services comprised nearly 58 per cent of the total freight share, followed by rail transport at around 32 per cent and coastal shipping and pipelines with relatively smaller shares of around 5 percent each. As per CRISIL Research roadways expects
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FREIGHT MOVEMENT: BULK VERSUS NON-BULK Freight movement can be divided into bulk and non-bulk freight. Bulk freight includes commodities like cement, fertilizer, food grains, POL, iron ore etc and non-bulk freight includes general cargo (increasingly containerized). In 2006-07, bulk commodities are estimated to have constituted about 70 per cent of the total freight movement. While 90-95 per cent of the railways freight constitutes bulk commodities, roadways freight is evenly balanced between bulk and non-bulk commodities, with the non-bulk commodities contributing 45-50 per cent of its total freight movement. Coastal shipping and pipelines largely move bulk commodities. Over the next 5 years, the share of non-bulk freight movement is expected to increase to 40 per cent of the overall freight movement, largely supported by road transport. While 60 per cent of the road freight transport is expected to be constituted by non-bulk commodities, the railways
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ROAD FREIGHT MOVEMENT: HAULAGE-WISE The road transport sector can be broadly divided into two areas, primary transportation that is, long haul (>800 km), medium haul (350-800 km) and short haul (50-350 km)] and secondary transportation (referred to as last mile distribution with <50 km). In 2006-07, out of the total primary road freight movement (estimated in btkm terms), long haul contributed close to 20 per cent, medium haul contributed over 55 per cent and short haul around 25 per cent. Railways have an upper hand over roadways in long haul movement of commodities mainly on account of its favourable cost economics (lower freight rates) and tie up with government undertakings for freight movement. On the other hand, road transport has been a favoured mode of transport in the medium haul, due to competitive and effective freight cost, fuel efficient vehicles, improved highway infrastructure etc.
INHERENT ADVANTAGES INFRASTRUCTURE SUPPORT GIVE AN EDGE TO ROAD TRANSPORT Historically, railways has remained a dominant mode of transport in India, over the past few decades, roadways has gained a significant share in the overall traffic movement, while railways has lost its market share. The reasons that have helped roadways gain market share are as follows: Greater coverage as compared to any other mode of transport Higher flexibility in terms of door-to-door delivery, giving it an edge despite higher effective cost
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Investments made by the government in the NHDP. Given the above-mentioned advantages and growth in road infrastructure, the road transport network has acquired a considerable advantage over a period of time. This is evident from the fact that during 2001-02 to 2006-07, while freight demand in road transportation sector is estimated to have grown by 12.3 per cent, the growth in the overall road freight movement was about 10.5 percent, and the growth in rail freight movement was just about 8.5 per cent. Consequently, over the past few decades, the share of road transport in the total freight movement has also been increasing; this share has been estimated to increase from 53.3 per cent in 2001-02 to around 57.8 percent in 2006-07, supported by strong economic growth, inherent advantages of roadways and initiatives in infrastructure development. (It may be noted that this share of road excludes last mile freight movement).
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VRL OPERATION
VRL LOGISTICS LIMITED
Goods Transportation
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Express Cargo
Maruti Parcel
General
Carriers
Road Rail
Parcel
Air
Goods Transportation and distribution business is carried across 17 states and 7 Union Territories i.e. Pondicherry, Daman, Silvassa, Chandigarh, Karaikal, Yanam, Mahe covering 649 cities through out India. They cover the states of Karnataka, Andhra Pradesh, Tamilnadu, Kerala, Maharashtra, Goa, Gujarat, Rajasthan, Punjab, Haryana, Delhi, Himachal Pradesh, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, West Bengal (Kolkata) and Uttarakhand under this business. Passenger transport business is carried on under the name of Vijayanand Travels. They carry on this business within the state of Karnataka, Maharashtra and Tamilnadu covering 56 cities in all. They have 40 branches and 466 franchisees across the states of Karnataka, Maharashtra and Tamilnadu for their passenger transport business.
The fleet strength as on February 29, 2008 comprises of 2,683 vehicles, all of which are owned by the Company. The fleet comprises of 2,446 vehicles for goods transportation, 197 vehicles for passenger travels and 40 vehicles for internal use which includes fork lifts, cranes, staff buses, water tankers, diesel tanker, tractors etc. Wind power generation: In 2006 VRL Logistics commenced wind energy business in southern India at Kappatgudda, Gadag district in the state of Karnataka. Company had issued various purchase and work orders to various Suzlon entities for the supply, commissioning and erection of 34 Wind Turbine Generators (WTGs). As on date all the 34 WTGs are operational. These WTGs are presently under warranty period which expires on March 31, 2008. Operations and maintenance of windmills are been taken care of by Suzlon Energy Limited by a team of experts at the site.
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COMPANY PROFILE
VRL LOGISTICS LTD VARUR, HUBLI
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BRIEF HISTORY OF THE COMPANY The Managing Director Mr. V, B, Sankeshwar started as an individual transporter in January 1976. Without any background and experience, initially for the first two years he suffered heavy losses, and then by end of 1977 he started as a local transporter between Hubli and Gadag. In 1978 due to personal management and effective service he purchased one old lorry and he observed activities of other well known transporter, and started first parcel service from Bangalore to Hubli, Garage, and Belgaum. With only two Lorries gradually business picked up. Similarly Smt Lalita .V. Sankeshwar purchased one old lorry in the year 1979 and running individually and some times hiring out to Vijayanand Road Lines which was proprietary concern then, company came in to existence effective from 31st march 1983. Due to efficient management and co-operation from the staff the total turn over and business picked up.
The above proprietorship firm was converted into a private limited company and sold its lorries to the company and the company came in to existence effective from 31st march 1983. Since then, the business has grown leaps and bounds and VRL LOGISTICS LTD is presently engaged not only in the goods transportation business but in the passenger transportation and courier business. VRL LOGISTICS LTD today is the leader in the parcel transportation business in India in fact the only organized segment player with a clear focus on the parcel segment- and has an extensive network of more than 800 branches throughout the country. VRL LOGISTICS LTDs revenue for the year ending March 2008 is 2750 million; the company got 81% of its revenues from goods transportation, 18% from passenger transportations 1% from other source.
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COMPETITIVE STRENGTHS
An established brand having a good reputation:
They have built a brand over two decades, owing to their commitment to quality service standards, reliability and timeliness of services offered and long-standing presence in the industry. They have a long operating track record in the industry. They have expanded their service offerings over the years; having commenced operations with parcel cargo transportation, they presently offer other services such as express cargo, courier and passenger transportation. They provide several luxury offerings in passenger transportation business. They also share good relationships with their business associates such as truck manufacturers and equipment manufacturers who are very critical to the business.
Large and established size and scale of operations:
There are a multi-service transport and logistics provider with their presence in 17 states and 7 Union Territories in India. They offer a wide range of services such as parcel cargo,
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The large fleet size provides them multiple benefits like ability to provide the services in larger number of routes, better margins on consignments, less dependence on hired vehicles, and reputation for reliable delivery of the consignment / passengers in a timely manner. Also the variety of vehicles fleet enables them to service the diverse nature of consignments of their customers and requirements of their passengers.
Long operating history in the transport and logistics business:
They have an operating track record of over 24 years in the transport and logistics business. The chairman Mr. Vijay Sankeshwar, who has been actively involved in the business and management of the Company enjoys over three decades of experience in the transport industry. They have extensive experience in the transport and logistics industry enables us to gauge and understand the changing trends and growth prospects in the industry. They have always believed that there is a growth potential in the transport and logistics industry. During 1991-92 to 2006-07, the total freight movement is estimated to have increased at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,990-2,010 billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted GDP during the same period.
Strong In-house capabilities:
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They believe that employing and retaining individuals with experienced backgrounds has enabled us to capitalize on their collective expertise in understanding this business and ensuring its growth. They are led by a management team with sound experience and expertise in the transport and logistics industry. The promoters are actively involved in management of the business operations. The Chairman and Managing Director, Mr. Vijay Sankeshwar, has over 3 decades of experience in the industry and provides the strategic direction to the operations.
They offer a range of services that are complementary to each other and thus constitute a unique business framework. They have adopted a hub and spoke distribution model for delivery of their consignments, which entails establishment of several transhipment hubs and re-distribution of consignments there from to the respective destinations. This ensures significant cost savings, rationalization of routes covered by the vehicles and optimum utilization of resources including vehicles, manpower etc. They have 43 transhipments hubs, 799 owned branches and 1387 franchisees, which enables the smooth flow of goods and
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CURRENT POSITION
The company currently is on a growth path having achieved a turnover exceeding Rs 2,750 million for the year ending March 2008. The company has the largest network of branches among all transport companies in south India with over 1000 branches in Karnataka, Tamil Nadu, Andhra Pradesh and Kerala. The company currently owns 2479 trucks and LCVs, 222 buses and regularly hires additional trucks from the market to render its services. This makes the company the largest individual owner of vehicles in India giving the company additional flexibility in its operating margins higher than other players in the organized transport industry. The company is known for its reliable quality service during its operation for the last two plus decades. VRL is an established brand name and this enables the company to charge premium rates to its customer. Turnover of Logistics division increased to Rs.51258.80 lacs in the current year registering on increase of 17.20% over turnover of FY 2006-07. Express Cargo which is part of logistics has achieved considerable operational success to reach turnover of Rs.2663.69 lacs in FY 2007-08. The Turnover details are as below.
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From the above figures we can say that there is steady increase in the growth of the turn over of the company. Within 25 years company has focused towards its Goals.
VISION To become the primer company that cuts across various segments and remaining as the torchbearer of each segment that the group venture in to.
MISSION To provide the highest quality service to our customers by continuously increasing cost efficiency and maintaining delivery deadlines. To encourage our employees /workforce to strive for quality and excellence in everything they do. To promote team work and create a work environment that takes care of talent and brings out the best in our employees.
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LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR THE VALUES PUNCTUALITY, INTEGRITY, HONESTY, LOYALTY AND CREDIBILITY
THE QUALITY POLICY We are committed to provide Quality Logistics services consistently at reasonable price and to continually improve the same to achieve customers delight on a sustainable basis.
OBJECTIVES OF THE COMPANY The main objective of the company is to provide good service to customer with the reasonable rate and provide quick prompt and safe service. To develop the transportation business in states like Andhra Pradesh, Tamilnadu and Kerala.
To have fixed-assets mainly own storehouse in big cities like Davanagere,
Gulbarga, Bangalore etc. To have an independent own building with printing machines &computer for each &every district. Training for all the employees. Quick and safe service. Customer satisfaction. Competitive price. Attain market leadership.
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CENTRALIZED BUILDING / LAND IS UTILIZED FOR THIS PURPOSE Head office Building. Transhipment godown. Work shop for existing vehicles. Canteen facilities for employees. Drivers rest room. The company has own petrol bunks Indian Oil Corporation.
Effluent treatment plant with capacity of 1, 75,000.
Rain water harvesting plant surface rainwater harvesting. Surface rain water harvesting. Roof water harvesting.
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SHIFT FROM UNORGANIZED SECTOR TO ORGANIZED SECTOR Currently, it is estimated that the unorganized sector accounts for over 86% of the goods transport in the country. With the introduction of VAT, significant shift of the business is expected from the unorganized sector to the organized sector (given that sales tax evasion is no longer an attraction under the VAT scheme) and VRL LOGISTICS LTD is well poised to take advantage of this shift with its wide network and the image of being a reliable service provider. Leadership position with revenue in excess of Rs 51258.80 lacs from the Logistics division for the year ending March 31, 2008, the company is a leader in this segment, in fact, the only organized sector player with a distinct focus on the parcel segment. The companies further hopes to consolidate the position in this segment by increasing its thrust on marketing and establishing further stations across India to increase its reach. With the largest reach in south India, the company has a well established network of branches enabling, procuring and distribution of goods across south India. The company currently has in excess of 350 branches in Karnataka, Tamil Nadu and Kerala making it the transporter with the largest reach in south India. Needless to say the impressive reach of VRL
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BOARD OF DIRECTORS
Sri. VIJAY SANKESHWAR (Chairman and Managing Director)
Has ardent faith in transparency to the core. He is a cut throat business entrepreneur and a technocrat, highly professional in finance and accounts, legal and personnel, advertisements and in circulation or marketing.
Sri. ANAND SANKESHWAR (Managing Director of Vijayanand Logistic
Ltd)
Sri. L. RAMANAND BHAT
He is the brain behind the entire computer system, heads the entire activities of the workshop and garage for maintaining the bodybuilding of vehicles.
Sri. K. N. UMESH
Heads the entire cargo transport activities of the southern and northern parts of the country with HQ in Bangalore.
Sri. D. N. KULKARNI
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ORGANIZATION CHART
K.N.Umesh CEO
L.R.Bhat CTO
V.V.Karmadi VP (Operation)
D.N.Kulkarni VP (Finance)
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S.R.Hatti GM (Administration)
Y.M.Hannalli GM (Infrastructure)
C.M.Baluthi GM (MPC)
Legal department Complaint department Maintenance department. H R Department (Personal Department) Account and finance department Garage Department Commission department Service department
Information Technology
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Legal department is one which plays most prominent part in the company. It focuses on all the legal aspects concerned to the company. It functions positively towards the success of the VRL LOGISTICS LTD group of companies.
Industrial disputes include strikes; lockouts are settled under industrial dispute act. Thus settlement of these disputes is one of the activities concerned with trade unions. Settlement of workmen compensation
This compensation, under workmen compensation act include accidents, matters related to gratuity pension etc are settled provided accidents to employees on job.
Settlement of accidents claims: In case of accidents are losses to the vehicles of VRL LOGISTICS LTD of
companies occurs then compensation can be claimed by this department. To avoid illegal activities in the firm:
Illegal activities such as theft, robbery within premise are avoided thus this department is created. Advice the departments in firm This legal department acts as an advisor for the different department of the firm concerning with ethics, Social obligation towards the public. Suit against debtors Customers are given maximum period to clear the debt. If the positive response is not given first notice is sent. That is within 30 days and second notice within 90 days and
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Suit against bounced Cheque: Customers paying by the cheque if return by bank when there is no enough
money in an a/c for it to be paid then the company has right to the customers for such as act. Settle legal charges. It is the responsibility of this department to pay all legal charges charged by the court/govt.
Complaint department Here is department to handle and settle the customer complaints, this department takes care of customers to keep up their interest in the companies service problem of customers will be handled efficiently and settled properly of their satisfaction. Complaints settled by this department are Delays
Delay caused in delivering of materials to destination point. Delay due to delivers negligence inconvenience etc. Settlement When the customer complaints about delay in delivery of goods with LR no enquiry will be made from destination point about the undelivered goods. And the date of right delivery date will be given. If any loss is caused to customer due to delay, such loss is compensated based on value of goods.
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This is one complaint that customer may complain. Sometimes the goods may be misplaced by the consignor unknowingly. So the customer is not in a position to receive the goods. Therefore the above complaint is placed. The company takes back the goods from wrongly delivered consignee and redelivers to the right consignee. Road robberies, fire theft etc
The goods are undelivered to the destination point due to robberies fire theft etc. If the goods are lost during transit, short certificate will be issued to customer until the goods are traced. If fail to trace, loss is compensated on the basis of value of goods on certain condition.
It is a point at which goods consigned will be stored when consignee fails to take responsibility of these goods that is when goods consigned reach the destination, point and fails to take delivering consignor. When they fail to respond the notice, goods will be sent to and stored in demurrage collection point. The notice inform them to take delivering of the goods consigned and settled and unclaimed charges if any generally. 3 notices will be sent first 30 days, second 90 days, and third 120 days. And a notice will be sent from demurrage collection point. When goods are about to sell through auction. Booking place Destination (delivery point) 1st notice 30 days 2nd notice 90 days 3rd notice 120 days
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Department
Maintenance department and House Keeping Department It means maintenance of various vehicles which includes bus, lorry and other goods carries. At present there are 2686 vehicles which include Volvo buses, luxury, buses, lorry, mini bus etc. Functions of Maintenance Department: Centralized purchasing Repairing the vehicles Complete body building of vehicles Changing of oil clutches as per the schedule for precautions. Hiring the lorries on the buses of locality and demand
Maintenance of drivers accounts i.e. payment of salary to drivers,
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Account and Finance department Significant of Accounting Policies. Bases of preparation of financial statement The financial statement are prepared on the historical cost convention basis in accordance with the generally accepted accounting principles and they accounting standards referred to in section 211(3C) of the companies act 1956 except otherwise stated. Revenue recognition: The company generally follow mercantile system of accounting expect on claims which is a counted on cash basis. Fixed assets Fixed assets are started at cost of acquisition construction except in certain fixed assets. Which has been revaluing less depreciation? All cost relating to the acquisition and installation of fixed assets are capitalized and include borrowing cost the assets is put to use.
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Taxation Provision for current tax is made and retained in the accounts on the basis of estimated tax liability as per the applicable provisions of income tax act 1961 and considering assessment order and decision of appellate authorities in companys case. Goods and passenger transport business are subject to various taxes, which may significantly affect profits. VRL is exposed to various taxes imposed by the State and the Central government which include Wheel Tax for seater and sleeper buses, Inter State Transportation Tax for buses operating between two states and service tax which are levied upon private operators. The rates of these taxes have steadily increased in the past three years. For example, the Wheel Tax which is payable by a private transport operator has increased from Rs. 3,300/- per quarter in fiscal 2005 to 43.03% Rs. 4,720/-, in fiscal 2007 (per quarter), for sleeper busses, and, Rs. 750/- in fiscal 2005 to 200% Rs. 2,250/-, in fiscal 2007 (per quarter), for seater busses. As they plan to expand their services and enter different states, they may be exposed to different tax regimes in different states, which may adversely affect profitability. In goods transportation they pay tax to the municipal corporation which is called as octroi. They pay octroi in Maharashtra, Andaman and Nicobar, and Manipur. If the octroi is
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H R Department It is heart of VRL LOGISTICS LTD group. It is department where matters relating to recruitment, settlement of grievances etc taken place. A well experienced person any manager of personnel department looks it after. Its activities are spread out over large area, some are: Training Employment Well force of employees Facilitating for provident fund gratuity Facilities of ESI Matters relating to leave, salary, bonus etc Improving employer employee relation Providing facility to relating employer or by termination
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To minimize the operational errors To establish a sound relationship between worker and his job To increase employees moral and confidence.
Importance of Training Better quality work; if the training (formal) is provided with the best methods and standardized norms, then it will help to improve the quality of service. Trained employees will do less operational mistakes and perform the work effectively. Less learning period; a systematic training program helps to reduce the time and cost involved in learning. Employees can easily reach the acceptable level of performance. They need not waste their time and effort in learning through trail and error. Higher productivity; as training improves the skill and knowledge of employees increases which helps to increase output have quality and quantity. Cost reduction
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STAFF SELECTION IS ON THE BASES OF CERTAIN COMPANY RULES AND REGULATIONS Employees who complete 5 years in the company get gratuity funds and insurance facilities. VRL LOGISTICS LTD implemented these schemes for all employees Pension schemes are based on salary + dearness allowance at the rate of 12% from employees salary matching amount is also contributed by the company and deposited in the account of employees...There has not been a single instance of labour unrest. This is due to the strong employee-employer relationship and various. Welfare ensures adopted by the company such as provident fund, educational benefits, gratuity scheme, medical reimbursement, pension scheme, maternity benefits. The company has introduced various novel schemes like payment to drivers based mileage driven by them. Even the labour and drivers of the organization are given benefits of ESI/PF etc.
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GARAGE DEPARTMENT
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considerable saving by way of excise duty and central tax by virtue of VRL LOGISTICS LTD activities having taken up all acts its on own.
Information Technology The information technology division is located in the workshop in Varur. This division oversees the information technology requirements of Company including the computerizing of their branches, hubs and offices. The computerization of hubs has facilitated mailing of delivery reports and quick flow of information between different offices, delivery offices and transhipment hubs of the Company. This enables effective coordination and tracking of the consignment.
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entire fleet and generates reminders and alerts automatically when any maintenance events become due. These reminders help in avoiding the premature failure and the excess consumption of parts.
Vehicle Traffic Application: This application controls the entire movement of the
vehicles and keeps track of the drivers performances in terms of the fuel average and the distance travelled. This also tracks the advance amount paid to the drivers and the diesel vouchers issued for en route fuelling. This application is online and ensures access to this data from any part of the world.
Consignment Delivery Application: This application is used in delivery branches to
raise online cash receipts and track the consignment. This application also maintains a record of the stock in the Companys godowns and is used to answer queries from the customers regarding the arrival of consignments. The records of stock and the delivery particulars are updated every 24 hours.
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booking branches and dispatches them to the final destination and some times reroute to other hubs.
On line bus ticket booking system: This application is hosted online on the web
server and all agents and passengers log on to this application for booking passenger tickets.
Accounting package: This application consolidates all accounting programs and
take remote access of any computer system linked to the network. This facility is used for monitoring the operations of the employees and also for conducting training sessions for employees in remote locations.
SWOT ANALYSIS
STRENGHT None regulated industry: Since, it is a courier service industry it needs no license to enter this industry, it is a non control industry. High entry barriers: The courier companies have to make a lot of investment in establishing a national network and for it the requisite, infrastructure and technology has to be set up. This
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WEAKNESS Dependent on economy scenario: In the mid-80 the Industry grew at a rapid rate. This growth rate was sustained in the 90s but with the revival of the economy and the greater reach of major players in the segment, the industry is expected to ground at an increasing rate. Have to face the bureaucracy: Express companies like other multinationals have introduced new technology and standards PF efficiency into India, The major courier companies, which have tie ups with international giants are facing problems with bureaucratic setup in India
OPPORTUNITIES Value added services: The courier companies endeavour to add to the products of their customers to differentiate themselves from their competitors. Backward integration: The companies cease to be dependent on others for the service they need and have integrated backwards; this is explained by the huge distribution network and the number of vehicle owned by these companies.
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THREATS Economy showdown: Being driven by the general economic scenario there is always the threat of it being affected by showdown in the economy. New technology: The company also needs to be constantly in touch with the latest technology to help them provide the best service possible; today a thing like tracking are fairly common and has become a norm.
The Transport and logistics Business is divided into two segments:1. Goods Transportation 2. Passenger Transportation
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GOODS TRANSPORTATION VRL Logistics, goods and logistics services include Full Truck Load, Less than full truck load (Parcel) and courier service. Less than full truck load is further divided into express cargo and general parcel service.
Kg, Medium Commercial Vehicles (MCV) with a gross vehicle weight between 7500 Kg and 12,000 Kg, Heavy Commercial Vehicles (HCV) with a gross vehicle weight of more than 12,000 Kg,
Trailers with carrying capacity up to 49 tonnes
Small vehicles for internal use like collection and delivery of goods in the cities and towns.
All these 2479 vehicles are owned by the company. However, in peak seasons company also take vehicles on hire for transporting goods. This ensures that customers are not put to any inconvenience. Therefore, last minute bookings are usually not turned away.
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FULL TRUCK LOAD Under full truck load, they provide door to door service to the customer, wherein the goods are loaded at the premises of the customer and are delivered to a certain delivery point as specified by the customer. Here the customer hires full truck for transport of goods from one location to another. This service is used by customers / manufactures who have large quantities of goods to be transported. This service is offered to the customer at a pre determined price. In this the whole and sole responsibility will be on the driver only. He only has to react to the negotiations of the customers. In full truck load price will be determined on per tonne base. Now the price is 3020 Rs/tonne. Here the driver will be provided with three water proof covers to provide good service to customer. Before rise in the fuel prices the full truck load service was available for 2900Rs/tonne. Some of the organizations which take help of this service are
West coast paper mill Dandeli. Kalyani steels Ltd. Sri Renuka sugars Munavalli. Bell ceramics for clay transportation Omkar purified water Ltd Vijay Karnataka Paper Industry All pharmaceuticals situated in Hubli, Belgaum, Bijapur and Banglore
etc.
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The company provided this facility to transport mines from Hospet to Manglore which was then exported. This service was dropped as it was not profitable. To trace the misuse of full truck load organization takes help of certain weighbridges situated in different places.
LESS THAN FULL TRUCKLOAD (PARCEL) Less than Full Truckload service is categorised into two categories; parcel and express cargo. Under Less than Full Truckload the customers do not hire the entire truck.
GENERAL PARCEL VRL Logistics provides general parcel services in 17 states, 7 Union Territories covering 649 cities in India. The parcel business is not a time bound service. However the company aims at faster deliveries to enhance customer satisfaction. Booking of the parcel is done at booking office, and then sent through one or more transhipment hubs. At each of the transhipment hubs the goods are segregated and finally delivered to delivery office. The customer then collects it from delivery office. However in case customers demand, they provide door to door also on extra charges. If the parcel is not collected by the consignees from their branches within the specified periods they collect demurrages charges and also send reminders to the consignor and the consignee. In case such reminders are not responded to within the specified period they intimate the customer that the consignment is sent back to head office at Varur. If the parcel is still not collected within the time specified in the intimation letter, a notice of auction is sent to the consignor and consignee, after which the consignment is disposed off in accordance with the notice.
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On the basis of weight: Min weight considered is 40 kg i.e. if the weight of the consignment is below 40 kg then also it will be considered as 40 kg only. Freight also varies according to distance it has to cover. For example: to transport the parcel of 7 kg from Dharwad to Banglore the company charges 60/- Rs
On the basis of space: For determining the rate the parcel is weighted at the booking house on the bases of CFT. The organization considers 1 CFT = 10kg. CFT=Length*Breadth*Height/1728
Example: For the container of 18 ft length, 8 ft width and 7 ft height CFT is calculated as CFT=18*12*8*12*7*12/1728 kg =1741824/1728 kg =10.08 kg =10 kg
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If the CFT cannot be measured, rate is charged as per the weight and distance. After determining the rate, the WAYBILL No. Is marked or labelled on the goods. The goods are then forwarded. Competitors: In Karnataka a. b. c. d. Ghatge Patil Transportation Ltd Prakash Roadlines DHL Deluxe
MARUTI PARCEL CARRIERS Maruti Parcel Carriers (MPC) is one of the goods carrier divisions which operate independently under its own name Maruti Parcel Carriers. Under this they provide services from booking office to delivery office without routing it through the transhipment hubs. MPC offers its services in the state of Karnataka covering 17 cities in all. MPC has a total network of 25 branches. Currently it has two booking centres one at Bangalore and other at Hubli. Rest of the 23 branches act as delivery offices. Parcels are collected from the booking centres and transported to various delivery offices.
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SHIVA ROADLINES Shiva Roadlines was started in the year 2003 as a separate division by the company. Shiva Roadlines provides service only in the state of Karnataka covering 6 cities. Shiva Roadlines has 6 owned branches. It provides door to door services without routing it through transhipment hubs. It carries goods weighing more than two tonnes only.
"Anywhere Anytime"
Delivery on time zero excuses. This mantra is driving force behind the success of VRL Express Cargo. Surface, Train & Air Cargo mode services. Dedicated Company owned vehicles. Door pick-up and door delivery. On-time delivery. Online track & trace facility. 24X7X365 days operations. Dedicated & well-groomed customer care windows. Extensive nation-wide network.
The express cargo business of company is done on a door to door basis and in a time bound manner using road/rail/air as a mode of transport. The express cargo business was initially started for booking and delivery of goods within Karnataka; however today express cargo service is available in 17 states, 7 Union Territories covering 649 cities in India. Express cargo mainly focuses on the requirements of their corporate customers who want time bound deliveries of goods to their various locations. The company charges higher freight amount towards the transportation of goods under this service. Company transport a substantial part of
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Under this category the charges will be 4 times than the general parcel. In this service the company uses two drivers to provide quick and safe service. There will be time bound for the drivers. If drivers are late then penalty will be paid by them.
Capitalising on the synergy of their transport network that connects all over Karnataka, they are into Courier Services focusing on delivering documents and small parcels in a time bound manner. Storing & dedicated Operating Team.
Time Bound Delivery with an Emphasis "On Time Every Time".
VRL LOGISTICS LTD started courier services in the year 1992, which marks the beginning of courier services in company. The turnover of courier service was Rs 4 corers per annum in the year 2007-08. It has become famous at the national level. But on July 17, 2007 it has reduced to only Karnataka.
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Charges for courier service: For one dock of 250 Grams: 10/-Rs For 1 kg the charge will be: 20/-Rs 250 Grams is considered as the minimum weight. Above 250 Grams and below 1 kg is considered as 1 kg only. This dept is having its branches and agencies in various cities. The branches are maintained by the organization only. The agents have to deposit certain amount in the favour of the organization. The agents in Bangalore city deposit 20000/- Rs and in other cities 10000/-Rs are deposited.
LIST OF DAILY CUSTOMER OF COURIER SERVICES IN HUBLI ICICI BANK STATE BANK OF INDIA WEST COAST PAPER MILLS Other daily customers.
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1) 2) 3) 4) 5) 6)
DTDC Courier service. Professional couriers. Teja courier. First flight courier Parkash courier. Other couriers
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DRIVERS Drivers are the life & blood of VRL Logistics Ltd. Wages & salary is given to drivers is on per km basis1Km = 70 paise. The drivers have to cover 40 kms per hour. Driver are also hired on fixed salary basis Rs. 1,950/- per month For Long distance journey Double Drivers Single Driver - 400 Kms 40 paise per km - 400 Kms 70 paise per km
Facilities for drivers 1) salary 2) organization 3) Provident fund- all drivers are enjoying this facility. Employee have to Education allowance all the drivers are also provided with education allowance. House rent allowance is given to drivers. This allowance is given at 20% of the
This facility is given only to that person who has completed one year of service in the
contribute 12% towards provident fund & the employer has to contribute the same amount 4) Employee state insurance- employees are contributing 1.75% of their basic
salary & DA. Employer is contributed 4.75% of the total salary paid by them. 5) Gratuity- This is available to only those who has completed 5 year of services.
Company also provide various types of incentive schemes to truck drivers besides the fixed amount paid to them for their services.
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one trip and accordingly the incentive is provided to them Company has also started the Loss Recovery levied for late service if the vehicle reached the fixed destination after schedule time. They charge their driver very minimum amount depends on how much hour taken for delay. Terms and conditions The company does not take the responsibility of leakage, shortage damage to goods by rain sunlight, other cause beyond its control Crockery, glasses & other delicate items are booked at the absolute risk of consigner. The company shall not be liable for wrong deliveries if the addresses not mentioned exactly.
The court in Hubli along shall have the jurisdiction in respect of all claims & matters
arising under the consignment. The company has the right to reweightment at the destination & collection before delivery such amount that have be omitted or under charged.
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a) CONSIGNOR COPY: In Consigner copy booking staffs write in consigner copy who has booked the documents and in another consignee section of the consignor copy write who will receive the document or its destination and write amount, date signature, declarations in consignor copy. It contains consignors Name and address. Phone number Amount Value of consignments Charges Weight of parcel or document TERMS AND CONDITIONS OF CONSIGNER COPY: The customers after entrustment of documents or cargo or goods to VRL LOGISTICS LTD Courier division for carriage or transportation shall be deemed to have accepted and agreed to the terms and conditions and specified as standards conditions of carriage. 1. 2. 3. etc. All documents or covers or envelopes letters are accepted for transport by air, road, and Nature, contest, conditions and values of consignment are unknown to the company and Consignor or consignee shall be responsible for any delay, detection, loss or forfeiture of railways. carriers are packed by owners and are at OWNERS RISK. goods by any government authorities due to wrong declaration to contest or improper documents
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(paper or coin) of any nationality, lottery ticket and contraband items. break-down, accident, fire, riots, strike, theft, flood, rain, sun and other natural calamities which are its beyond its control.
6.
The company shall not in any case be liable for consequential losses such as loss or profit,
interests, market and utility, VRL LOGISTICS LTD. Disclaims all warranties expressed or implied with respect to this consignment for any loss, shortage, damage or unfair seen delay, in the carriage. 7. 8. 9. No complaints or enquirer will be entertained after 15 days from the date of booking. No agent, servant or representative of company has authority to after modify any The court in Hubli City alone shall have jurisdiction in respect to all disputes arising
b) CONSIGNEE COPY (RECEIVER) This copy gives to receiver of the parcel. That addresses mention in consignees copy.
THE CONSIGNEE COPY (RECEIVER) CONTAINS It contains consignors address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document. Receivers signature.
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c) PROOF OF DELIVERY COPY (POD) This copy gives to receiver and takes his signature and that come back to booking office and will give to person or company who have booked the parcels (consignor) It contains consignors address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document.
d) HEAD OFFICE COPY (HOC). This copy is for head office reference It contains consignor and consignee address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document.
TRIP SHEET This copy is prepared in triplicate. It contains courier LR number, receipt number, weight of consignment and content of consignment. Number of pieces, source of origin & source of destination. It is prepared in order to know the places from where the cover is sent & to which place it is to be sent.
DELIVERY SHEET Delivery of articles is done by delivery post. Particulars of delivery of articles are written in delivery sheet. It contains the details of branch office, consignee name, original place, consignee note, time, date & signature. Also if the booking party is a company seal should be taken from the company.
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ACCOUNTS Booking statement is prepared for accounts purpose single entry system is maintained here. They have a book system as well as computerized system booking statements contains C/N number, weight destination & amount of consignment, branch and date. DEBIT VOUCHER It is a voucher where any expenditure made by the staff is maintained. It is attached to cash statement & sent to the head office to claim the amount. CREDIT VOUCHER This is the voucher which is given to the sub branches or agencies while submitting the accounts, the issue booking statements along with total amount to this branch COMPLAINTS REGISTER It is a book where entry of customer complaints such as late delivery, misplacement, improper courier is noted. NON DELIVERY BOOK It is a book where non-deliveries are noted is case of door locks, shifts, transfers; incomplete address or party refusal parcel is brought back. Entry is done in this book.
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The price charged by the Company for transporting parcels is determined on the basis of the weight or volume of the goods and the distance of the delivery point. They have three types of payment mechanisms in their parcel and courier business:
i.
Paid:
Under this system, the consignor pays the charges to the Company at the time of booking the consignment. This is the most common mechanism of payment and this enables us to receive the revenues immediately.
ii.
To Pay:
Under this system, the consignor does not pay the charges at the time of booking the consignment but the consignee is required to pay the same upon collecting the consignment from the office.
iii.
Running Account:
Under this mechanism, the consignor does not pay the charges to company at the time of booking the consignment, nor is the consignee is required to pay the same upon collecting the consignment. Company provides its services on credit and keeps a running account of the charges the consignor / consignee is liable to pay, and the consignor / consignee is required to make payment against the running account on a weekly / monthly basis. This facility is only extended to selected high-volume regular customers.
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Booking section
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Working of the Booking section The goods to be transhipped are booked as per the instruction of the customers at the booking office and according to the goods forwarding note is prepared. The customer has to fill the goods in forwarding note. The transhipment company verifies the goods according to forwarding note. After the goods forwarding note is filled by the customer marking at goods is done. The marking of goods is done by the clerk in the booking office on it can also be done privately by consigner. The invoice number, and marking number, is included in goods forwarding note. On the basis of forwarding note way bill is prepared. It is bill containing information regarding the consigners name, consignee name, date of delivery, nature of material weight, type of packing & freight. It is prepared by booking clerk. For convince and documentations, four copies of way billing prepared. They are
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Vehicle and accounts section This section basically deals with load management as well as with some of the miscellaneous accounts. Where the vehicle in charge has to perform the basic function of tallying the total market load that is with them in accordance with the availability of trucks, normally there is a deficit in the availability of trucks, which is fulfilled by hiring trucks from outside.
He has five people working under him. Of these one person handles the cash and accounts for advances given to the drivers which are in turn handed over to the drivers account section. There are three persons looking after vehicle maintains. If the vehicles are in need of some heavy repairs, they sent it to the work shop or else the minor repairs are handled then and there. The last person is meant for the miscellaneous works like collection, booking outside trucks and any other routine work. Delivery Section All the goods collected at different booking office are to be transported are all bought to the transhipment point. These goods are then separated, sorted and according to destination to which they are to be sent. These goods are then sent to their respective destinations and the delivery offices in that area unloads the goods and delivers to the consignees. For goods more than two tones or hundred cartoons boxed, there is availability of free door delivery. Working of Delivery Section When the goods are received from the booking offices they are classified in two ways.
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In this case a receipt is prepared acknowledging the payment. The consignees seal and signature is taken behind the copy of the receipt as a proof. On delivery the name of the person taking delivery, quality and L.R. no. is recorded for future reference. The delivery office stores the goods for free for a maximum period of thirty days in case of regular customers and twenty days for others. After this period a notice is sent to the consignee to collect his goods. If fails, another notice is sent after sixty days. A last notice is sent after ninety days. If he fails to do so again the goods are sold and the amount is adjusted. But in case if the goods are collected after the first notice or the second demurrages are collected. Some of the documents used by this section are Cash receipt book Daily delivery and stock report Inward statement Short/Excess book
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Short/Excess Section While loading the goods some times the goods are loaded in excess or may fall short this will be at their destinations when verified. In case the excess goods are not claimed, these goods are sent to the search and found department at Gadag. If the goods are sent on to pay basis and nobody claims, the company has a right to sell the goods and make good its loss.
Working of the Transhipment Point The materials that come from the booking offices are verified according to the trip sheet, which is sent by the booking office. Then the materials are unloaded. The next step is to prepare the unloading report. Materials are sorted according to there destinations.
Materials are sorted according to their destination in proper section provided at a
Transhipment point. Materials of one destination are loaded in a single vehicle. All the required documents are maintained by the respective departmental heads.
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Under the Hub and Spoke system, VRL transhipment yards act as hubs and the various booking and delivery offices act as spokes. The hub acts as a connector between the booking office and the delivery office. The hub receives the booking consignments from various branches, which are segregated, based on the destination and then dispatched directly to the delivery office or to the other hub, which connects to the delivery office. Once consignments are booked at the spoke they are unloaded at the nearest hub based on the destination of the consignment. Once the unloading of a certain number of trucks is complete, all the consignments meant for a particular destination are aggregated and loaded into a truck for further transportation. This ensures that every truck is filled to capacity and its utility is improved. In case a hub does not have enough consignments for a particular destination, the goods are unloaded onto the next nearest hub to be further aggregated at that hub en-route to the destination.
The processes followed by the company are designed to meet the various business objectives such as simplicity in understanding and implementation, effective information capture of a particular transaction, traceability of goods, automatic internal controls, etc.
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Customer walks in
BOOKING CENTRE
Receive goods
DC
HD
As soon as the customer agrees to the terms and conditions of the contract, the goods are booked and the customer is issued a Goods Consignment Note (GCN). The GCN contains all relevant details such as the\ type of consignment (i.e. express, full load, parcel, etc), type of
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with the help of cranes, forklifts and trolleys, which are equipped to handle heavy goods in a safe and smooth manner.
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Particulars No. of Branches Goods Transportation General Parcel Express cargo Courier Maruti Parcel Carriers Shiva Roadlines Total Branches for goods Transportation Passenger Transportation Total Branches
No. Of Branches
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Freight consignors usually prefer roadways over railways due to its inherent advantage of higher accessibility and reach, and customer orientation unlike other modes of transport. Moreover, the customers get an edge in bargaining power, as the roadways is highly fragmented and there is intense competition even among the large transporters. However, the large organised players who provide value-added services such as warehousing, containerised movement, supply chain management etc are also able to influence the terms and conditions of the freight contract, as not many transport operators provide such services. Also, while the bargaining power of suppliers seems strong, given that there were only a few equipment suppliers catering to a large customer base of transporters, more players showing interest in entering the equipment manufacturing space, bargaining power of suppliers is set to come down in future. Industry participants in road freight transportation sector The structure of the road freight transport industry in India has always been and continues to be highly fragmented. It comprises many players who provide transportation services, intermediaries transport contractors / booking agents who can provide haulage services, brokers who fetch equipment and drivers for a commission, and the consignors / users who constitute the ultimate demand for the services.
TRANSPORT OPERATOR
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Small truck operators Single truck or small fleet operators are operators who own up to 5 trucks. While in certain cases, the single truck operator is both the owner and the driver of the truck, the truck may be operated by the operators family members, relatives etc. Following are some of the typical characteristics of a small fleet operator: Ownership: Ownership of up to 5 trucks Broker dependence: Significant dependence on brokers for business Haulage: Mainly ply on last mile and short haul routes not exceeding 150-200 km Operations: Operate mostly in the full truck load business Attachment of vehicles: Small operators are usually attached to the large fleet operators.
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Large fleet operator Following are some of the typical characteristics of large fleet operators are: Ownership: They own or control a relatively larger fleet size, typically over 20 trucks
Broker dependence: They directly bid for contracts with consignors / users
without the support of any intermediary Haulage: They operate predominantly on long haul on a hub and spoke distribution model Operations: They operate in both the fully loaded and partly loaded truck businesses
Attachment of vehicles: They use the services of smaller operators when they
Large fleet operators dominate road transport In terms of structure, the road transport services segment is highly fragmented, while the Railways are owned by the government. Coastal ships are either captively owned by end users or by several small fleet operators, while pipelines are owned by a few organizations mainly in the public sector. While road freight transport is generally described as highly fragmented, large fleet operators control a significant portion of both the stock of commercial vehicles and freight. According to estimates the large fleet operators (defined as owning more than 20 trucks each) cumulatively own about 50 per cent of the total stock of commercial vehicles and control about 65 per cent of the total stock of commercial vehicles. Similarly, freight carrying capacity of vehicles owned by large fleet operators is estimated to be over 70 per cent and the same for vehicles controlled by them is estimated to be close to 85 per cent of the total road freight capacity. Apart from the vehicles that are owned, controlled vehicles also include vehicles attached by small fleet operators.
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Domination on stock and load carrying capacity The organised large fleet operators of the industry are relatively small in number and have varying payloads; but, these large fleet operators carry a significant portion of both the stock of commercial vehicles and freight. CRISIL Research estimates large fleet operators to own over 50 per cent of the total stock of commercial vehicles (commercial vehicles includes light, medium and heavy commercial vehicles excluding three-wheelers goods) and control about 65-70 per cent of the total stock of commercial vehicles. Controlled vehicles are vehicles owned and net of vehicles attached with the fleet operator. Net of vehicles attached means vehicles received on attachment less vehicles given on attachment. According to CRISIL Research estimates, large fleet operators load carrying capacity with owned vehicles is over 70 per cent and with controlled vehicles is close to 85 percent for the year 2006 -07. The fleet is primarily used for general goods transportation, with the operators working on a hub and spoke distribution model. The industry interactions with operators and users also revealed that apart from their broad-based transport stock, large fleet operators are able to generate business on account of goodwill, assurance of timely delivery and quality, distribution network and necessary infrastructure. Transport operation and haulage Large fleet operators operate on all haulage segments short, medium and long. However, as they are dominant in the medium and long haul operations, they operate on a hub and spoke system of distribution. As the large operators cover a wide geographical area, ranging from 200-1,500 km or even more, they typically have a wide network of branches throughout the country, apart from the necessary infrastructure to support their network. This enables them to attract users and get business on a continuous basis. Unlike small fleet operators / single truck owners, large fleet operators operate on both the full truckload and parcel truck load operations. Parcel truck load refers to small packages booked by consignors that occupy only a part of the entire truck space. Large fleet operators are
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FREIGHT RATES As per the research, demand-supply and cost factors emerge as the two key determinants of freight rates; however, regulations and industry structure also have a role to play in influencing freight rates. These factors explain why freight rates have risen continuously over the past five years, despite significant fragmentation of the road transport sector. Over the next 5 years, the cost of transport operations may reduce structurally and this will reduce freight rates (adjusting for inflation); however, the rates may continue to remain firm over the next 1 year, due to continuation of healthy economic growth as well as cost pressures.
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Demand-supply dynamics Freight rates have a direct impact on the distribution costs of the manufacturing sector and therefore have indirect implications for the economy as well. A recent World Bank study states that, despite many impediments, mainly related to the existing infrastructure, India has achieved a highly competitive, low-cost road freight transport for basic services, with its highway freight rates being the lowest in the world. However, it should be noted that the costs of delay and uncertainty in transportation do push up the effective cost of the users significantly.
Fuel price and capital cost Fuel costs typically constitute more than 50 per cent of the transport operators total costs; accordingly, any increase in diesel prices may reduce the players operating margins. However, empirically, it has been observed that while the transport operators have been able to pass on the fuel cost increase through higher freight rates when freight availability was at its peak, the same has not been the case during recessionary periods, when they had to absorb the small changes in diesel prices, and take a toll on their profitability. The following graph will show the trends in freight rates and diesel prices.
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Capital costs (interest and depreciation): also constitute as a major cost for transport operators; in fact these costs constitute 6-10 per cent of their freight income. Moreover, considering the 95 per cent penetration of finance in new truck sales and over 85 per cent penetration in second hand sales, interest cost have gained significant importance in the cost structure of transport operators over the past few years. Likewise, as the number of commercial vehicles that are 0-4 years old is as much as 40 per cent usually 0-4 years is the period during which the finance for new commercial vehicles has to be repaid the influence of any change in interest cost may affect the freight rates. Hence, hardening of interest rates may lead to postponement of truck purchases and in a scenario of good freight availability this may lead to a further rise in freight rates.
Comparison with Railway as mode of transport An analysis of the normal freight rates of roadways versus railways revealed that while the railway freight has risen marginally during 2002-03 to 2006-07, the road freight has continued to grow. Moreover, during the same period, while the market share of roadways (excluding last mile) increased from 54.0 per cent in 2002-03 to 58.0 per cent in 2006-07, that of railways declined from 34.0 per cent to 31.5 per cent.
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However, if we consider the effective freight rate, which is the normal freight rate plus freight cost for last mile transportation and loading and unloading cost, the rail and road freight rates are relatively comparable. This shows that even though the effective freight rate of railways is competitive, the share of roadways is higher in the total freight movement, due to its inherent advantages such as door to door delivery, higher accessibility and customer orientation.
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Vehicle utilization Vehicle utilisation is measured in terms of the distance covered by the operator during the year. Changes in vehicle utilisation significantly affect the cash flows of an operator. A 10 per cent improvement in equipment speed, leads to a 5-7 per cent increase in distance covered during the year, thereby resulting in a 15 per cent improvement in cash flows. Consequently, the efficiency of the transporters goes up, as the average turnaround time decreases, and the business expands by 5-7 per cent (number of trips). Monetarily also the transporter is benefited, as the fixed costs gets spread over a higher base, thus improving the cash flows. Given the good freight availability, if another driver is added, the vehicle utilisation will go up, as the vehicle halting time will come down when one driver rests the other will utilise the vehicle. Additional revenues from increased vehicle usage may more than offset higher costs like fuel and labour. Variables that affect vehicle utilisation include the type of commercial vehicle, road infrastructure / traffic, time spent at check posts and rest time.
Fuel cost Fuel cost constitutes a major part of the cost structure of a transport operator; it constitutes between 55-60 per cent of the total costs. Moreover, fuel costs are variable in nature; hence, a small movement in fuel price or fuel efficiency significantly affects the cash flows of
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Vehicle-mix and fuel efficiency Transport operators can maximise their profitability by maintaining a suitable vehicle mix, given the existing freight availability, its range of operations, type of freight carried and contracts with customers. Since the late nineties, the preference for higher gross vehicle weight commercial vehicles has been increasing, as they are more profitable with their higher payload capacity and relatively better fuel cost economics.
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In the transhipment hub the goods which are to be delivered to other destinations are stored. The space of the warehouse in Hubli is 40,000 sq feet. The total space which is called as carpet area is around 60,000 sq feet. The warehouses are not well organised. The goods which are unloaded are brought and kept in the respective places. There is no separate compartment or racks for the goods to store, which may lead to misplacing of the goods. The total capacity of the transhipment is around 1500 tonne to 1800tonne. There are 43 transhipments through out India. As explained above they are divided in to major, mid, and small size hubs.
They have entered into an agreement with Ashok Leyland for the supply of automobile spare parts and units in the Vehicle Maintenance Department for the maintenance of the vehicles. As per the agreement, they have provided the space to Ashok Leyland admeasuring 1000 sq. feet in their workshop for the storage of spare parts and units. These spares parts are available to them at discounted rates. The spare parts are used as and when required by them and payment done on a weekly base. This eliminates the cost of maintaining the inventory, cost of transport incurred in procuring the spare parts at the same time ensuring timely availability of spare parts. There are 6 branches through out India and all of them are computerised. The fourth coming years estimation for stores is 1.74 crores. They store adequate spare parts which will be sufficient for fourth coming three months.
Store-room for tyre section.
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This is used to lift the goods and move from one place to another place. This can lift 5 to 6 tonne weight. Hydraulic trolley
Hydraulic trolley is used by the labours to transfer the goods from one place to another place. Here, the goods are kept on the pallet and then with help of this trolley they can lift that pallet to move the goods. This can lift the goods of 3 to 4 tonnes. They are 25 in number in Varur TPT. Handle vehicle
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Handle vehicle can lift up to 2 tonne which will be pushed or pulled by labours to move the goods. The number of handle vehicle in Varur TPT is 55. Pallet
Pallet is used to keep the materials, which is then lifted to move more goods at time. It can be lifted by both hydraulic trolley and fore clip. Crane
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Crane is used to load the goods of large quantity and huge weight. All the major hubs are provided with cranes.
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The area of the Varur TPT is around 40,000 Sq feet. The area is utilised efficiently for the present demand. The ware house can store around 1400 to 1600 tonne of material.
The factors affecting the road transportation. Difference between large truck operator and small truck operator. Freight rate determinants. Potential for the freight movement in the fourth coming years. GENERAL FINDINGS:
During the course of the study it was found that VRL LOGISTICS LTD. is a
service sector. The organization focuses on customer satisfaction and best and speed service. The major advantage is that the company is a single largest service provider in south India. They discontinued out of state courier service.
SUGGESTIONS
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It should emphasize on warehousing facilities provided. They can construct racks to make use of space in the warehouse.
They have to purchase more material handling equipments as the business is
growing. Transhipment labours should be given sufficient training to handle the goods. All vehicles used for transportation should be given container facility. The company should build relationship with industries for more contracts. The TPT labours can be divided into three shifts for the better efficiency. Now they are working in two shifts of 12 hours each.
The courier service can be provided in Maharashtra to gain more customers.
CONCLUSION
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SUPPLY CHAIN MANAGENENT By B.S.Sahay LOGISTICS AND SUPPLY CHAIN MANAGEMENT By G. Raghuram, N. Rangraj. COMPANY REPORTS (ANNUAL REPORT)
Websites:
www.vrllogistics.com www.google.co.in www.logisticsfocus.com
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