PROJECT REPORT ON STUDY OF EXPORTS OF MACHINE TOOLS AND RECOMMENDATIONS ON SOME STRATEGIES OF MARKETING OF MACHINE TOOLS

Submitted in Partial Fulfillment of the Requirement for Summer Placement Project During Post Graduation Diploma in Management (PGDBM 2005-2007) Of INDIAN BUSINESS ACADEMY By Api Shalini Sinha Reg. No. FP 57/129 Under the Guidance of Mr. Manish Jain Internal Mentor Indian Business Academy Bangalore 560062 Mr.H.V.Manjunath D.G.M Projects HMT (International) Ltd Bangalore 560032

CERTIFICATEThis is to certify that the project work titled Study of exports of machine tools and recommendations on some strategies of marketing of machine tools submitted by Miss Api Shalini Sinha (Reg. no.-FP 57/129), a student of our B-school, is a work of dissertation carried out by her during the period of April 2006 to May 2006.This project report is submitted in partial fulfilment of the requirement for summer placement project, during the Post Graduate Diploma in Business Management, a prestigious P.G. Diploma awarded by our B-school. ________________________ Dr.Subhash Sharma Dean, Indian Business Academy Bangalore Date:

CERTIFICATEThis is to certify that the project work titled Study of exports of machine tools and recommendations on some strategies of marketing of machine tools submitted by Miss Api Shalini Sinha (Reg. no.-FP 57/129), a student of our B-school, is a work of dissertation carried out by her during the period of April 2006 to May 2006.This project report is submitted in partial fulfilment of the requirement for summer placement project, during the Post Graduate Diploma in Business Management, a prestigious P.G. Diploma awarded by our B-school. ________________________ Mr.Manish Jain CEO, Indian Business Academy Bangalore

CERTIFICATE of GUIDANCEThis is to certify that Api Shalini Sinha (FP57/129) has conducted a project titled Study of exports of machine tools and recommendations on some strategies of marketing of machine tools. This project report is submitted in partial fulfilment of the requirement for summer placement project, during the Post Graduate Diploma in Business Management, a prestigious P.G. Diploma awarded by Indian Business Academy, Bangalore. This work has been done under my close supervision and to my entire satisfaction. The thesis submitted embodies her genuine work. During the tenure of project, I found her responsible, sincere and hardworking. I wish her all the best for the future. ________________________ Mr.Manish Jain Internal Project Guide Indian Business Academy Bangalore Date:

STUDENT DECLARATIONI, Api Shalini, the undersigned, student of Indian business Academy, Bangalore, declare that this project report titled Study of exports of machine tools and recommendations on some strategies of marketing of machine tools is submitted in partial fulfilment of the requirement for the summer project during the Post Graduate Diploma in Business Management, a prestigious PG Diploma awarded by Indian Business Academy, Bangalore. This is my original work and has not been previously submitted as part of any other degree, diploma of another B-school or University. The findings and conclusions of the data in this report are based on my personal study, during the tenure of my summer internship.

________________________ Api Shalini Sinha Reg.No.FP57/129 Indian Business Academy (IBA) PGDBM 2005-2007 Bangalore

Date:

ACKNOWLEDGEMEN TI would like to express my earnest gratitude to Mr. Mahendra KumarManaging Director, HMT (International), for giving me the opportunity to undertake this project and guiding me throughout the execution of this project. I would also take this opportunity to thank Mr. K. Sridhar Joint General Manager (Projects), Mr. Shridhara- Deputy General Manager (Machine Tools) for guiding me and providing useful information to carry out this project Finally, I would like to acknowledge the continuous guidance of Mr.H.V.Manjunath Deputy General Manager Projects, who was the guide for this project and Mr. Khujur-Assistant General Manager (HR) for being very supportive and providing the necessary facilities for the successful completion of my project.

Api Shalini Sinha

TABLE OF CONTENTSTOPIC PAGE NO 1. Executive Summary 1-2 2. Research Purpose 3 3. HMT (Parent co mpany) 4. HMT (INTERNATIONAL) 4.1. 6 4.2. Business Portfolio 4.3. Associates of HMT (I) 4.4. Business Plan Introduction 7-9 10 11-12 1318-19 194-5

4.5. Key Strategic Initiatives 16 5. Study of Marketing of Machine Tools 5.1. Manufacturing Range 5.2. Observations in the Research 48 5.2.1. Market Decision 20-23 5.2.2. Pricing 24-25 26Employees 2932-40 5.2.3. Quality 27 5.2.4. Total 28 5.2.5. Sales Promo tion 31 5.2.6. Global Comparison of Indian Machine Tools with the other countries 5.2.7. Data Analysis of the survey 5.2.8. Problems faced by the Company 6. Swot Analysis 7. Recommendation 8. Conclusion EXHIBITS BIBLIOGRAPHY 52 49 50-51 41-47 48

1. EXECUTIVE SUMMARYThe objective of this project is to study the exports of machine tools by HMT (International) Ltd, and analyze the present scenario within and outside the company and make recommendations to improve the overall performance of the company. HMT (International) Limited is a wholly owned subsidiary of HMT Limited, a Government of India undertaking. HMT's range of products is marketed internationally by HMT (International) Ltd. HMT (I) exports machine tools and other engineering products manufactured by other reputed firms in India backed by efficient after-sales-service. The global network extends over 38 countries with 60 representa tions to service its clientele world wide. The manufacturing range is from simple lathes to multi-station transfer lines, from stand alone CNC machines to state-of-the-art CNC machines, leading to factory automation. The main market segment of the company is Oil industries, Automobile, maintenance etc. The countries where machine tools exported are Saudi Arabia, Dubai, Oman, Abu Dhabi, Kuwait, Ethiopia, Nigeria, Nepal , Bangladesh etc. In the globalize market HMT (I) forces tremendous opportunity to increase its market share multi fold. HMT (I) has initiated various action plan in this regard. This study supplements this vision of HMT (I) to become a global leader in exports of machine tools across the world. The research deals with the analysis of how the exports of machine tools are carried out. Various steps involved in deciding the market, determining the prices p, ensuring quality and sales promotion are studied. A global comparison of the market of Indian machine tools with other countries is done. This study throws light that there is tremendous opportunity for HMT (I) to increase its market substantially.

The report then goes to examine and analyze the degree of relationship of the company with its suppliers and the level of satisfaction with the customers. For this the respective questionnaires are designed and feedback obtained. During the analysis it is seen the existing cust omers are satisfied with the relation with the company but they still have their complaints which are discussed in detail in the report. In todays free market economy the customer has always an option to look for other suppliers. As such HMT (I) in order to retain its customers and expand its market HMT (I) has to cater to all the needs of the customers like quality price, delivery, after sales service etc. In addition HMT (I) has to increase its sales promotion activities and appoint new agents and dealers to promote its products. HMT (I) has also to ensure that it retains its good suppliers since the suppliers also have many options to switch from HMT (I). This study gives recommendations which will help the company in eliminating problems faced by the company presently.

2. Research Purpose:The objective of this project is to study the exports of machine tools by HMT (International) Ltd, and analyze the present scenario within and outside the company and make recommendations to improve the overall performance of the company.

RESEARCH METHODOLOGYResearch Design The research design comprises a co mbination of Descriptive research and Exploratory research. Descriptive research is used to determine market characteristics or function and Exploratory research helped to identify solutions to the problem that has been identified. Primary Data The primary data was collected through personal interview; using structured questionnaire which had both open-ended and close ended questions. Secondary data Secondary data was collected from Print and electronic media.

3. HMT the Parent CompanyHMT Ltd.: HistoryYEAR EVENTS 1953 - T he Company was Incorporated in Bangalore. It was converted into a Public Limited Company on May 13, 1977. The main objects of the Company is Manufacturing of the Machine Tools, Metal forming presses and press brakes, pressure die, casting machines and automatic plastic injection moulding machines, Automatic plastic injection moulding machines, Paper cutting machines, Automatic plastic injection moulding machines, T ractors 25/35/55 HP, Lamps and Lamp making machines, Printing Machinery, Printing Machinery and Watches. The Machine Tool Division at HMT Bangalore is the oldest manufacturing unit of the Company and the product line consists of 16 types of metal working machines. The Die Casting Division was set up for the manufacture of Die Casting and Plastic Injection Moulding machines. In 1961 The Watch Factory at B angalore with two operating divisions; Factory Division and Horological Machinery and Tractor Division was set up. In 1964 the two operating divisions of HMT Division and the Printing Machine Division In 1965the HMT at , Kalamassery , and Machine Tool the Machine Tool were set up. was set up. Machine Tool Division In 1963 the HMT, in Pinjore with two operating divisions The Watch

Hyderabad three operating divisions,

Division , the Press Division and The Lamp Division was set up. In 1975 unit of Machine Tool Corporation of India Tools, Ltd. to HMT Ltd. HMT locations are given in Exhibit 1 in Ajmer was set up. From 12th

September 1978 , the name of the Company was changed from Hindustan Machine

Today HMT is a multi-product, multi-technology engineering complex with strengths comprising of:

16 Manufacturing units (22 Product Division) Assets worth over US $ 250 million Annual turnover of US $ 300 million ISO 9000 accreditation The widest range of machine tools, ranging from General purpose lathes to CNC turning/machining centres. Source of qualified and experienced manpower

4. HMT INTERNATIONAL THE COMPANY4.1. INTRODUCTIONHMT (International) Limited is a wholly owned subsidiary of HMT Limited, a Government of India undertaking. It was set up in 1974 to handle international projects and export of products of its parent company and other Indian manufacturers. HMT's range of products are marketed internationally by its subsidiary, HMT (International) Ltd. HMT(I) also exports machine tools and other engineering products manufactured by other reputed firms in India backed by efficient aftersales-service. The global network extends over 38 countries with 60 representations to service its clientele world wide. Over the years it has come to be recognised as a reliable source for project expertise in a spectrum of engineering fields, covering manufacturing, and maintenance and training projects. A comprehensive package of consultancy, technical and engineering services from concept to commissioning on turn-key basis is offered. Its track record includes prestigious projects in Algeria, Indonesia, Kenya, Malaysia, Mauritius, and Tanzania, UAE, Maldives and other countries. HMT (International) has been recognised as "MINI RATNA" by Government of EEPC

India for its continued excellence in export performance. It was awarded the trophy for its achievements in export of technical services during the year 1998-99.

4.2. Business PortfolioHMT (I) is recognized by many leading international organizations such as UNIDO, UNDP, ADB, Af DP and World Bank and its outstanding performance in international trading and export of products and services in following areas.

Machine ToolsHMT started manuf acturing machine tools in 1953 in technical collaboration with Oerlikon of Switzerland. Starting with High Speed lathe H22, today has probably the widest range of machine tools in the world spanning centre lathes to sophisticated CNC Turning & Machining Centres and flexible manufacturing systems. HMT Limited, has incorporated HMT MACHINE TOOLS LIMITED as its fully owned subsidiary. HMT MACHINE TOOLS LIMITED (HMT-MTL) is a Multi unit, Multi location, Multi technology Company manuf acturing a wide variety of STATE-OF-THE-ART Machine Tools. HMT-MTL has its ISO 9000 certified manufacturing units at five locations with each unit specialized in a particular family of Machines. The Sales and Service network is spread across the length and breadth of the country.

Project & ServicesProjects offered Turn Key and Semi Turn Key Projects Training Projects Agricultural Development Projects IT Related Projects Partial L ist of the Type of Projects Offered Project Consultancy Division Development of Small & Medium Enterprises (SMEs) Entrepreneur and Technical Development Centres (E TDCs) Common Facility Centres (CFCs) Small & Medium Enterprises Service Institutes (SMESIs) Cluster of SMEs

HMT (I) offers a comprehensive package of consultancy, technical & engineering services from concept to commissioning on turnkey basis in the areas of engineering, technical training and entrepreneur development. Technical & management & consultancy Services covering Market research, Demand Studies, Project Formulation & Appraisal Studies, Project Design & Engineering, Project Management, including Modernization/Rehabilitation studies for the various types of Engineering projects. HMT (I) has set up many prestigious projects in different countries is offered

TRADINGHMT (I) offers a wide range of bearings, components, workshop equipment, laboratory equipment and commodities. The variety spans * Machined Components * Pressed Parts & Sheet Metal Components * Ferrous & Non-ferrous Castings * Forging * Die- cast Parts * Dies & Moulds * Ball Screw Assembly * Industrial Furnaces * Compressors * Transmission belts * Welding flux, welding rods and equipment * Workshop & Factory Equipment * Metrology & Inspection Equipment * Scientific & Laboratory Equipment apart from Industrial & agricultural Commodities.

IT SERVICESWith rich experience in manufacture, HMT Limited has emerged f rom an in-house software service provider to an enterprise-wide resource management software solution provider in the global software market. HMT (I) also provides expert services in the field of setting up of IT Training & Software Development Centres. HMT (I) also undertakes software projects in the areas of manufacture, trading, management of training centres, etc

IMPORTSHMT (I) is emerging as a nodal agency for imports of engineering components, equipment, machinery, electrical systems, machine parts etc., and engineering

commodities like special steels, wood pulp, paraffin wax, coal, optic fibre etc. It has acquired agencies for products like ball screws, auto tool changers, interchangeable turret type milling heads etc., and has been able to source a whole gamut of engineering products from abroad for Indian industries looking for imports.

WORLD WIDE EXPORTSASIA Afghanistan, Bahrain, Bangladesh, Brunei, Bhutan, Hong Kong , Indonesia, Iran, Iraq, Japan, Jordon, Korea, Kuwait, Malaysia, Maldives, Myanmar, Nepal, Oman, Philippines, AFRICA Algeria, Botswana, Egypt, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Tanzania, Uganda, Zaire, Zambia, Zimbabwe AMERICA Canada, Chile, Columbia, Ecuador, Haiti, Mexico, Paraguay, USA, Venezuela EUROPE Austria, Belarus, Belgium, Czech Republic, Croatia, Denmark, France, Germany, Hungry , Italy, Luxembourg, Netherlands, Poland, Romania, Russia, Spain, Sweden, Slovenia, Switzerland, Ukraine AUSTRALIA, FIJI, NEW ZEALAND, TONGA Qatar, Saudi Arabia, Singapore, Sri L anka, Syria, T aiwan, Thailand, Turkey, U.A.E, Uzbekistan, Vietnam, Yemen

4.3. THE ASSOCIATES OF HMT INTERNATIONALHMT (I) has arrangements with reputed Associates in different disciplines/fields to offer quality products. The customer comes with the requirement of products which may not be within the manuf acturing range of HMT. Hence HMT (I) will look at various suppliers who can supply these products. The process of selection of these suppliers who are called as associates in view of their close relationship is systematic and sufficient care is taken that good suppliers are selected. For this purpose first a deliberate search for manufacturer of the product required by the company is conducted. T he products generally included are to augment the range demanded. Once the associate is finalized then the team of Quality Assurance visit the respective plant to assure the quality. Further discussions on price, delivery, product modification etc are finalized. Only after full assurance the order contra ct of the associates comes into force. The names of some of the associates are giv en in Exhibit 2.

4.4. BUSINESS PLANHMT INTERNATIONAL BUSINESS ToPOLICY interest of all the stakeholders through satisfy the planned growth

M A N A

BUSINESS PERSPECTIVE To become a major player in trading, projects & services through strategic initiative ness on specific thrust areas covering core competencies

G E M E

BUSINESS FOCUS

N T

SECTO R PRODUCT MARKET

S Y S

ORGANIZATIONL INITIATIVENESS With clearly defined action plan the organization is restructured in products, projects and commercial as distinct groups

T E M

Key Performance Parameters Key Productive Parameters Key Financial Parameters

MISSIONTo be leading International Engineering and Trading house for marketing of Quality goods and services.

VISIONTo satisfy the interest of all the stakeholders through planned growth in accordance to the road maps.

BUSINESS PHILOSOPHYTo improve and of fer competitive advantage to customer through cost reduction, quality up gradation and product reliability with quick response and innovative approach.

BUSINESS FOCUSIn order to achieve paradigm shift in the levels of operation, HMT (International) has taken strategic initiatives on SECT ORS, PRODUCTS & MARKETS to exploit short and medium term business opportunities and has also embarked on market development plan for the future. Building on core competencies of HMT Machine Tools Limited , HMT Watches Limited and Tractor Group of HMT Limited Thrust on Project & Consultancy expertise in Engineering & Entrepreneur Development & Training

4.5. THREE KEY STRATEGIC INITIATIVES TAKEN BY HMT (I)

SECTOR

PRODUCT

MARKET

FOCUS SECTORS

TRACTORS IMPLEME NTS AGRICULTURE TRACTOR ASSEMBLYMC TOOLS & ACCS

CAPITAL GOODS CONSUMER DURABLES

WATCHESIND. MCRY.COMPS

TECHNICAL EDUCATION

TECHNICAL TRAINING ENTREPRENEUR SKILLS

PRODUCT FOCUSPRINTING MACHINESS CUTTING T OOLS MACHINE TOOLS CNC SYSTEMS, etc CASTING &COMPONENTS MOVEMENTS COMPONENTS

WATCHES

TRACTORS

AGRICULTURAL IMPL EMENTS DRILL RIGS, PUMPS, etc

MARKET FOCUS Existing MarketAfrica USA Middle East Tractors Machine Tools Machine Tools S.E & Neigh N.E Count. Asia Watches Machine Tools

Projects Projects Projects Ptg.Mach Machine Tools Photo Films Engg Co mpts Tractors Machine Tools Projects Tractors

NEW MARKETSNIGERIA EGYPT CIS LATIN AMERICA TRACTORS PROJECTS PROJECTS MACHINE TOOLS PROJECTS MACHINE TOOLS MACHINE TOOLS TECHNICAL SE RVICES MACHINE TOOLS WATCHES

TRACTORS WATCHES TRACTORS

As per the sales performance and the order prospects of different products (refer exhibit 3) there are some strategic initiative ness taken by the company.

Strategic Initiatives taken for increasing order procurement and Sales for 2005-06 Of the Company as a whole.Greater emphasis on Non-MEA projects Focus on move towards high value GPMs and CNC machines Trading in Engineering goods Utilize EXIM / GOI Lines of Credit for high valued business particularly Tractors Identify new markets for focus

NON MEA Projects identified / New Strategies plannedMoU signed with KPTCL/KPCL to focus on energy Syringe Manufacturing Project in Kuwait

Training Centre Project , Helwan Co. Egypt Tool Room & Industries Rehabilitation project, Ethiopia Horma t Engineering Project , Ethiopia Cluster of Tool Rooms , SriLanka

MARKETING INITIATIVES TAKEN AS A WHOLE

Widening Market and customer base through visits and appointment of Agents. Identify opportunities for medium high value orders. Increase focus on high value machines. Development of ma rkets with known potential for HMT ( I) products West and East Africa , North Africa , Iran and Latin America. Explore business opportunities under the lines of credit extended by government of India through EXIM Bank of India. Participation in exhibition in target markets Continued thrust on marketing of tractors / implements to Sri Lanka , Bangladesh , Nepal, Senegal, and other west African countries Continued thrust on marketing of machine tools ,Remanuf acturing / retrofitting of machine tools in middle east and neighbouring countries Pro motion of printing machines , HMT bearings , in middle east and neighbouring countries Further penetration into south Asian countries for HMT watches

5. STUDY OF MARKETING OF MACHINE TOOL

THE OBJECTIVE OF MARKETING OF HMT (I)As per the company policy the objectiv es of ma rketing of HMT (I) are To export 30% of HMTs production annually. To provide assistance to HMT in product up gradation and technology advancement. To contribute to foreign exchange earnings to meet import requirements.

Core Competencies of Machine ToolsEngineering excellence Experienced and skilled manpower Quality After Sales Service

PLACES WHERE EXPORT DONEMiddle East MARKETS Bahrain Vietnam Kuwait Australia Oman Singapore Saudi Myanmar Qatar U.A.E AFRICA Egypt Kenya Arabia SMALL

HMT had collaborations with the companies (list in Exhibit-4) initially to start manufacturing of machines. Presently, the company does not have any collaboration

with these companies. HMT has developed and modified most of the machines in line prevailing market condition and requirement with is own R&D facilities.

5.1. Manufacturing Range of the CompanyFro m simple lathes to multi-station transfer lines, from stand alone CNC machines to state-of-the-art CNC machines, leading to factory automation, HMT's broad range of machine tools covers general purpose machines, special purpose machines and CNC machines to meet the application needs of every industry. HMT also has the distinction of manufacturing its own CNC system in association with Siemens. The different machines that are traded by HMT (I) are as follows: 1. GENERAL PURPOSE A. TURNING Lathes Automates B. MILLING C. DRILLING D. BROACHING Vertical Horizontal E. BORING AND MILLING F. GRINDING G. GEAR CUTTING Gear Hobber Gear Shaper Meshmatic Speed Gear Shaping 2. CNC MACHINES A. CNC TURNING MACHINES B. CNC MACHINING CENTRES C. CNC GRINDING MACHINES Double Disc Grinder

Cylindrical Grinder Surface Grinding D. CNC GEAR HOBBERS 3. SPECIAL PURPOSE 4. INDUSTRIAL MACHINERY Die Casting Machines Plastic Injection Moulding Metal Forming Presses Printing Machine Prog rammable Guillotine 5. TRAINING APPL ICATION CNC Train Master Lathe CNC Train Master Machining Centre

5.1.1. User Industries Serviced.The company's prospects mainly depend on growth of engineering industries. The user sectors of machine tools to name a few are automobile sector, defence industry, oil production, petrochemical, die casting industry etc. The details are given in Exhibit 5.

5.2. OBSERVATIONS IN THE RESEARCH

5.2.1. HOW A PROSPECTIVE MARKET IS DECIDEDAny company when deciding to go abroad needs to define its objectives and policies. As for HMT (I) it has its own policies and objectives, and this is done by diagnosing & analysing HMT (I)s strengths and weaknesses .On the whole it is ensured that strategy and implementation will meet the objectives laid by the company.

Market SegmentationThe company's target customers: 1. Automobile seating manufacturers. 2. Manufacturers of complete product lines. 3. Maintenance. 4. Others.

MARKET ANALYSIS Market Segment

Market Segm ent

10%

35% 25%

Oil Industries Automobile Maintenance Others

30%

Percentage of products exported

2004-05

25% Spe cial purpos e CNC 10% 65% GPS

Export Percentage to different Countries

2004-05

15% Middl e East Neighbouring Countries Othe rs

50% 35%

Target Market Segment StrategyMachine Tooling is focussing the market offerings on three major customer groups: 1. Oil Industries. 2. Automobile Industries. 3. Maintenance Workshops 4. Manufactures of complete product lines. The market research shows that these customer segments are the most demanding in terms of the engineering, technical service support, and automated design. Machine Tooling is particularly strong in these areas and will utilize the capacities to serve the clients. The company will seek customers who require production of components used in upper-end product lines. This will provide a further possibility for Machine tooling to off er value-added engineering services.

Market NeedsEach of the served segment's market needs is shaped by the desire to procure quality products at reasonable prices. HMT (I) is in the position to offer just that to the clientele, and understands that the products must help the clients to better add value to their own end customers.

Industry ParticipantsCompetitive threats come from machine shops who perform similar types of machining, as well as design firms that have established relationships with a large customer base. Their machinery, tooling, fix Turing, and inspection equipment is tailored to acco mmodate specific customer products. To name few; ACE Industries India, BFW India, HASS U.S.A, ACE Germany, and Bridgeport USA, and the companies of Taiwan and Japan: Mori Seki, Mori Seki, Yong Chin Supermax, Murata, Yamazaki Mazak etc.

Though machines are similar but still there is a lot of difference in features and performance. The competition with the foreign companies is tough. The brand name, years of experience makes the dealing saf e as compared to private company. Thus all the factors play a positive role in fighting with the competition with the domestic players.

Competition and buying patternHMT (I) believes that the customers choose their products based on the following criteria: Price. Performance. Customer service and support The Pot ential market is decided by doing the proper ma rket study of a country. Fo r the information required the co mpany directly contacts the Indian Embassy and they provide information regarding the market. After the demand is studied an agent is appointed by the company or frequent visits by the marketing people are done to the respective country. There is also Export promotion councils who inform by doing the market survey of the country example IMTMA (Indian machine tools manufacturers associates) and EPC (export promo tion council.) Basically it is done by the help of the Embassy give the full prof ile of the company by finding out details through their contact and respective banks. HMT (I) is a merchant exporter which deals with the trading of HMT products and other non HMT products. So once the potential market and how to enter market is decided then according to the demand of the product is made ready by ordering the number of machines required to the HMT manufacturing units and also the non HMT units.

5.2.2. PRICINGWith faster communica tion, transportation and financial flows, the world is rapidly shrinking. In this era competitive pricing is a necessity. Price is one element of the marketing mix that produces revenue; other elements produce costs. Price also communicates to the market the companys intended value positioning of its product or brand. Customers now have access to information which is very cheap. The use of internet helps him easily to compare different prices offered by various players. In view of this HMT (I) has to carry out systematic and effective pricing policies. It considers the following facts when deciding the price. It studies the cost of the product from various suppliers. Studies the prices of the competitors. Ascertain the buying powers of the customers. Payment term is customer is made ready. Erection and commission cost. Freight and Insurance cost. Past relationship with the customers. Future relationship with the customer Future prospects with the customers. Margin that can be charged on the customers Competitive aggressiveness. The price of the product consists of the following: Cost of the product decided by the manufacturing units to be around 75% and the balance by HMT (I).The cost of HMT (I) decided includes the insurance, testing, marketing, quality insurance, erection & commission, margin, packaging, freight.

Price decision % for Machine Tools

0% 25% Manufacturing Unit HMT (I)

75%

Also ma chine tools consists of various elements like steel, iron, electrical items, precision components, mechanical parts, electronic components and computers etc. Many of this is imported hence variation in pricing in any of these elements will also have a bearing either on price of product or the margin. If there is high fluctuations in revalue there will be repercussions on the pricing or margin of the products.

5.2.3. QUALITY CHECK:Quality Assurance HMT has undergone a radical shift in its paradigm thinking, the Indian machine tool industry is now recognised as a provider of cost-effective high quality lean manufacturing solutions. The industry resiliently supports all its users to enhance productivit y as well as improve competitiveness, for the betterment of the final customer. The Aim of the Quality assurance team is: The marketing and supply of products conform to the customers requirement The customer support service. To take preventive actions to eliminate the causes of potential non conformities. To take suitable action when non conf irming product is produced by the supplier. Checking the complaints INSPECTION There are various types of machine tools and so each machine its own purchase order and test chart. The very first step taken is to check all the specifications as per the purchase order. The product is inspected by the inspector of HMT (I). The Inspection List compromises of specifications or drawings of the elements, then the operating and functional elements, electrical elements, the test and test chart. The test chart is one which mainly concentrates on the geometrical accuracies of the product. Then a Snag list is prepared and attended which comprises of the f aults found during inspection. Then the Inspection certificate is given to the product which is kept by the company as a reference. (Inspection Check List, Inspection Certificate in exhibit 4 and 5 respectively). painting, running

QUALITY ASSURANCE Quality of a product is inbuilt and that is maintained there is use of branded elements. They should be new, genuine and unused and shall be of current models and current productions. The bought out accessories should be of ISI, CE mark (European trademark). Then commissioning the product is done i.e when it is first send to the customer place then a person is also send in order to give a proper training to their personals and show them how to operate the machine.

COMPL AINTS The main motive of any company is customer satisfaction, and retention. To achieve this company tries to attend all the complaints and rectify them as soon as possible. The Quality assurance team ensures that such complains do not come so they recommend the manufacturers or the suppliers to use the products that are of high quality. The complaints are rectified as soon as possible by sending a person to the customer; if still some problems are there regarding the product then they replace it with a new one.(Exhibit 6)

DELIVERYThe delivery of the product on time is the basic responsibility of the company. Transfer price as it is called is a quotation involved in export pricing. As mentioned before HMT (I) is a merchant exporter and the units are manufacturer exporter. The company is dealing with the trading of the HMT as well as non HMT products. The transfer price is decided according to the INCOTERMS. (Exhibit 7)

5.2.4. PRESENT MANPOWERThe introduction of voluntary retirement in the company resulted in erosion of only technical manpower with a few separations in the support staf f. This has resulted in very high ratio of technical to non technical manpower, which is now more than 2. Today the manpower of the Company is as follows: Technical 19 Other Professional Manpower Total professional manpower Non- Technical Manpower Total 68 For o rganizational chart please refer (Exhibit 8) 47 Strength Manpower 2 21

.

5.2.5. SALES PROMOTIONSales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Strategy for Sales Promotion as used in HMT (I) Focus on high value machine product, SPMS, where competition is less Explore new markets where HMT(I) not penet rated To work with Indian associates & non HMT product manufacturers Expand network of business through agents throughout the world with the view to build up efficient sales service To increase participation in global tenders by pre-qualif ying against multilateral funded projects in developing countries To identify global partners and develop strategic alliance to create the required synergy to maximise exports

All this is being done through: Participation in business exhibition planned in select markets Seminars on products and technical awareness in select markets Advertisements in identified markets for products Multi Media presentation for business promotions

Exhibition:The exhibitions with international participation reinforces the business optimism, a re held almost every year and HMT participates in it whole heartedly. To name a few were : IMTEX (Jan 2004) Mumbai: It was held in Mumbai at the Godrej Industrial Garden Township. The feel-good factor was harnessed .It was a show-window to witness live new trends, refinements as well as

the innovative efforts in manufacturing solutions and systems. The exhibition reflected the process of globalisation. Toolteck (Feb. 2005) Mumbai: Toolteck is Indias premier business exhibition showcasing latest trends in cutting tools and tooling industry, from different parts of India and across the globe. It is a one-stop fair that featured innovations in this industry segment - in terms of technology, productivity, development and design. Tooltech 2005 revealed explicit range of cutting tools, tooling technologies, production aids, machine tool accessories, metrology, and CAD/CAM equipment and software.

Toolteck (Feb. 2006)New Delhi: Indian Machine T ool Manufacturers Association (IMTMA) organised Tooltech 2006, the 8th International Exhibition of Cutting Tools, Tooling Systems, Machine Tool Accessories, Metrology & CAD/CAM from 1-5 Feb 2006 at NSIC Exhibition Complex, New Delhi. Tooltech provided a unique forum for the sub-supplier and outsourcing industries of machine tools where technology and design developments translate into major productivity increments in the manufacturing sector. >> DELEGATIONS HMT (I) being a part of IMTMA also participates in the foreign exhibitions, wherein it went to China and the interest of the company was in Business Opportunities in China, Joint Venture in China & Sourcing of Components. The Mission programme was designed to cover visit CIMT, largest machine tool exhibition in China, interactions with Industry associations of major machine tool consuming industries such as Automobiles, Die & Moulds, Toys, interactions with China Machine Tool B uilders Associations, interaction and one to one meetings with

major machine tool distributors & Plant visits to major machine tool manufacturers/users in China in order to get a wider perspective on the Chinese economy, market, machine tool business as well as key aspects pertaining to doing business in China. So it can be seen that HMT (I) is taking all concern to get fully involved in the market and increase its share in the global market.

Key Findings of exhibitions and delegations: Most leading manufacturers of machine tools from countries such as Japan, Taiwan, Korea, USA, Germany, Italy, UK etc. are very active in this market. Unlike India, sectors other than automotive sector have significant consumption of machine tools domestic as well as import. Other major consuming sectors being Die & Mould, Aviation, Railway equipments, Consumer durables, Defence Equipments etc, Physical presence in the respective countries and communication ability in their language is very essential for successful entry.

5.2.6. GLOBAL COMPARISONThe focus of this study is to compare Indian firms as a whole with the Taiwanese and Japanese firm. Not to forget that 32% of total contribution to Indian Machine Tools is from HMT .The Taiwanese producers offer an important point of comparison because they have succeeded in capturing a substantial share of the Indian market for these products by offering machines of similar quality at significantly lower prices relative to Indian firms. The Japanese firm on the other hand, represent a high price, high Quality competitor both on the Indian market and abroad. The most striking difference between these foreign firms and Indian is the customized machines more as compa red to foreign which produce more of standardized ma chines. Also they concentrate on the mix cat egory of the two types of machine. The reason for such difference is that these foreign plants employ quite heavily automated techniques of production. ANNUAL OUTPUT SCALE OF PRODUCTION . The figure given below can tell that The Indian firms produce

Customised

Standardised Mixed

QUALITY COMPARISON It is diff icult to compare the quality of the products as different machines are purchased of different users. T his comparison is basically done exclusively for HMT products to foreign products manufactured by Quality comparison of the machine tools of HMT, ACE Industries, BFW India and other foreign companies mainly those of Japan, Taiwan and USA. After the comparison it was found that the foreign machines were better as compared to Indian machines was on three counts: RELIABILIT Y ACCURACY PRODUCTIVITY. Other factors mentioned were of documentation, workmanship and maintainability. The three points on which the Indian Machine from HMT was better:

SERVICE PRICE SPARES As for the case of machine reliability of Machine tool from India on the scale of 5 was a difference of 1 point in favour of the foreign machines.

Difference in scores in

machine reliability

on the scale of 5.

Red is for Foreign company Black the Benchmark Green for Indian machine tools Industry. Difference as in case rating of Accuracy is weaker as compared to other foreign of companies on the given scale of 5.

Difference in Ease of maintenance on the given scale of 5

SERVICE RELATED FACTORS Indian machines scored better results on the factors of Speed of Service backup response and Availability of spare products rated on the scale of 5. Rating on After Sales Service

The score of Indian machines as in finding the Adequacy of service backup and Knowledge of personal are weak as compared to the foreign companies. The scale is on 5.

PRE SALES SERVICE, TRAINING AND DOCUMENTATION. As for pre sales service Indian products have scored better results as compared to foreign companies. The rating was done on the scale of 5.

As for the training in different respects the results have little difference.

The results for the documentation part; Indian machines have scored on average in areas of programming, diagnostics and machine operations.

In Documentation of maintenance, servicing a nd spare parts Indian machine tools industry is better than the foreign companies.

INFERENCE

The Indian machine tools industry when taken as a whole then the conclusion derived is that T he Indian firms should concentrate not only on the Customised products but also on the standardised products.

Indian products are in no way inferior compared to those of Taiwanese competitors.

In terms of delivery the Indian companies have to improve.

While Indian machines enjoy an overall advantage on service- related factors, they under-perform f oreign ma chines in terms of the knowledgability of service personnel. This suggests that efforts should be focussed, not on increasing the number of service personnel, but on improvements in the training of service engineers.

5.2.7. DATA ANALYSIS OF THE SURVEYThe suppliers and customers were interviewed and also administered with structured questionnaire. The questions put to them were both technical and general. LIMITATIONS OF DATA ANALYSIS Many suppliers did not reveal their machinery information as it was very confidential for them. Area of study for suppliers was restricted to Bangalore; hence the results cannot be generalized for the whole. As for the customers they are all internationally based so questionnaire filled through mail. Type of sampling done was judgement sampling so some potential customers may have been left out.

1. DATA ANALYSIS OF SUPPLIERS:Objective: To find out the degree of relationship of suppliers with HMT (I). It is seen that the suppliers are having relation with the company since ten years approximately. They decided to join with HMT (I) for their company expansion and interest in exports. Their contact was direct, basically through internet. They are satisfied with the work of the quality assurance team when they visit for the inspection. The price fixed is basically through negotiations.

i. The Type of machines supplied

20% CNC

50% 30%

CONVENTIONA L MACHINE S OTHERS

Inference: It is inferred that maximum percentage of machines supplied are CNCso that tells how much demand it has in the market. The percentage of sales to the company of the suppliers to the company as surveyed was that they supply lies in the range of 10% -20%.

ii. The Rating of Quality Assurance team.

0% SATISFACTORY 0%

BEYOND EXPECTATION S 20% 0%

BAD

35%

GOOD 45%

iii. Satisfaction level:

EX CELLENT 0% 11%

BAD 26%

GOOD 52%

S ATIS FIED11%

Inference: The suppliers satisfaction level is good.

2. DATA ANALYSIS FOR CUSTOMERS:

Objective: The feedback obtained was to measure the degree of satisfaction of the Customers. The feedback shows that the relationship of the customers and HMT (I) is about is 15 years, and that they are happy and satisfied. The various parts of the questionnaire are analysed through the given diagrams. The factors that really made them do the business were mainly Quality and Brand image but there are also factors wherein both the factors were considered at the same time.

i. Factors

17%

12% 5% 10%

QUALITY AFTER SALES DELIVERY BRAND & QUALITY BRAND

56%

ii. Machines generally purchasedThe machines that are generally purchased by them are General purpose machine, CNC machines and also Special purpose machines a small amount being Industrial machines but maximum demand is of both general purpose and special purpose machine together.

General & Special 20% 0% General purpose 35%

General &CNC 25%

Special purpose 10%

CNC 10%

Further it is seen that they contact through agent and that the price offered to them is satisfying.

iii. PricePRICE

10%

25% TOLERABL E MODERAT E HIGH

65%

iv.The Reason that make them bye the machines are

REASON

TECHNOLOG Y 24% 0%

AESTHETIC S 10% NEED 19%

BRAND 14% QUALIT Y 33%

v. The Factors they desire when judging the product are:

FACTOR S

0% 0%

PERFORMANC E & RELIABILITY 45%

RELIABILIT Y 15% DURABILIT Y 15%

PERFORMANC E 25%

vi. On the whole they rate the Quality of After Sales Service as good.

Sales service in %

EXCELLENT 20

LOW 5

GOOD 35 SATISFACTOR Y 30

vii. The Quality of the products offered from the machine tools in %.

Quality of machines

EXCELLENT 15

LOW 5

SATISFACTIO N 35

GOO D 45

viii.Overall the Customers rating of HMT (I) on different parameters is

Rating on different attributes

15% 14%

14% 16%

Customer service Brand Features Durability Quality Performance Price

16%

12%

13%

5.2.8. Problems faced by the CompanyThe two major areas presently the company is facing problems are:

1. Sales Promotion:The company broadly depends on the agents in the countries. These agents are not sufficiently aggressive. The marketing officials hardly go for field visit in the countries There are no offices in different countries and an off icial to administer day to day business, except for Middle East.

2. Lack of Professionals:The ratio of Non-Professionals to Professionals is 3:1 The pay scale is still not revised.

6. SWOT ANALYSIS

STRENGTHS: 25 years track record of successful implementation of International Projects worth over US $ 70 million Successfully implemented training centre projects in seven countries Strong Technological Base Expertise to understand needs of overseas customers Excellent facilities for long duration training in India Wide network of associates of repute Institutional Support Sustained customer focus WEAKNESS Sales Promotion Less technical people Non attractive pay package OPPORTUNITY Globalized economy High demand of machine tools in oil producing countries High cost of machines and servicing from developed countries THREATS Private co mpanies of India. Competitive companies of China and T aiwan.

7. RECOMMENDATIONSIn a liberalized economy HMT (I) has to initiate certain steps to be a major player in the global machine tool market. These steps are detailed below:

I. SALES PROMOTION:There are some recommendations that HMT (I) can follow to improve its sales promotion: 1. Aggressive sales promotion through personal visits with customers, agents, , suppliers 2. Identification of new agents or other partners. 3. Setting up of new offices across various countries. 4. Training programmes for customers and agents 5. Providing free service to important customers periodically. Model marketing plan for HMT (I). Goals: 1. To increase the market share of the co mpany. Phase 1: Market Resea rch Develop an introductory letter and basic marketing materials. Identify firms which require/uses of machine tools. Offer total solutions to prospective customers. Established marketing/sales networks Phase 2: Establishing agent relationship Identify firms who are capable of taking agency of HMT(I) machines Appoint one or more agents in each region / country Intensive "get to know you" including communication by email, telephone, Visit agents on a regular basis.

2. Export Promotion To be a part of International Buyer Program (IBP) Supporting 28 major domestic trade exhibitions annually and bringing more than 125,000 visitors from around the world, the International Buyer Prog ram undertakes for each show a worldwide promotional ca mpaign aimed at maximizing international attendance through work with the overseas network of Commercial Service and Embassy offices. Qualified buyers and prospective distributors, many brought as part of delegations led by overseas commercial staff, are assisted in meeting with interested exhibiting firms and provided services aimed at helping them f ind new suppliers and trade partners. Each show features an International Business Centre at which export counselling, interpreter, and other business services are provided to international visitors and exhibitors.

II. HIRING OF PROFESSIONALSAs observed the ratio of technical/professional to non technical employees is presently 1:3. In order to provide a qualitative change in the working of the company this ratio has to be 1:1. In order to achieve this HMT (I) has to hire professionals and also reduce non technical people through VRS schemes. In order to attra ct and retain qualified and technical people HMT (I) has to increase its pay package as per the prevailing norms in the industry.

8. CONCLUSIONIn the globalize economy HMT (I) is catering to international customers, it faces competition from com panies across the world. In order to stand up to this competition HMT (I) has to carry out certain structural changes in its operations. HMT (I) with its high brand image has to fully utilize the opportunity available in the global market. Even if it captures a market segment of 2 to 3 % globally it can increase its sales manifolds. The company has to evolve system and procedures so its operations are more efficient and much faster response to customers and suppliers is delivered. It has to simplify its procurement procedures in order to cater the delivery and quality needs of the customers. HMT (I) has to give or provide remuneration to its employees as prevailing in the industry in order to attract quality manpower as it is facing severe competition from the IT companies. And finally HMT (I) has got a committed work force which has to be channelized to perform better in a liberalized economy.

EXHIBITSEXHIBIT 1- HMT LOCATIONS

Sl.no

Location Type AddressBangalore , Karnataka - India Pin Code :560032 Phone :3330333,,, Fax :3339111,

1 Registered Office "H M T Bhav an" No.59, Bellary Road

2 Factory/plant Pinjore Panchkula , Haryana - India PinCode :134101 Phone :,,, Fax :, 3 Factory/plant Plot No. A-4, 5 Industrial Area, Phase - I, SAS Nagar Mohali , Punjab - India PinCode :160051 Phone :,,, Fax :, 4 Factory/plant Narsapur Road HMT Township P.O. Hyderabad , Andhra Pradesh - India PinCode :500854 Phone :,,, Fax :, 5 Factory/plant H-2, MIDC, Chikalthanas I A, Post Box No. 720 Aurangabad , Maharashtra - India PinCode :431210 Phone :,,, Fax :,

Exhibit 2- Associates listSl SUPPLIER ADDRESS PRODUCT no 1 Alex Machine Tools Goregaon,Mumbai Surface Grinders & Rotary surface grinders 2 Acumac Machine Peenya industrial area, Grinding Tools Pvt .Ltd Bangalore Machines 3 Bharat jyoti Tumkur Road , Hor.& vertical Industries Bangalore Rotary Table, Indexing Arrangement, Back Palte,3 Jaw Self centring chuck 4 D.M Kapur & Sons Industrial Shaping Machines Area ,Ludhiana 5 EIFCO M/c.Tools Ramnagar,Coimbatore Drilling ,Grinding, (P) Ltd Slotting, Tip Tool Grinders, Hacksaw etc 6 Elmeca Works Behind Railway Boring heads, station, Dharwad Milling Arbors 7 Gujarat Lathe Vikhroli(W) , Mumbai Pather Lathes Manufacturing Co.(P) Ltd 8 Guindy Machine Chromepet,Chennai Lathe chuck, Tools Pvt,Ltd Grinding M/c Automatic Tapping M/c &Precision Lapping M/c 9 Himalaya Industrial Estate, Plate bending Machinery Pvt Ltd Vadodhara machines Hydraulic press & shearing 10 Max Preci machines Peenya,Bangalore Auto reconditioning

11 Energy Machine Tools Pvt Ltd

Pandit Nehru Marg, Jamnagar

Radial Drills, Vertical milling &drilling

12 Nugen machineries Tasanand,Ahmedabad Guillotine Shears& Press brakes Mylapore, Chennai Hydraulic press Cutting Tools

13 Oriental Hydraulics Pvt Ltd 14 Sandvik Asia Mumbai Pune road, Pune 15 Shailesh Sales Corp Rajkot Power Presses 16 TOOLCRAFT Industrial Area, Bangalore 17 Widia (India) Ltd Tumkur Road, Bangalore 18 Radix Machines Indiranagar, Bangalore 19 Geeta Machine Industrial Area, Tools Pvt ltd Jamnagar 20 Atlas Machines (India)

Electric Discharge M/cs Cutting Tools D.R.O Milling Machine and Tool & Cutter Grinder Machine All Geared Heavy Duty Slotting Machine

Doshi marg Fort, Mumbai

Exhibit-3 SALES PERFORMANCE Value in Rs Lakhs

Product Range Sales 2003-2004 Machine Tools 837 1096 1500 Watches 449 307 575 Tractors 197 438 1600 Projects 993 1430 2000 Trading 226 62 700 Imports 292 247 525 Total 2994 3580 6900

Sales 2004-05

Target 2005-06

MACHINE TOOLS

Rs Lakhs

CUSTOMER/COUNTRY ORDER PROSPECTS COLUMBO, DOCKYARD,SRILANKA 200.00 IRAN-MTP MACHINES 900.00 USA 300.00 SAUDI ARABIA 150.00 UAE 200.00 SPARES 50.00 TOTAL 1800.00

TRACTORSDGCL GHANA 81.00 BANGLADESH 24.00 MOA SENEGAL 760.00 ZAMBIA-MEA 250.00 TOTAL 1115.00

RS Lakhs

CUSTOMER / COUNTRY ORDER PROSPECTS

WATCHESHONG KONG/CHINA 300.00 CANADA-MECH MOVEMENTS 10.00 ONAN-WATCHES 20.00 TOTAL 330.00

Rs Lakhs

CUSTOMER / COUNTRY ORDER PROSPECTS

PROJECTSCUSTOMER / COUNTRY ORDER KYRGSTAN-IT PROJECT 478.00 CASHEW PROCEESING UNIT 89.00 ZIMBABWE-SHE PROJECT 2250.00 VTC, SRILANKA 380.00 TOTAL 3297.00

Rs Lakhs

TRADINGPARS KHODRO IRAN 200.00 HPF Pdts for UAE & AFRICA 100.00 MISCELLANEOUS ORDERS 100.00 TOTAL 400.00

Rs Lakhs

CUSTOMER / COUNTRY ORDER PROSPECTS

KEY PERFORMANCE PARAMETERS ORDERORDE R 8000 6000 4000 2000 0 ORDE R

2003-04 2004-05 2005-06

ORDER 3464 5000 6959

KEY PRODUCTIVE PARAMETERS

productive parameters100 80 60 40 20 02003-04 2004-05 2005-06 per capita sales 36.96 45 87.34 per capita order 42.77 61 87.34 value added/ re of wage 2.36 2.67 4.44

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

years

KEY FINANCIAL FACTORS

Financial Factors250 200 150 100 50 02003-04 2004-05 2005-06 TO/Cap ratio 111 135 192 Curr ent rat 151 201 232 Profit Ratio 0.43 0.5 1.54 Ret on Cap 0.48 0.63 2.96

3.5 3 2.5 2 1.5 1 0.5 0

MARKET SCENARIO

Value in Rs CRORES

4000

3000 pro ducts 2000 pro jects others 1000

0 2003-04 2004-05 2005-06 pro duc ts 1494 1841 3400 pro jects 983 1430 2000 others 507 309 1500

EXHIBIT 4: List of CollaboratorsPRODUCTSCENTRE LATHES

COLLABORATORS

COUNTRY

OOERLIKN SWITZERLAND

CENTRE LATHES HERNAULT FRANCE BATIGNOLLES MILLING MACHINES FRITZ WERNER WEST GERMANY RADIAL DRILL CYLINDRICAL GRINDER SURFACE GRINDERS HERMANN KOLB WEST GERMANY OLIVETTI ITALY WMW EAST GERMANY

SPECIAL PURPOSE RENAULT FRANCE MACHINES GEAR SHAPER DRUMMOND U.K BROTHERS SINGLE SPINDLE MANURHIN FRANCE AUTOMATS GEAR HOBBING LIEBHERR WEST GERMANY MACHINE COPYING LATHE ERNAULT SOMUA FRANCE DIE CASTING TRACTORS WATCHES PRINTING MACHINES BROACHING MACHINE REFACTORY PRESSES BUHLER SWITZERLAND MOTOKOV CZECHOSLOVAKIA CITIZEN JAPAN SOCIETA NEBIOLA ITALY OSWALD FORST WEST GERMANY LAEIS-WERKE WEST GERMANY

EXHIBIT 5 Industries served by Machine Tools Automobile Work Shops Marine Engineering Services Air-Conditioning and Refrigeration Work Shops Catering to Oil Industry General Engineering Work Shops General Engineering Work Shops Tool Rooms Catering to Local Requirement Defence Industry Cement Industry-Maintenance Workshops Petrochemical Industry-Maintenance Workshops Die Casting Industries- Fencing, Grills etc Ship Building and Repair Work Shops Gas Cylinder Manufacturers Engineering Contractors Industries With Manufacturing Activities etc Crude Oil Production Petroleum Refining Basic Petrochemicals Cement Construction Fertilizer Plastics Defence Industries Automobile Industries Machine Tool Industries Agricultural Industries Steel Mills Ship Repair Workshops

EXHIBIT 6 Machine Tools Inspection Check List & Inspection Certificate. Machine Tools and Equipment are inspected under the following headings and details are recorded in the Inspection Report.

Sl. NO

DESCRIPTION CHECKED OK or NOT OK

REMARKS

1. Visual aspects Ok 2. Specifications/Drawings Ok From 3. Operating &Functional Ok HMT(I) elements 4. Electrical Elements Ok Inspection 5. Running Test Ok 6. Test Chart(Geometrical Ok accuracies) 7. Painting Ok 8. General Checking Ok 9. Snag List Ok Attended Date of Inspection: 29.03.06 to 03.04.06

Supplier: 1. Machine Type/: NH 22/1000, NH22/1000, NH32/3000 & NH32/3000 MODEL Signature: Name: Designation: (M/C NO: 7255), (7276), (7275) & (7277)

INSPECTION CERTIFICATE

HmtiReport No. HMT (INTERNATIONAL) LTD

NSR/HMT/73 HMT Bhavan, 59, Bellary Road , BANGALORE-560032, INDIA Date-20.04.06 1. Machine Type & Number NH22/1000-2 NOS &

(A Wholly owned subsidiary of HMT Ltd)

7255, 7256, 7275, 7277:

NH32/3000-2 NOS. 2. HMTIS PO NO and Date 3. Manufacturer/ 1 Supplier 4. Customer/ Agent 4 5. Date of Inspection 31.04.06 6. Result/ Verdict Inspection. 7. Spl Instruction/ Major Divisions if any 8. Remarks HMTI/2005-06PO/084020 Dt.27.03.06 NONOCleared from HMT (I)

Name the Designation Engineer(S)/Officer(S) Date: 05.04.06

Signature of Inspection

Exhibit 7 INCOTERMSInco terms are a set of International rules for the interpretation of commonly used trade terms, eliminating or reducing the uncertainties of different Interpretations of these terms in different countries. It was developed by the International Chamber of Commerce (ICC) in Paris. Incoterms 2000 contain 13 rules for standardised global trade, defining the most important responsibilities of buyers and sellers in International sales contracts. The specification of Incoterms 2000 on all contracts allow buyers and sellers to ensure the new Incoterms are being applied and clearly identify source of reference for the definition. Variations in local Trades, ports and customs are possible. They are as follows. EXW: Ex Works Carriage to be arranged by the buyer. Risk transfer from the seller to buyer when the goods are at disposal of the buyer. Cost transfer from the seller to the buyer when the goods are at the disposal of the buyer. FOB: Free on board Carriage to be arranged by the buyer. Risk transfer from the seller when the goods pass the ships rail Cost transfer from the seller to the buyer when the goods pass the rail. CFR: Cost and freight. It is same as FOB just the diff erence is that here: Cost transfer at port of destination, buyer paying such costs as are not for the sellers account under the cont ract of ca rria ge. CIF: Cost, Insurance and Freight. It is all same as CFR just the difference is that here: Carriage on Insurance to be arranged by the seller.

ORGANIZATIONAL CHARTManaging Director Finance

Director

Products Projects

JGM

Head

Machine Tools Watches Tractor

Marketing Sales & PromotionDGM DGM DGM

Quality Assurance

Shipping Trading

Manager Manager

Manager

Manager

Manager

Off-1 Off-2

Off-1 A.S

Off-1 Off-1 Off-2

Off-1 Off-2 Off-2 A.S A.S A.S

A.S A.S

A.S A.S A.S

Off 1, 2-Officers I, II A.S-Administrative Staff

M.D-1, 7, DGM-10,

Director-1, Managers-15,

JGMOfficers-15, Administrative Staff-19. Total- 68

BIBLIOGRAPHY1. Marketing Management by Phillip Kotler. 2. www.hmti.com 3. www.itma.com