final report on leypower rentals

Office : 19, Rajaji Salai, Chennai - 600001

Reporting: 3-A/1 & A/2, North Phase,

SIDCO Inds. Estate, Ambattur, Chennai - 600098

Ph – (044) 25342493,

Summer Internship ReportSummer Internship ReportSummer Internship ReportSummer Internship Report

LEYPOWER RENTALS AND LEYPOWER BUSINESS

Submitted To:-

Mr. C. G. Belsare General Manager – Engines

Ashok Leyland Limited

UNDER GUIDANCE OF

Mr. Abhilekh Mathur Astt. Manager (Engines)

Ashok Leyland Limited

Submitted By:-

Sumit Gupta

MBA, Batch of 2007- 2009 Institute Of Management, Nirma University

Ahmedabad

Summer Report: Leypower Rentals & Leypower Business

Prepared By: Sumit Gupta, MBA Batch of 2007-2009

Institute of Management, Nirma University

1

EXECUTIVE SUMMARY

Ashok Leyland has been a highly reputed firm with more than 8,000 crores turnover in

India. Ashok Leyland Limited (ALL), in the flagship company of the Hinduja Group, is a

manufacturer of commercial vehicles in India. In 1955, the company entered into an

agreement with Leyland Motors, UK, to manufacture Leyland vehicles and laid root to

Ashok Leyland trucks and vehicles.

AL’s main emphasis was on automotive section, which kept them providing higher

margins and better growth rate. However, Engines as a different product has been on a slow

growth rate and slowly gained its significance. Now with the Launch of their new product

“Leypower DG sets” which are completely sold under the name of AL they are planning

for expansion and consider rentals as one of their plans. This report on “Leypower Rentals

and Leypower Business” has been prepared to provide them a brief feedback of the project.

Rentals Business in the prevailing scenario has huge margins and profits. Due to regular

shortage supply of power and non-ability of government to fulfill demand it is currently

having a better growth rate. To extract maximum profits out of the business Ashok Leyland

needs to develop a better and highly effective network with dealers, OEM’s and local

vendors. This network is an actual base on which this business can prosper.

The report on this project provides them an analysis of the complete rental business. This

analysis has been completed under many sections. Rental Business section gives them a

brief idea of the business working and its major issues. Market Analysis gives them an idea

of the players and their strengths that should be kept in mind to prosper. Rental profits

provide an idea of the actual profits and earnings they can have. Business structure section

gives them an outlook to the roadmap of following this business. In addition, the last

section of proposal is one, which tells what can be their Break-even period for the

Business.

Considering the recommendations and limitations we recognize this sector to be highly

profitable and in 4 years of time they can achieve their Break even if they start with a fleet

size of 35 sets in the prescribed cities.




2

PART 1:

ORGANIZATION OVERVIEW

ASHOK LEYLAND IN INDIA




3

1. ORGANIZATION OVERVIEW

1.1 COMPANY PROFILE

Company Ashok Leyland Limited

Head quarters Chennai

2007 Sales 83,477,000,000 Rs.

Subsidiaries Gulf-Ashley Motors Limited

Ashley Holdings Limited

Ashley Investments Limited

Ashok Leyland Project Services Limited

Major Industry AUTOMOTIVE

Sub Industry TRUCK & TRAILER MANUFACTURERS

Country INDIA

Employees 12,125

Annual capacity 84,000 Units

1.2 BUSINESS PROFILE

Ashok Leyland Limited (ALL), in the flagship company of the Hinduja Group (an

England-based transnational conglomerate), is a manufacturer of commercial vehicles in

India. Ashok Leyland Limited, incorporated in 1948 as Ashok Motors started business as

an assembler of Austin car parts in India. In 1955, the company entered into an agreement

with Leyland Motors, UK, to manufacture Leyland vehicles and changed its name to Ashok

Leyland.

Early products included the Leyland Comet bus chassis, which sold in large numbers to

many operators, including Hyderabad Road Transport, Ahmedabad Municipality,

Travancore State Transport, Bombay State Transport and Delhi Road Transport Authority.

By 1963 the Comet was operated by every State Transport undertaking in India, and over

8,000 were in service. The Comet has joined in production by a version of the Leyland

Tiger.




4

The company’s principal activity is to manufacture commercial vehicles and spare parts.

It also manufactures special vehicles and engines for industrial, generator set (genset’s),

marine requirements and automobile spare parts. Ashok Leyland vehicles have built a

reputation for reliability and ruggedness. The 500,000 vehicles being put on the roads have

considerably eased the additional pressure placed on road transportation in independent

India. Eight out of ten metro state transport buses in India are from Ashok Leyland

The company has six plants having a total installed capacity of commercial vehicles and

ferrous castings of 84,000 nos. and 36,000 Tonns (T) respectively. The company is the

second largest manufacturer of Commercial Vehicles i.e. bus and truck in India. ALL and

Sundaram Industries have together joined hands with Irizar of Spain, a luxury bus

manufacturer, to float a joint venture company, Irizar TVS. This new joint venture will

manufacture bus bodies in India. ALL plans to invest Rs 5,500 million in the next two

years on capacity expansion for all its commercial vehicles. This will include setting up of

a unit in Dubai to build bodies of buses, a bus-manufacturing factory in north India and a

unit to manufacture gears for export.

The plan is to take the capacity to 100,000 units. The company also has plans to enter the

small vehicle segment i.e., small trucks of less than nine tons. The company is setting up a

new Plant in the North Indian state of Uttarakhand at Pant Nagar at an investment outlay of

Rs. 1200 crores. This plant is expected to go on stream in the year 2008. The Plant will

have a capacity to produce around 40,000 commercial vehicles and is expected to cater

mainly to the North Indian market taking advantage of the excise duty and other tax

concessions. The company has signed an agreement with Ras Al Khaimah Investment

Authority (RAKIA) in UAE for setting up a new manufacturing base in the Middle East.

The company also announced that it might set up a manufacturing base in South Africa.

The company was involved in exporting vehicles to the Sudan against UK government

export restrictions to the region.

Last year; the company acquired Czech-based Avia's truck business. The newly acquired

company has been named Avia Ashok Leyland Motors s.r.o. The company has recently




5

announced a joint venture with Japanese auto giant Nissan (Renualt Nissan Group) which

will share a common manufacturing facility in Chennai, India.

1.3 QUICK FACTS

Founder Mr. Raghunandan Saran

Year of Establishment 1955

Industry Manufacture of Commercial Vehicles

Business Group Hinduja Group

Listings & Its codes BSE: 500477

Collaborations

• Land Rover Leyland International Holdings Ltd.

(LRLIH) - UK based, jointly with IVECO. (Hinduja

Group is 100% holder of LRLIH since July 2006.)

• In-house R&D with world leaders such as Hino Motors

and ZF

Head Office 19, Rajaji Salai

Chennai 600 001

India

Tel.: +(91)-(44)-25342141

Fax: +(91)-(44)-25342493

Website www.ashokleyland.com

1.4 COMPANY FLASHBACK

Ashok Leyland has been the technology leader in the country's commercial vehicle industry

for more than five decades. It has molded India's commercial vehicle profile with

technologies and product ideas that have become the industry norms.

The company took shape when Pandit Jawaharlal Nehru, the then and first Prime Minister

of India, persuaded an industrialist, Mr. Raghunandan Saran to manufacture automotive

vehicles in India. In 1948 the concept was implemented in Madras for the assembly of

Austin Cars. It was known as British Leyland. Soon, in 1955 it was changed to its current

name and commenced the manufacturing of commercial vehicles.




6

Today, Ashok Leyland is the first automobile company in India to win the ISO 9002

certification. It was the year 1993. In 1994, the company became an ISO 9001 certified, in

1988 QS 9000 and in 2002 ISO 14001 for all vehicle manufacturing units. The company

has also grabbed the credit of becoming the first Indian auto company to receive the latest

ISO/TS 16949 Corporate Certification. This certificate is specific to the auto industry.

1.5 MILESTONES

1966 Introduced full air brakes

1967 Launched double-decker bus

1968 Offered power steering in commercial vehicles

1979 Introduced multi-axle trucks

1980 Introduced the international concept of integral bus with air

suspension

1982 Introduced vestibule bus

1992 Won self-certification status for defense supplies

1992 Launched vestibule buses

1993 India’s first automobile industry to receive ISO 9002

1997 India's first CNG powered bus joined the BEST fleet

2001 Received ISO 14001 certification for all manufacturing units

2002 Launched hybrid electric vehicle

2006 India’s First Auto industry to receive TS16949 Corporate

Certification.

1.6 PRODUCTS

The major Products of Ashok Leyland can be categorized as

� Buses

� Trucks

� Defense & Special Vehicles

� Engines

� Diesel Generator Sets




7

The company manufactures a wide range of products, which can be differentiated under

Non-Exhaustive and Goods carrying Segment. They are

Non-Exhaustive � Luxura � i-bus � Viking BS-I - city bus � Viking BS-II - city bus � Viking BS-III -city bus � Cheetah BS-I � Cheetah BS-II � Panther � 12 M � Stag Mini � Stag CNG � 222 CNG � Lynx � Double Decker � Vestibule � Airport Tarmac Coach � Double-decker buses

Goods Carrying Segment � Bison Haulage � Tusker Super 1616 � Comet CO 1611 � 1613 H � Comet Gold 1613 � Comet Tipper (4X2) � Taurus 2516- 6 X 4 Tipper � 2214 � Bison Tipper � Tusker Super 2214 - 6 X 2 � Tusker Gold 2214 (6X2) � Taurus 2516 - 6X4 � 2516 H (6X2) � Taurus 2516 - 6 X 2 � 4018 Tractor � Artik 30.14 Tractor � Tusker Turbo Tractor 3516 � ecomet 912 � ecomet 111i � 4921

Boosted by higher production and sales in the last quarter, Ashok Leyland (ALL) reported

an all-time sales high of 54,740 vehicles for the just-ended fiscal, 12.5 percent more than




8

last year's sales of 48,654 vehicles. At 6,812 vehicles, exports grew by 80 percent in

comparison to 3,782 vehicles last fiscal. Overseas markets accounted for one out of every

eight vehicles sold. Out of the total domestic sales of 47,928 vehicles, the goods segment

contributed 37,137 numbers, up 10.9 percent from 33,471 vehicles last fiscal.

Sales in the passenger segment were 10,469 units, as against 11,025 last fiscal. Total

production during the year grew 10.9 percent from 49,148 to 54,524 vehicles. Reflecting

the hike in installed capacity from 50,000 units to 67,000 units, ALL's monthly production

has stayed over the 5,000 mark since December 2004. Consequently, production in the last

quarter was up 15.8 percent and sales rose 15.9 percent, on a year-on-year basis.




9

PART 2:

BRIEF THEORY ON DIESEL GENERATOR

WHAT’S IMPORTANT IN DIESEL GENERATORS?




10

2. BRIEF THEORY ON DIESEL GENERATOR

2.1 WHAT IS A DIESEL GENERATOR?

A diesel generator is the combination of a diesel engine with an alternator to generate

electric energy. Diesel generators are used in places without connection to the power grid

or as emergency power-supply if the grid fails. Small portable diesel generators range from

about 1KVA to 10KVA, while the larger industrial generators can range from 8KVA—

30KVA for homes, small shops & offices up to 2000KVA used for large office complexes,

factories and power stations. These generators are widely used for not only emergency

power, but also many have a secondary function for providing back up power to utility

grids.

Figure 1: Ashok Leyland Generator

Ships often also employ diesel generators, sometimes not only to provide energy for

electric systems, but also for propulsion. The use of diesel generators for propulsion is

actually becoming more common due to the fact that in this arrangement the generators do

not need to be close to the propeller and instead they can be placed in better positions,

usually allowing more cargo to be carried. Such a diesel-electric arrangement is also used

in some very large land vehicles.




11

Power generators are selected based on the load they are intended to supply power for,

and that load's "mission critical" needs (e.g. a hospital needs to have 100% redundancy and

up-time, a backyard standby unit to keep a hot tub warm isn't nearly as critical). Diesel

generators can be operated together (in parallel). The use of parallel running generators

provides the advantages of more capacity, efficiency and redundancy. A power plant driven

by diesel generators will typically include between three and six machines.

There are internationally agreed definitions of the rating levels for diesel engines.

� Standby - Output available with varying load for the duration of the normal source of

electrical supply. In essence it is the "prime overload" condition with no time limit for an

engine which is normally not operated.

� Prime - Output available with varying load between 25% and 100% of the rating for an

unlimited time. The unit can be overloaded to 110% of the rating for one hour in twelve.

� Continuous - Output available without varying the load for an unlimited time.

If the standby rating were 1000 kW, then a Prime Power rating might be 850 kW, and the

continuous rating 800kW (Taking unit power factor).

Generally to gain the maximum of product life cycle for diesel genset it requires various

cost considerations. A diesel generator need a fuel running cost, maintenance costs and

may even involve an employee working on it. Also various law governing noise pollution,

air pollution and area for use should be considered by manufacturer as well a customer

before using it.

Diesel fuel is a form of light fuel oil, very similar to kerosene, but diesel engines,

especially older or simple designs that lack precision electronic injection systems, can run

on a wide variety of other fuels. One of the most common alternatives is vegetable oil from

a very wide variety of plants. Some engines can be run on vegetable oil without

modification, and most others require fairly basic alterations. Biodiesel is a pure diesel-like

fuel refined from vegetable oil and can be used in nearly all diesel engines. The only limits

on the fuels used in diesel engines are the ability of the fuel to flow along the fuel lines and

the ability of the fuel to lubricate the injector pump and injectors adequately. In general




12

terms, inline mechanical injector pumps tolerate poor-quality or bio-fuels better than

distributor-type pumps. Also, indirect injection engines generally run more satisfactorily on

bio-fuels than direct injection engines. This is partly because an indirect injection engine

has a much greater 'swirl' effect, improving vaporization and combustion of fuel, and also

because (in the case of vegetable oil-type fuels) lipid depositions can condense on the

cylinder walls of a direct-injection engine

2.2 DIESEL GENERATOR’S AS PER REQUIREMENTS

Selection of a generating set is not merely adding all the loads to arrive at the set rating.

Following points need special consideration while selecting a genset.

Generator for rapidly fluctuating loads:

Loads such as welding loads, compressors, furnaces etc. are ones which fluctuate under wide

limit. These fluctuations can lead to change in output voltage and frequency of generator. This

will affect other connected loads. It is better to use oversized generator rated 30% to 40% higher

than the estimated steady continuous load, as this functions satisfactorily. A detailed study is

always required to calculate the set ratings.

Wave form and Radio/Telephone Interference:

Most of the industrial generators meet the requirements of the wave from deviation (with

respect to ideal sinusoid) as per the standards. Instruments like computer are said to be sensitive

to wave forms and the standard generator may not be suitable for the same. Hence there is a

need to design special generators for them. The distortions which are generally created in

industries are due to non liner loads like thyristor converters. They result in malfunction of the

motor due to malfunction of the excitation control of the generator. Generally proper filters are

used for such kind of loads.

Radio interferences caused by rubbing contacts at slip rings can be largely suppressed if

desired by fitting suppressor capacitors.

Number of Sets required:

Distribution of loads, sizes and types of loads, available sizes of generator and the study of

economics of a set used in parallel should be done before installation. If the loads are not




13

concentrated at a single point its always advised to use different no of sets instead of using a

single generator as this gives a chance to overcome the difficulties of failure if occurred in a set.

These different sets can be easily maintained and serviced without affecting the total load. The

only disadvantage is the additional complications and the cost involved in introducing parallel

generators.

Environment in which generator is used:

It plays an important role and determines the type of enclosure and the degree of protection for

the generator which in turn affects the rating that can be obtained for a given machine. For

example if the set is running in chemical and corrosive environment special treatment for

winding and other parts, and special materials are required while manufacturing the generator

set.

2.3 PARTS OF DIESEL GENERATORS

There are many components, which are required in running for generator. The major segments

under which it can be analyzed are:

1. Engine: A diesel engine is an internal

combustion engine, which operates using the

Diesel cycle. Invented in 1892 by German

engineer Rudolf Diesel, it was based on the hot

bulb engine design. A diesel engine relies upon

compression ignition to burn its fuel, instead of

the spark plug used in a gasoline engine. If air

is compressed to a high degree, its temperature

will increase to a point where fuel will burn

upon contact. This principle is used in both four-stroke and two-stroke diesel engines to

produce power. A diesel's compression ratio is usually between 16:1 and 25:1. This

extremely high level of compression causes the air temperature to increase to 700 to 900

degrees Celsius (1300 to 1650 degrees Fahrenheit).




14

Problems and solutions with Diesel Engines

In cold weather, diesel engines can be difficult to start because the mass of the cylinder

block and cylinder head absorb the heat of compression, thus preventing ignition. Spark

ignition engines undergo the same problem, though they have the added benefit of a spark

plug to help cause ignition. The main reason diesel engines take a long time to warm up in

cold weather is the lack of a throttle. Spark ignition engines are throttled, so only the right

amount of air comes in at a time. This is less efficient, but spark plugs only work near the

stoichiometric, or the proper ratio of air to fuel for complete and most efficient combustion,

mixture of fuel and air. Diesel engines accept a cylinder full of air and measure in the right

amount of fuel. So each time the intake valve on a diesel opens, a full charge of cold air

enters the cylinder. This cools the cylinder back down. The heat gained from each

combustion process therefore can only cause a gain in temperature that is much, much

smaller than it would be in a spark ignition engine.

Glazing occurs due to low combustion temperatures and pressures in the engine cylinder.

Running an engine under low loads low cylinder pressures and consequent poor piston ring

sealing – these rely on the gas pressure to force them against the oil film on the bores to

form the seal. Low initial pressure causes poor combustion and resultant low combustion

pressures and temperatures. This poor combustion leads to soot formation and unburnt fuel

residues which clogs and gums piston rings. This causes a further drop in sealing efficiency

and exacerbates the initial low pressure. Glazing occurs when hot combustion gases blow

past the poorly-sealing piston rings, causing the lubricating oil on the cylinder walls to 'flash

burn', creating an enamel-like glaze which smoothes the bore and removes the effect of the

intricate pattern of honing marks machined into the bore surface. Un-burnt fuel leaks past

the piston rings and contaminates the lubricating oil. At the same time the injectors are being

clogged with soot, causing further deterioration in combustion and black smoking. This

cycle of degradation means that the engine soon becomes irreversibly damaged and may not

start at all and will no longer be able to reach full power when required. To remove this

problem an engine should be loaded correctly, the load resists the movements of the

crankshaft and piston during combustion. This causes the combustion pressure to rise as the

volume of the cylinder cannot increase directly in line with the increase in pressure during

combustion.




15

2. Alternator: An alternator is an electromechanical device that converts mechanical energy

to alternating current electrical energy. Most alternators use a rotating magnetic field but

linear alternators are occasionally used. In principle, any AC electrical generator can be

called an alternator, but usually the word refers to small rotating machines driven by

automotive and other internal combustion engines.

It's mainly a mechanical device, concealing a pulley, wheels, brushes and wires, which

hooks to the crankshaft and runs to the battery. This way, the gasoline powers the engine to

turn the crankshaft, which in turn connects to the alternator. The alternator converts that

motion into current. The resulting electricity operates the cooling fan, headlights, windshield

wipers, radio, defogger, and air conditioning.

To be more specific, an alternator is very efficient at producing a constant, high voltage,

even when the car is idle, because of how it works. The belt (from the crankshaft) connects

to a pulley system, called the rotor, such that when the belt is turning, it moves magnets

across a special surface, called a conductor. Moving magnets, in the stator, generate an

electrostatic field, otherwise known as electricity. This alternating current is controlled by a

voltage regulator to keep the voltage steady. Another part, called the diodes, convert

alternating current into direct current that flows on to the battery and other components.

The output frequency of an alternator depends on the number of poles and the rotational

speed. The speed corresponding to a particular frequency is called the synchronous speed

for that frequency.

3. Control Panel: The Manufacturing of AMF Panels and Standard Control Panels are

fabricated from the best raw materials to ensure effectiveness and hence the reliability of the

products. Generally we have two types of panels as:

� Automatic Panels: A complete range of AMF control Panels are fabricated our of 16

SWG thickness, high grade CRCA Sheet steel. Control Panels are suitable for

240/415V, Single/three phases, 2/4 wire 50 Hz. AC supply. The quality materials used

to manufacture the control Panels make them dust and vermin proof. They are

meticulously wired as per international standard and powder coated to ensure a long life.




16

� Standard Panels: We also fabricate Standard control Panels our of 16 SWG CRCA sheet

steel suitable for 240/415V, single/three phase/ 2/4 wire 50Hz AC electric supply. The

standard Panels are well engineered and leave no scope for errors.

4. Acoustic Enclosures/Canopies: Silent D.G Set container is of modular construction with

the provision to assemble and dismantle easily as per site condition. The structure is

fabricated using CRCA (cold rolled cold-annealed) sheets. 14/16 SWG perforated sheets of

22 gauge with 6mm diameter are used to support the panels and roof. Rock wool slabs of

suitable thickness and high density is used for acoustic purpose to reduce the sound level to

permissible limits, i.e. as per pollution control norms. The doors are gasket with high quality

EPDN gaskets to avoid leakage of sound. The door handles are lockable type. These

Enclosures are made keeping in mind the following points:

�� Adequate ventilation for genset cooling air requirement.

�� Absorbent / insulating material used is fire radiant.

�� Suitable thermal lagging to avoid localized heating of adjoining part of exhaust.

�� Easy access to service points on genset’s.

The acoustic enclosure is designed with the help of CAD software. The enclosure can be

tailor made as per the requirement and depending upon the capacity of D.G. Set. The

enclosure is ideal for all locations of installation.

For Acoustic purpose Rock wool slabs with

high density 64kg/m3 and confirming to IS-

8183 are used. Also a high-density fiber glass is

used for clear view and better prevention

purpose. To increase the life of acoustic

material, resin coated fiberglass cloth is

provided on exposed surface of rock wool. For

modifying reverberations, sound absorbent and

sound reflecting materials are used. Thickness of Acoustics will be nearly 100mm,

confirming to sound level of 75 db at 3mtr distance from acoustic enclosure. Excellent




17

results of acoustic enclosures are achieved by creating the proper balance between sound

absorbing and sound reflecting materials.

The enclosure is painted with polyurethane epoxy paint with zinc oxide primer base, for

the longer life and to make it weather proof. The paint is highly resistant to acids, alkali’s,

salt spray, halogens, solvents, lubricants etc. It has very good dielectric properties and

resistant to abrasion and cracking. This surface treatment is 100% non-yellowing aliphatic

polyurethane which provides heavy-duty long-term protection for equipment. For the proper

ventilation and to maintain the temperature inside the enclosure, exhaust fans are used.

Some Enclosures may also be naturally aspirated. Air volume required for ventilation is

calculated keeping in view the combustion, cooling air, & alternator cooling air as per the

specifications given by the engine and alternator manufacturer. If required a blower (Co-

axle flow fan) is used to meet total air requirement & air charges. Temperature of enclosure

does not exceed beyond 7 degree of ambient temperature difference.

These enclosures provide wide features as:

�� Guaranteed performance

�� Complete size flexibility

�� Sturdy construction

�� Access doors from all sides

�� Ventilation options include acoustic louvers ad attenuates if required.

�� Proper surface treatment for longer life and better aesthetics.

�� Proper designed to achieve best acoustic qualities.

�� Consistent quality, dimensions and performance.

5. Base: Base frame is fabricated either in ISMC channel or in sheet metal. The base frame is

generally primer coated and painted.

6. Battery: It is another important part of DG, which helps to start DG and provide power to

client. A generator battery charger is different from the battery chargers for car. A generator

battery charger is meant to keep your battery charged by supplying a precise "float" voltage

to it. This voltage should be neither too low, nor too high.




18

PART 3:

RENTAL BUSINESS

WHAT’S IMPORTANT IN RENTAL BUSINESS?




19

3. RENTAL BUSINESS

3.1 PRESENT POWER SCENARIO

India is the world’s sixth largest energy consumer, relying on coal as the primary energy source

for over half of its total energy needs. Thermal power plants produce more than three quarters of

India’s electricity, taking advantage of India’s position as the third largest producer of coal in the

world. The electricity sector has long experienced capacity shortfalls, poor reliability and quality

of electricity (voltage fluctuation, etc.) and frequent blackouts. Industry cites electricity supply

as a major impediment to economic growth. Despite reforms introducing private participation

during the 1990s, the India’s electricity sector has remained dominated by the state since India’s

independence in 1947. The Electric Supply Act of 1948 integrated smaller fragmented utilities

into 19 state electricity boards. SEBs remains the dominant institutions within India’s electricity

industry, controlling well over half of the electricity supply and the vast majority of distribution.

The SEBs fall under the jurisdiction of individual state governments. Currently, the financial

losses of the SEBs total to nearly US$ 6 billion, amounting to 1.3% of India’s GDP.

Graph 1: Demand Supply Gap Source: EIA 2006-07




20

Because India could not adequately address the country-wide shortage in electricity supply

through state and federal deficit spending, federal and state reforms aimed at minimizing the role

of cash-strapped and inefficient state electricity boards (“SEBs”) and empowering independent

regulators across the country. States were given wide latitude to pursue their own reform plans.

Some states privatized distribution, others unbundled their SEB, and a few opted against

structural reform, keeping the SEBs intact and reforming internally. With the introduction of

independent regulators in 1998, independent electricity regulatory commissions at the state level

have primary responsibility for setting retail electricity tariffs and approving tariffs between IPPs

and the state SEBs.

From 1990 to 2000, annual electricity generation and consumption nearly doubled and India’s

projected annual rate of growth in energy consumption (2.6% to 4.5%) is the highest of any

major country. Estimates of the current electricity supply shortage for peak capacity range from

11% to 18%. A summary of electricity generation, by project type, and electricity consumption

during the period under review in the IPP study is set forth below in Table 1.

Thus it is clear from the data that the lack of electricity in India is high and causes a huge

influence on its development. Thus this deficiency is due to two reasons, one due to shortage of

supply during peak period (Also known as period of high demand) and second due to lack the of

regular supply shortage. Looking at the consumer prospects there are very less options in front

of them to gain electricity either for a short term or for a period of high use. This available

TABLE 1: ELECTRICITY GENERATION AND CONSUMPTION 1990-2001

1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Net

Generation 275.5 395.8 412.7 441.2 470.7 503.7 512.0 533.3 545.4 560.9 565.9 570.3

hydroelectric 70.9 72.0 68.4 73.9 82.2 79.9 73.7 77.4 78.4 87.4 88.4 86.4

Nuclear 5.6 6.5 7.4 10.5 10.6 11.5 14.1 18.2 19.2 21.2 23.4 25.2

geo/solar/

wind/biomass 0.0 0.1 0.8 1.0 1.1 1.4 1.6 1.8 2.0 2.3 2.6 2.8

conventional

thermal 198.9 317.2 336.1 355.8 376.8 410.8 422.6 435.8 445.8 449.8 451.8 455.8

Net

consumption 257.1 369.7 385.4 411.7 439.1 469.4 477.5 497.2 505.2 515.6 530.5 548.8

Imports 1.0 1.7 1.7 1.6 1.5 1.4 1.5 1.5 1.5 1.5 1.5 1.5

Exports 0.1 0.1 0.1 0.1 0.2 0.3 0.2 0.3 0.3 0.3 0.3 0.3

Note : generation components may not add to total due to rounding

Source: DOE/EIA




21

electricity can thus be further differentiated in two categories. These can be said as 1) Grid

Power and 2) Capative power.

The grid power electricity has many options like:

a) State Electricity Board

b) Own Power Plants (Could be of coal, Nuclear Fuel, Hydro power, Wind power)

The second one is of capative power, which again can provide power for a short duration or as

per high utility, they are:

a) Uninterrupted power supplier (UPS): It is a device, which automatically starts ones

the power goes off. There is a huge use of these machines in Information technology and

Telecomm industry. They are short load bearers and can offer there service for a short

time period only.

b) Inverter: They are also one of the sources, which provide electricity within no time of

the power loss. They can be used to carry high loads as compared to UPS and can

actually be used for longer time duration. They are highly effective for residential

purpose and for offices/business with limited use of power work.

c) Natural gas sets: These are Natural Gas generator sets, which have very low emission

of NOx. While these versatile new generator sets are very fuel efficient, they also serve a

high output to the user. Another important feature of these series is that it has been

designed for extended maintenance intervals. Less required maintenance means lower

operating expenses. They are also the biggest threat to substitution to the DG sets

prevailing in market.

d) Diesel Generators: Working part of DG has been already explained. These can be used

for high load carrying purpose. They are not only used under power failures but also

used for peak period of power requirement.

3.2 WHY “RENTAL BUSINESS” – MARKET OPPORTUNITIES

Genset Providers gain a huge margin on rentals then on sales of there generators. Still there is

huge profit to the customer who prefers to use Generators on rentals. All starting entrepreneurs

or even the bigger organizations need genset’s on rentals to make a full-fledged use of it and get

their job done without interruptions. Renting genset’s make a lot of sense owing to these

factors:




22

� For Establishing a new enterprise and which is going to take some time to reach the full

capacity

� Organization under expansion and the power requirement is growing

� Process industry requires backup for critical loads

� If customer does not want to make capital investments in captive power facilities.

� Customer inadequate to fulfill his seasoned demand and need short term additional

power.

� Customer is setting up a new project site where SEB supply is not immediately available.

� Customer is in a new industrial area, where SEB supply is yet to be streamlined.

� The client has seasonal requirements of additional power.

� Client is experiencing inconsistent and poor quality SEB power.

� Client needs to limit his maximum demand with SEB.

� Client needs limited power during his planned plant shut downs.

3.3 WHAT IS “RENTAL BUSINESS”?

Rental business works on certain principle and predefined norms formed by organizations to

follow. Generally an advance for 2 months is taken and a contract agreement is signed between

the company and the client, which includes the details of Pricing, Time period and other minute

details about expenses. These expenses can be given as

a) Loading and Unloading: These expenses are born by client or are as agreed in

agreement. This may also depend on DG set to be used. The costing may be based on

the location; availability of transfer and no of times the loading or unloading needs to be

done.

b) Transportation: DG’s upto 250KVA may or may not be trolley mounted, which is

done strictly based on the client needs and requirements. DG’s of higher KVA are

loaded on trailers for transportation and are taken to the customer place. The costing

done here is again based as per the availability of resources.

c) Installation and commissioning: This can be further divided as

i) Foundation: Generally born by customer.

ii) Earthing: A DG set needs four earthings are per requirement. Two for DG body and

two for the neutral.




23

iii) Cabling: It is done from alternator to control panel. Company provides this cabling

service, which costs as per their charges, and client need.

iv) Exhaust pipe: For the removal of flue gases pipes should be raised around 5 meters

above the nearby buildings.

v) Temporary shed: This is an essential requirement for the DG, which keeps it

prevented from environmental hazards.

*A few certifications are required from CPCB, Electricity inspectorate and PWD. Megatest and

Earthtest are to be done for this purpose. The responsibility of these tests lies onto the customer;

organizations just give test certificates of their company.

3.4 USER BASED RENTAL CLASSIFICATION

The Rental Business of the Generators provides huge margins to the businessman. These

Generators are generally taken from daily basis to yearly basis. These generators have a huge

variation in their usage and hence their usability differs from every customer to customer.

The major classification of the business can be done in two categories as:

1) Duration of Generator Rent

The major classification of these durations are done as:

a) Short Term: These periods of rentals are actually the ones, which can vary from daily

basis to 2-3 months basis.

b) Long Term: These are the ones, which vary from 2-3 months to 1-year basis. They give

a better usage to Generators and hence more earnings to the rental provider.

c) Project Work: These are the ones, which give maximum utility to the diesel generators

and provide a better payback to the investment made on the generator sets. These

generator sets are generally of high KVA and requires a huge customer satisfaction

before they are taken.

2) Type of Generator Used

a) Residential/Single Room Generators: These are the ones, which are below 15KVA

power capacity and are taken for a seasonal period or on hourly periods for low power

supply. This category of generators is the one, which give lower return and also for a

shorter duration. The major players in this category are Honda, Birla, Kirloskar, Greaves

etc..., whose engines are highly utilized by unorganized sectors for rentals.




24

b) Commercial/Small Business Generators: These are the ones, which range from

15KVA to 125KVA. They are taken from hourly period to monthly period basis. These

DG’s provide better margins if rented for a shorter period. The Major Players in this

category are unorganized sector like local players and some of the players like National

hiring which provide all range requirements. Other players have less fleet in this section.

c) Medium Firm Generators: These are the ones, which range from 125KVA to

1000KVA. They are generally taken from monthly basis to yearly basis. These

generators are the ones, which carry major organized sector, and Cummins hold the

highest market share in it. They provide a huge margin rate to the players. The major

players in this segment are Cummins, Caterpillar, Nityanand, Modern Hiring, National

Hiring, Marco and Powermak.

d) Large Firm Generators: These are the ones, which range from 1MW to 10MW. These

generators are generally taken for project works. They involve a huge service network

for proper running of the generator. The major players are Cummins and Caterpillar.

3.5 ADVANTAGES OF RENTAL BUSINESS OVER OTHERS

There are many advantages of using a genset either on rentals or preferring to buy your own set.

However Genset Providers offer following advantages:

� Guaranteed availability

� Immediate delivery

� Quality power

� Zero Capital Investment

� Mobility of available Power

� Total service support

� One phase relationship for services.

3.6 CUSTOMER EXPECTATIONS FOR RENTAL DG

Service is the most important aspect for any heavy equipment. Moreover, when it comes to

Rentals it becomes even more important because people go for rented DG mostly to overcome

disruption or lack of power availability. They expect it to be free from problem and even if

problem comes they expect it to be corrected within 4-5 hours or at most 1 day.




25

Depending on the type of usage dealer might even need to keep a back up generator. For

example in case of marriage, an exhibition, or religious processions it is quite possible that a

genset failure could occur. In that condition it is certain that you will not get paid anything for

the rental. Those in the field tell that even violent scenes erupt in such critical cases.

People generally don’t want to take any headache regarding DG and expect the company to do

the maintenance activities according to their convenience.

3.7 CONSIDERATION IN RENTAL BUSINESS

There are some major and minor issues involved with rental business, which an organization

needs to look for profitability and working. These issues are:

1) Costing Issues: Here organization needs to look after the negotiation that they can

undergo with there clients for rentals of DG sets.

a) Transportation

b) Loading/Unloading

c) Fuel costing

d) Octri, MVAT and Service tax cost

e) Other outstanding costs

2) Maintenance and Services Issues: Organization needs to provide regular

maintenance to their customers and need to have a proper network to provide better

response in case of failures. The issues basically here are

a) No of vendors available

b) Dealers Availability and powers to them

c) Battery and its maintenance issues during working

d) Services provided on Breakdown

3) Features issues: Customer may need some specific features or services that must be

fulfilled to provide better scope of work.

a) Acoustics size and requirements

b) Mobility features

c) Earthing issues

d) Base Making and preparation

e) Exhaust considerations




26

4) Authority with the Team: Every section of an organization needs to work on

independent basis. Therefore there must be a complete devoted team for rental business,

which can fulfill and look after customer needs and demand. The concern here should be on.

a) Rentals as a different business group.

b) Negotiation Power.

c) Clearing bills on spot decision.




27

PART 4:

MARKET ANALYSIS

RENTAL MARKET IN INDIA




28

4. MARKET ANALYSIS

4.1 LEADING PLAYERS IN RENTAL BUSINESS

1. Cummins: Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc. USA,

the world’s largest independent diesel engine designer and manufacturer above 200 HP. Set

up in 1962 . Today, CIL is India’s leading manufacturer of diesel engines with a range from

205 hp to 2365 hp and value packages serving the Power Generation, Industrial and

Automotive Markets. CIL also caters to the growing market for gas and dual fuel engines.

Cummins Power Generation Business is the market leader in the Diesel and Gas power

systems. They are a single window provider for complete energy and power solutions,

offering top-of- the-line products (diesel & gas) and services.

CIL is one of the leading and major players in rental business with DG range of 125KVA to

1500KVA spread across India. The reason for Cummins being a strong player in this field is

their strong network and their own manufactured diesel generators. This gives them a

chance to use their own customer base (of diesel generators), as a rental client.

2. Gmmco (Caterpillar): For more than 80 years, Caterpillar Inc. has been building the

world's infrastructure and, in partnership with its worldwide dealer network, is driving

positive and sustainable change on every continent. With 2005 sales and revenues of $36.34

billion, Caterpillar is a technology leader and the world's leading manufacturer of

construction and mining equipment, diesel and natural gas engines and industrial gas

turbines. As a leading power systems supplier, Caterpillar and the worldwide Cat® Dealer

Network are committed to supplying client with the electric power solutions he need to

operate his business at maximum efficiency. Caterpillar Electric Power Systems —

generator sets, automatic transfer switches (ATS), uninterruptible power supply (UPS) and

switchgears — are all engineered to work together to offer them the convenience of a single-

source provider. Caterpillar generator sets have a powerful reputation in a variety of electric

power markets - and they have it for a reason. Cat has been into the business of rentals

through GMMCO from past 10 years. They are also one of the major players who are

successfully earning profits from this segment. GMMCO Limited is the largest distributor of

Earthmoving, Mining, Construction Equipment and Diesel Engines / Generating Sets in




29

India. They have been in this business from the last three decades. GMMCO is the dealer of

products from leading companies like Hindustan Motors Ltd. (Power Products Divisions),

Caterpillar and Hindustan Powerplus (a joint venture between Caterpillar and CK Birla

Group of Companies). The company operates in the Southern, Western and Central parts of

India, having 28 offices and over 800 committed employees. They have arrange from

60KVA to 2500KVA in offering for genset’s. There being manufacturer adds to there

strength.

3. Nityanand: It has Twenty-Eight years experience in supplying Power Generators on rentals

all over India with a list of Reputed Clients. They are the acknowledged specialist in

temporary power generation packages all over India, which ensure quick response in even

the most inaccessible location to huge spectrum of industries from Refineries to Factories,

Onshore to Offshore; Construction to emergency under the name of Nityanand

Infrastructure Limited.

Nityanand Infrastructure Limited has been established specifically to provide readymade

power Rental Solution for all type of projects regardless of the application, size, duration,

industry / location, which includes consultation, design, installation, operation &

maintenance, emergency repairs & replacement without much time loss at remote places.

They have a range from 30KVA to 1500KVA in offering which generally works on the

diesel engines of Cummins (even older sets of KCL). There Major strength has been better

dealer network.

4. National: National Hiring, the No.1 power generators hiring company of India is a trusted

name in the Genset’s hiring industry. They provide perfect solutions to all power needs with

a complete range of generators from 2.5 K.V.A to 1250 K.V.A for varied commercial and

consumer’s application. 25 years in the service, it has emerged as a major suppliers of

Genset’s on hire to various segments of industry such as small to large scale industry. They

are having Genset’s of latest models and if there is a long-term project they are ready to

supply brand new Genset’s. They are preparing hiring scheme as per client’s requirement.

They have provided Genset’s in the very difficult situation like recent rain flood in Mumbai

for which they have received award from Government of Maharashtra. They have supplied

to reliance energy in those flood days in which they were helpless for which they have




30

received their certificate of thanks, for good services and apprehension. They have even

supplied to Gujarat, Kutch earthquake when there were blackout in that region and had

supported them by their Genset’s supply.

5. Marco: MARCO has been successfully providing power to various industries for the past

five decades. Not withstanding their high performance level in the market, they are

constantly striving to upgrade their services and technology to meet the stringent demands

of their esteemed customers. Their present strength of Diesel Generator Sets of capacities

ranging from 60 KVA to 1250 KVA and in multiple units is being augmented accordingly

to meet the ever-growing demand of power all over India. Rental power is made available at

short notice as they have service centers with DG sets stationed in most of the major cities.

This ensures power supply any where in India whether at client’s factory premises or project

sites as per clients schedule. Their range of various capacities of DG sets ensures that

client’s have the choice of meeting their exact requirements without incurring huge

investment in the purchase of the Generator sets and recurring expenditure for repairs,

maintenance and operation.

6. Modern hiring: Modern Hiring Service (MHS) is a reputed Mumbai-based Company that

offers need-based quality services & solutions in the area of Rental Power. They provide an

extensive range of Power Generating (PG) Sets to match varying client needs, right from 30

KVA to 1250 KVA. With a solid expertise and a diverse experience of 20+ years in this

domain, MHS has a focused, problem-solving approach. Clients can also avail the flexibility

of ‘dual fuel option' (LDO/HSD) for their PG sets.

They rent out only premium quality, eco-friendly DG sets of Cummins make, that are

known for their excellent performance. The Company has a conveniently located, well-

equipped Service Center at Rabale in Navi Mumbai. They also provide guidance to the

required type of PG on the client’s site. This value added consultancy service on their part,

empowers their clients with knowledge about the precise KVA ratings, which helps them,

tune in to their needs.

7. Powermak: Powermak has been in this business for the last 20 years. It provides Diesel

Generators from 62.5KVA to 1500KVA to industrial units on short-term lease. The

company gains its success, mainly due to its reliable service and efficient management. It is




31

associated to major companies in India to execute contracts on turnkey basis. At present it

possesses 50,000KVA capacities of Diesel generator sets and is in growing phase. They

provide their genset’s both on trolley and truck mounted basis. They have a huge no of

employees consistently working on the project to improve their market creditability and

networking. They specifically provide their operators to handle their sets and look after it for

which arrangements have to be made from the customer side. They also have their own

manufacturing section for their home acoustic and sound proofing systems.

4.2 ENVIRONMENT ANALYSIS – “PORTER MODELS”

I - THREAT TO ENTRY

The threat to entrance in this industry is very evenly biased. Many engine producers in India

(like Greaves, Koel, Mahindra, Eicher, and many more) provide a very large range of

engines for manufacturing of DG. These DG’s can very from lower KVA segment (of lesser

then 15KVA) to 1,000KVA or above. Now for rental business an entrant would require a

high capital and network to gain profits. It’s easier for the engine producers to enter the

market as they can easily capitalize on their pre-nurtured network. Present players in this

segment (like Cummins and Caterpillar) are already providing huge range of engines on

basis of KVA. This gives them enough chance to attain a better economics of scale then a

new entrant. The product differentiation from customer prospects is not much. For him it’s

just a DG providing him power backup. Still Ashok Leyland provides a better quality DG’s

with low maintenance and less operating cost. The major players in the segment have a high

experience and better fleet arrangement; they lead the business with an experience of above

15 years. This shows that other engine manufacturers can easily enter the market; still the

need of capital and network is concern as it makes the segment competitive for new bees.

Thus the threat to entry is limited.

II - BARGAINING POWER OF BUYERS

The bargaining power of buyers is dependent on the type of DG required by him. The higher

KVA requirement the lesser the players and hence the bargaining power decreases. The

negotiation can be completely based on the understanding of the supplier and the client,

infact this is completely based on the assignment given by the client to supplier i.e, the size




32

of DG set required. The presence of experienced players gives them better chance to achieve

economy of scale at lower prices also. Hence the rental prices can only negotiated with

better services and other facilities.

III - POWER OF SUPPLIERS:

The power of suppliers completely depends on the Fleet strength they have. The higher the

fleet strength the better options of negotiations. This fleet strength needs to have depth and

width to attain negotiations. The depth with involve higher range availability of that product

while the width will account for the no of DG sets and the various features that can be given

to the customer for better satisfaction. The power of suppliers can also be accounted from

their network and services that they can provide to satisfy their customers. However the

market is lead by monopoly of Cummins engines as they manufacture the highest range of

diesel engine sets with varied fuel run and dual fuel work availability.

IV - PRESSURE FROM SUBSTITUTE PRODUCTS:

The substitutable products could be Inverter, UPS, Natural Gas generators and SEB. The

pressure of substitution is not much. Inverter, UPS and Diesel generators are not efficient

enough to deal the complete demand for the client. NG sets can deal it but the constraint of

gas availability remains for its working. Now SEB is a very easily available substitute

product but in cases of industrial charges (which are very high as compared to running a DG

set) and in non-available zones this is the best available product.

V - INTENSITY OF RIVALRY AMONG EXISTING PLAYERS:

Industry Growth for rentals is quite high. Due to lack of availability of electricity and high

growth of electric demand the scarcity can be fulfilled with DG sets. The Competitors

diversity is growing at a high rate with higher technological advances and regular research

and development work. This makes the competition intense. Ashok Leyland provides a

better engine quality with lower operating cost and overall costing. In this business the

customer loyalty is not dependent on the type of engines used by the supplier. Clients only

need backup power without interruption. This is the main base of the business.




33

4.3 FLEET AVAILIBILITY WITH MAJOR PLAYERS

Total market distribution of rentals is done in many pockets. These pockets are generally

divided under the KVA distribution range. Now the major players of this segment have different

pockets and different no of sets in each pocket. The complete market pocket distribution can be

given by following table 2.

DG (KVA) Caterpiller Cummins

National Hiring Nityanand Marco

Modern Hiring Powermak

2.5 -- --

5 -- --

7.5 -- --

10 -- --

20 -- --

30 -- --

50 -- --

62.5 -- --

75 1 --

82.5 2 --

100/110 -- --

125 2 15

140 -- 1

160 -- 7

180 -- 8

200 1 3

250 8 13

320 1 9

380 6 15

500 10 23

625 2 1

750 3 8

1000 4 12

1250 -- 16

1500 -- --

Total 40 131 % above 250 KVA 85% 74.05%

Table: 2

In the above table it is as clear that the complete market leadership belongs to Cummins who

has the highest feet size. Still the best option is to go for the sets of higher KVA as they give

them better margins and the demand is high here.




34

4.4 PRESENT MARKET RENTALS (ORGANIZED PLAYERS)

The approx market rentals for the prevalent section can be segregated in two parts. The first is

from 30-125KVA and other is for 125 above range. These contracts are given generally on a

minimum of 1-month duration. The basic rental charges of these genset’s are classified for

240Hrs, 360Hrs, 480Hrs and 600Hrs for a period of 1-month. For longer periods and less usage

the rental charges decreases. The charges for Lower Segment from 30-125KVA is shown in

Table 3:

KVA ratings 30 40 50 62.5 75 82.5 100 125

240 hrs 16,000 17,000 19,000 20,000 24,000 25,000 31,000 34,000

360 hrs 22,000 23,000 25,000 27,000 33,000 34,000 42,000 45,000

480 hrs 25,000 27,000 30,000 31,000 40,000 41,000 50,000 52,000

600 hrs 30,000 31,000 35,000 36,000 47,000 48,000 58,000 62,000

1 Mths-100 hrs 20,000 21,000 24,000 25,000 30,000 31,000 39,000 41,000

2 Mths (monthly) 15,000 16,000 18,000 20,000 24,000 23,000 30,000 31,000

3 Mths(monthly) 14,000 15,000 17,000 17,000 21,000 22,000 27,000 29,000

>3 months 13,000 14,000 16,000 16,000 20,000 21,000 25,000 27,000

Table: 3

However, the longer the period of rent the rent charge is decreased and hence the margin rate

decreases. By long term utility of set is high and improves relationship. The complete market of

above 125 has lesser players (comparative) and their approx. rentals are shown in Table 4:

KVA ratings 140 160 180 200 250 320 380 500 625 750 1000 1250

240 hrs 38,000 40,000 43,000 51,000 61,000 75,000 88,000 115,000 137,000 170,000 235,000 330,000

360 hrs 51,000 53,000 56,000 67,000 80,000 97,000 116,000 150,000 176,000 220,000 300,000 385,000

480 hrs 61,000 63,000 66,000 80,000 93,000 115,000 136,000 175,000 205,000 255,000 345,000 440,000

600 hrs 72,000 74,000 77,000 94,000 110,000 140,000 165,000 205,000 235,000 300,000 400,000 510,000

1 month 47,000 50,000 53,000 62,000 75,000 90,000 106,000 145,000 170,000 210,000 305,000 380,000

2 Months 36,000 39,000 41,000 48,000 58,000 70,000 82,000 110,000 135,000 160,000 235,000 290,000 3 months 33,000 35,000 38,000 44,000 53,000 64,000 75,000 100,000 120,000 145,000 215,000 265,000 >3 month 31,000 33,000 35,000 42,000 50,000 61,000 71,000 95,000 115,000 140,000 205,000 253,000

Table: 4




35

4.5 PLAYERS IN CHENNAI

The Details of present players [only in Chennai (T.N.)] with the persons contacted during

training period from the Rental players is shown in Annexure 2. In addition, some of the

contracts as provided by these players for DG hiring are enclosed in Annexure 3.

It is requested to refer the Annexure attached with the report.




36

PART 5:

RENTAL PROFITS

HOW CAN AL MAKE PROFITS IN RENTAL BUSINESS…




37

5. RENTAL PROFITS

5.1 PRESENT RANGE OF ENGINES WITH AL

Looking into the fact that rental prospers ones a proper network is used with availability of

fleet of DG sets. Ashok Leyland has strength of having its own diesel generators.

However the range of their DG sets varies from 10KVA-500KVA. The availability is

shown in Table 5.

Model no

Electrical

Power

KVA/ KW Phase

Fuel

Consu-

mption

L/Hr Aspiration

Power

O/P

Engine

(BHP)

Cylinde

rs of

engine

Base Price

List

(Single

Phase)

LP 10 BA3 10, 8 1, 3 2 N A 24.8 4 159000 164000

LP 15 BA 3 15, 12 1, 3 2.9 N A 24.8 4 167000 177000

LP 20 BA 3 20, 16 1, 3 3.6 N A 44.3 4 205000 217000

LP 25 BA 3 25, 20 1, 3 4.4 N A 44.3 4 211000 226000

LP 30 BA 3 30, 24 1, 3 5.3 N A 44.3 4 274000 N /A

LP 30 BA 3 30, 24 1, 3 5.4 N A 46.7 4 278000 N/A

LP 40 BA3 40, 32 1, 3 6.9 N A 52.5 4 283000 N/A

LP 50 BA3 50, 40 1, 3 8.5

TC

Intercooled 81.9 4 N/A N/A

LP 55 BA3 55, 44 1, 3 9.4

TC

Intercooled 81.9 4 N/A N/A

LP 63 BA3 62.5, 50 1, 3 10.7

TC

Intercooled 81.9 6 343000 N/A

LP 75 BA3 75, 60 1, 3 12.8 TC 113.3 6 N/A

LP 82.5 BA3 82.5, 66 3 14.1 TC 113.3 6 396000 -

LP 100 BA3 100, 80 3 17.6

TC

Aftercooled 131.3 6 435000 -

LP 125 BA 3 125, 100 3 23.1 TC 163.8 6 524000 -

LP 140 BA 3 140, 112 3 24.4

TC

Aftercooled 188 6 N/A -

LP 160 BA 3 160, 128 3 27.8

TC

Aftercooled 215.3 6 N/A -

LP 180 BA 3 180, 144 3 30.7 TC 234.5 6 N/A -

LP 200 BA 3 200, 160 3 34.1 TC 264 6 N/A -

LP 250 BA 3 250, 200 3 39.9

TC

Intercooled 327.8 6 936000 -

LP 500 BA 3 500, 400 3 82

TC

Intercooled 601 8 2200000 -

Table 5 N/A= Not Available




38

5.2 COSTING CALCULATION

Diesel generator has its own capital cost and its own operating costs. These costing are

generally divided in two categories:

1. Costs incurred by Clients:

1.1. Loading and Unloading Charges

1.2. Transportation

1.3. Operator Charges

1.4. Installation and Commissioning Charges (Earthing and additional Features)

1.5. Fuel Charges per Hour.

1.6. Incidental Expenses (Recouped)

2. Costs incurred by Owner:

2.1. Incidental Expenses faced by owner

2.2. Operators charges

2.3. Acoustic Enclosures

2.4. Dealers Commission (Assuming AL enters through Dealers Network)

2.5. Running cost per hour

2.6. Interest Payment to the capital invested.

The section of running cost is studied with the availability and experience in particular

engines (those that have been sold in past and are running) with various checks and cost

analysis of it. The Running cost accounts for

• Oil Costs for running

• B check cost

• Air Cleaner Total cost

• Serv. Engineer Cost (Who goes for checks)

• Alternate cost of Electrical spares

• Control panel Cost

• Abnormal Costs

• E check Cost

• Overhaul Cost

• Total Miscellaneous Cost

To conclude to the total costing; keeping in mind the market analysis and looking after the

available DG sets by Ashok Leyland , only sets of 30, 40, 62.5, 100, 125, 250 and 500 KVA

where taken for further analysis part.




39

There are various others features that a rental player needs to take care before providing his

DG on rent. He needs to charge some of the incidental expenses and provisions on

guarantee and fuel efficiency. These cost once considered can help a player to known his

returns from the complete project invested in.

5.3 RUNNING COST OF SETS (As mentioned above)

The Detailed Analysis of the Costing of sets is shown in the Annexure 1. These are the

costs, which any DG buyer will have to face once he buys an available DG set of Ashok

Leyland. As a customer (buyer/owner) of DG only first few services provided by the

dealers are free, rest is paid. Hence the total running costs of some sets is shown in Table 6.

Model LP 30 BA 3

LP 40 BA3

LP 63 BA3

LP 100 BA3

LP 125 BA 3

LP 250 BA 3

LP 500 BA 3

Ratings (KVA) 30 40 62.5 100 125 250 500

1 Oil Cost per hour 6.56 6.56 6.56 13.67 13.67 20.50 19.68

2 B check cost per hour 3.00 3.00 3.00 3.00 3.00 3.00 3.00

3 Air Cleaner Total cost 1.05 1.05 1.05 1.49 2.66 2.66 3.00

Per Hour

4 Serv. Engr. Cost / hour 1.67 1.67 1.67 3.33 3.33 3.33 3.33

5 Alternate Electrical spares Cost/hr 1.67 1.67 1.67 1.77 2.69 3.27 3.40

6 Control panel Cost/hour 0.8 0.8 0.8 1 1.2 1.2 1.2

7 Abnormal Costs Rs /hr 0.75 1.25 2.00 3.00 3.25 4.00 5.00

8 E check Cost per Hour 3.97 3.18 3.18 2.57 4.50 4.79 5.39

9 Overhaul Costper Hour 2.18 2.18 2.18 2.76 3.12 3.72 4.41

10 Total Miscellaneous Cost per Hour 2.59 5.99 6.10 7.99 9.72 11.75 11.89

TOTAL Running Cost per hour 24.22 27.34 28.19 40.58 47.13 58.23 60.30

Table :6




40

These maintenance services are classified as A, B, C, D and E checks. Each of the checks

has their own costs and maintenance type. These checks, which are done for the DG

clients, now have to be beared by DG players also.

5.4 CUSTOMER’S PROFIT IN RENTALS

If we take the running cost of the DG set into consideration, which will be same for the

rental player with the DG set capital cost. The total break even for the customer while

giving the rent will occur as shown in Table 7:

Table: 7 30 KVA 40 KVA 62.5 KVA 100 KVA 125 KVA 250 KVA 500 KVA

Capital cost 361680 373560 452760 574200 691680 1235520 2904000

Running Cost 27.34 27.34 28.19 40.58 47.13 58.23 60.30

Break Even @

240 hrs rent 38 36 34 27 30 26 29

360 hrs rent 30 28 27 21 25 21 23

480 hrs rent 30 27 26 19 24 19 20

600 hrs rent 27 26 24 17 21 16 17

1 month rent 27 26 25 20 23 20 22

2 month rent 43 40 34 28 35 28 30

3 month rent 49 44 44 33 39 32 34

Break-Even is in months

It is evident from the market report that higher utility sets have higher breakeven points

like those that 125KVA set has higher break even as compared to others. These rentals are

based more on market equations and the negotiation that the team can undergo with the

client for the most of their benefit.

The capital cost considered here are completely different from those considered in the

margins due to the fact that these costs are the ones, which are beared at the time of buying

the DG set, by the consumer.




41

5.5 CONTRACT COSTING SHEET

This Contract Costing sheet will actually help to calculate the monthly margin and margin

rate that a DG owner can earn from his set. The sheet made for the project is worked

considering the sets 30, 40, 62.5, 100, 125, 250 and 500 KVA. Here the user first needs to

put the DG range for which he wants to calculate margin rate then he needs to fill hours of

contract and for months of usage and at last the rental he is going to take for the client.

These all blocks are highlighted with orange colour. The rest values highlighted with

yellow are based on the contract made. This sheet will take care of rest costs as the blocks

are linked with the other sheets making it more users friendly. This sheet will give the




42

margin rate and the monthly margins earned from the rental contract per month. If the

owner wants to provide any discounts to the client he can even show and the total margin

will be calculated.

The most important part for concern here is that, these rentals are based more on the

duration for which they are taken. Therefore the team should have the skills enough to

handle the costing and then calculate their profits as per the need. The decision taken are

strictly taken by the team from their past experience.

5.5 MONTHLY MARGINS FROM RENTALS

Every set has its own margin and margin rate for different hours and usage. This margin

gives us a clear view about the contract, and tells which one is beneficial for the DG set and

which increases its utility. The following margins shown are strictly based on the

assumption that these sets are given for on rent for a period of 1 month and follow the

above mentioned rental charges.

240 hrs 360 hrs 480 hrs 600 hrs

Dg

Range

Margin

Per

Month

Margin

Rate

Margin

Per

Month

Margin

Rate

Margin

Per Month

Margin

Rate

Margin

Per

Month

Margin

Rate

30

KVA 10,104 38% 13,194 41% 13,765 39% 16,015 40%

40

KVA 10,301 37% 13,120 39% 14,259 38% 15,398 37%

62.5

KVA 11,943 39% 15,539 41% 16,614 40% 18,530 40%

100

KVA 18,032 43% 23,987 46% 27,422 45% 30,857 42%

125

KVA 18,352 41% 23,762 43% 32,533 46% 30,384 42%

250

KVA 34,043 48% 45,254 50% 51,426 50% 60,957 51%

500

KVA 63,305 50% 87,807 55% 103,910 56% 124,212 58%




43

If the client goes for a higher period of need obviously the total rental taken will change as

mentioned before. The monthly margin will therefore reduce heavily. But these contracts

are signed with a 240 hrs usage only. If the clients have higher usage the rentals may

further differ as per negotiations. The 240 hrs usage of the sets for longer contract period

has margins as shown below:

2 Month 3 Month >3 Month

Dg Range Margin Per

Month

Margin

Rate

Margin Per

Month

Margin

Rate

Margin Per

Month

Margin

Rate

30 KVA 9,264 36% 8,424 34% 7,584 32%

40 KVA 9,461 34% 8,621 32% 7,781 30%

62.5 KVA 11,943 37% 9,423 32% 8,583 30%

100 KVA 17,192 40% 14,672 37% 12,992 35%

125 KVA 15,882 36% 14,152 34% 12,472 31%

250 KVA 31,523 44% 27,323 41% 24,803 39%

500 KVA 59,105 48% 50,705 45% 46,505 43%

As we can see that the greater the period the lesser margins we get but the utility of the

complete DG is improved.




44

PART 6:

BUSINESS STRUCTURE

ROADMAP TO RENTAL BUSINESS…




45

6. BUSINESS STRUCTURE

6.1 BUSINESS DEVELOPMENT FOR RENTALS

To start with their market development plan AL needs to follow some roadmap and then try

to proceed to achieve their goals. For expansion it is important for AL to formulate their

complete business strategy. The new segment of rentals can be formulated with the shown

roadmap.

This roadmap can be easily followed by analyzing the 7-S framework and SWOT analysis

of Ashok Leyland in the rentals section.

6.2 7-S FRAMEWORK FOR RENTALS

The 7-S framework depicts the combination of basic parameters on the basis of which the

organization is completely studied. It further describes organization’s ability to change, and

its proper mode of change. All these factors

are interdependent and it is impossible to

make significant progress in one area without

making a progress in the others as well.

There's a lot more to the 7S framework of

course, especially how the company applies it

in practice. The Traits in 7-S framework

depicts the following important issues for

working.




46

Strategy A set of actions that you start with and must maintain

Structure How people and tasks / work are organized.

Systems All the processes and information flows that link the organization

together

Style How they handle their issues and Clients

Staff How you develop managers (current and future)

Super-ordinate

Goals

Longer-term vision, and all that values stuff, that shapes the destiny

of the organization

Skills Dominant attributes or capabilities that exist in the organization

STRATEGY

Strategy is a way by which an organization aims to execute its business and further plan its

working to achieve its target.

Ashok Leyland is one of the leading players in heavy transport automotive vehicles. It

manufactures a wide range of products, which can be differentiated under Non-Exhaustive

and Goods carrying Segment. Their main plants at Ennore & Hosur are producing diesel

engines and other required parts, their assembly plants are at Alwar and Bandra.

Being advanced and competitive in the field of Engines they have entered in various

market segments like Marine Engines, Diesel generators and other Industrial application.

Now with their current product of Diesel Generators they want to enter new market of

Diesel Generators rental and hence they need to apply Market Development Strategy. They

need to develop their market by following a proper structure as suggested.

STRUCTURE

The structure of an organization helps coordinate various tasks of the organization and hence

enhance efficiency. Ashok Leyland has been working as a single working unit and hence the

centralized working of the organization has not enhanced the efficient working of the

complete organization. They have different




47

To plan for this new business unit we need to follow the following structure to know the

performance and the area of improvement on regular basis. The rental unit of the

organization should have a separate team or may act as a different business unit to start with.

The proposed unit for this segment for the proper flow of information and processing could

be as:

Here the Sr. Manager should be directly reporting to GM-Engines for the goal formulation

and profit results. This complete team can be installed for all India basis at most profitable

centers.

SYSTEMS

Systems of an organization include all the formal and informal procedures that make the

organization run efficiently. The working of the whole organization should be executed by

proper coordination between the Dealers, Area Offices, Zonal Offices and the Corporate

Office through computer network. The jobs to be performed, the skills required and

responsibilities should be fixed. The Area Heads work in consultation with the Sr. Manger to

make profits.

GM-Engines

Marketing and Sales

Sr. Manager

(Rentals)

Area / Divisional / Business Development

Manager

ACCOUNTANT

Crew of 2-3 Members Working For Divisional Rentals




48

STYLE

Freedom of work and speech is the most important aspect of the organization. The employees

should have direct access to any level of the organization. There should be no intervention by

the Heads in the work being done by the subordinates. The organization should offer

complete flexibility of working by achieving the ends by any means. Complete support at

any point should be provided. The delegation of work at main offices should be at the

discretion of the Area Head.

STAFF

Staff presently in Ashok Leyland is a combination of technical and marketing individuals.

The sales force has a degree or diploma in engineering as the basic qualification and

professional training or degree in management as an added advantage. Therefore the

privilege of holding a good staff can be easily enchased in this department also.

SKILLS

Ashok Leyland should be divided in strategic business units mainly for Engines and

Automotive division. Due to the continuous expansion plans and regular improvements in

different segments of product line this decentralization will enhance their efficiency and

effectiveness. Area manager should be responsible for the development and recruitment at

the regional level, where as executive level appointments should be done from head office.

SUPER ORDINATE GOALS

Super ordinate goals of the Rentals Business should be reflected in its Mission and Vision

statements, which are as follows:

Vision: To enter World market for power solutions after capturing Indian Market.

Mission: To Provide complete Power solution to the growing Indian Market.

6.3 SWOT ANALYSIS

STRENGTHS: Ashok Leyland has recently entered the market of Diesel Generators.

However they have developed a better network in last 50 years in the field of engines.

There major strength is their pre-developed network in this field. They can also give

competition to their counter parts in the scale of economics due to their better engine

performance under various conditions. They can also use their goodwill of past

performance to enter this field.




49

WEAKNESS: They have no experience in this field and are new-bees in this segment.

They would require vendors and dealers in large numbers to provide the services and other

facilities that their competitors are providing in this segment. They don’t have the higher

range DG’s which provides a better margin and could help to expand business. As being

late entrant the economics of scale will be low. Ashok Leyland is stringent with its policies

and rules, whereas their new Business Unit (as Rentals) could demand some strategic steps

for execution. This hurdle can be dealt successfully with some policy changes.

OPPORTUNITIES: With the Entrance in this segment they can actually advance to

develop a complete range of DG sets available for rentals. For the clients who can’t buy

new DG’s because of high investment, Ashok Leyland can also provide them older sets

with the specifications required. These older sets can also be further used for research and

development section for further improvement and development. They can also enter to

Resale and Buy of DG sets business as their resale value is high.

THREAT: The segment is highly unorganized and thus the lower segment can attract

many players for rentals. The initial investment is high and so as the switching cost if AL

decides to switch from it. The major threat to AL could be the rising prices of Diesel,

which may make the rentals costlier then the SEB.

6.4 NETWORK SUPPORT

Local Rental Players for

Support

Dealers Support System

Local Vendors and service providers

Rental Player (AL)

To gain more clients and contracts

To maintain your DG set for which you provide commission

Providing immediate help and service.




50

To expand into this business and gain better margins the need of local support is very

necessary. The above shown network diagram shows the exact need of getting help and

from the person you need. When we are into a local market we will need to grab the

maximum contracts out of it. This will keep our fleet’s utility high and will help us gain

better profits. This can only be possible once we are tied up with the local Rental players.

Not only this we need to build up a strong bond with our own dealers so that they can take

care of our sets and maintain them. For this purpose we need to give them some amount of

share from the rentals gained and we should train their team to use it in best efficient way.

The other important thing is to develop relations with local vendors and maintenance

players of the prevalent market. This is done so that if in emergency there is non-

availability of our own dealer we can solve the problem by their help. These persons will

also help us in brand building with their word of mouth. AL should get into these detailed

analyses before stepping in the business.




51

PART 7:

BUSINESS PROPOSAL

STARTING RENTAL BUSINESS…




52

7. BUSINESS PROPOSAL

7.1 CITIES TO START WITH

DELHI:

Energy is a critical input for economic development and one of the vital needs of every

citizen. Globally, the per capita consumption of energy is often used as a barometer to

measure the level of economic development. All forms of economic activity, be it

agriculture, industry or services, is reliant on the uninterrupted supply of power. Delhi has

the highest per capita power consumption among the States and Union Territories of India,

with a consumption of 1265 KWH per capita per annum in 2004-05 as compared to the

national average of 606 KWH. The power demand in Delhi is growing at the rate of 5-6% per

annum. From a peak demand of only 27 MW in 1951, Delhi's power demand crossed 3600

MW on 23 June 2005.

As per the projections made by the Seventeenth Power Survey Committee of Central

Electricity Authority (CEA), Ministry of Energy, Govt of India, the maximum demand of

Delhi will grow to 6961 MW by the end of 11th Five Year Plan.

While demand has been growing rapidly, capacity addition

has remained relatively stagnant.




53

The net cost of generating power from Delhi’s own plants is high due to low capacity

utilization and high fuel consumption by the plants. Delhi’s own generation installed capacity

is 994.5 MW but availability is only around 750 MW. Nearly 38% of Delhi’s power needs

are met by its own plants, BTPS, remaining 62% by import from NTPC, and other sources.

Delhi Being capital of India is one of the major attractions for MNC’s and other coming

Industries. All these large or small Scale industries have been looking forward to come in the

National Capital Region (NCR) to gain the most for their business. New and growing SEZ’s

like Gurgauon, Greater Noida and Ghaziabad are in shortage of supply with electricity. The

Pattern of the Electricity Usage can be shown as…

We can see that Industrial usage being less due to the fact of Industrial Development

occurring majorly at the outskirts of Delhi.

MAHARASTRA (PUNE AND MUMBAI)

The Prayas (Energy Group) Report on Maharashtra State Electricity Board suggests that

MSEB operates as one of the largest SEBs in India (and the largest as of 2002-03). With

nearly 13,000 MW of capacity on its grid as of 2002-03 (including 728 MW of offline

capacity from the Dabhol Project), with 9771 MW of that capacity owned and operated by




54

the MSEB. Private generation capacity in 2002-03 represented only a 12 percent increase in

total statewide capacity on the grid since 1996-97. The MSEB’s own capacity increased 26

percent over this same six-year period. Tata Electric Company (now Tata Power) and the

Bombay Suburban Electric Supply Company (now Reliance Energy) have also provided

additional capacity to the grid through licensed generating units.

Through the 1990s, the MSEB had a reputation as one of the best managed SEB’s in the

country. In 2002-03, the MSEB reported its peak demand at 13,418 MW, which outstripped

its ability to supply, particularly when factoring in the several thousand megawatts of load

shedding occurring at the time of peak demand. As for the predicted Growth rate of

Electricity demand in Maharashtra is as high as in Delhi. The state is facing severe power

deficit and energy shortage. As per the data published by CEA, the power deficit is as high as

19.8 per cent or 2,718 MW against a peak demand of 13,697 MW and 13.4 per cent energy

shortage or 11,680 million units during the period 2002-03. This shortfall is so significant

that the state cannot ignore the power supply position from the perspective of development.

The power Growth of Maharashtra is shown below…

As indicated above, the present peak demand is 13,697 MW and only 10,979 MW is met

during the period 2002-03. Including the present deficit and projected growth rate, about

18,759 MW shall be added till the end of 12th Plan Period. Considering the immediate

requirements of energy and till the end of the present 10th Plan Period of 2006-07, about

5,737 MW shall be installed during the next four years. Another 5,632 MW shall be added

during 11th Plan period ending 2012. This Even leaves a shortage of 2500MW of Peak

power. In total there is a huge shortage of power in Maharashtra State even being the best

SEB managed state.




55

7.2 PROPOSED FLEET DISTRIBUTION

Taking into account the supply shortage and present fleet of major competitors into the

above-mentioned regions, we need to start with smaller fleet. This will also give us a chance

to gain more experience and once the business is gripped with good network AL can expand

its Fleet size and focus more Pockets in India.

The Proposed fleet for 4his business as whole Indian market is shown below.

DG Range No of Sets

30 KVA 4

40 KVA 6

62.5 KVA 3

100 KVA 4

125 KVA 6

250 KVA 8

500 KVA 4

Total 35

This Fleet can be divided into two pockets as Delhi and Maharashtra region. The Division of

the Fleet for these Segments is as shown

Delhi Maharashtra (Pune And Mumbai)

DG Range No of Sets DG Range No of Sets

30 KVA 2 30 KVA 2

40 KVA 2 40 KVA 4

62.5 KVA 1 62.5 KVA 2

100 KVA 2 100 KVA 2

125 KVA 2 125 KVA 4

250 KVA 4 250 KVA 4

500 KVA 2 500 KVA 2

This is what the total fleet should be there for the development of the complete business.

Now with no of Fleet the total Initial Investment that Ashok Leyland needs to do will be as

shown below…

DG Range No of Sets Cost of 1 Set (In Rs) Capital Invested (In Rs)

30 KVA 4 2,74,000 10,96,000

40 KVA 6 2,83,000 16,98,000

62.5 KVA 3 3,43,000 10,29,000

100 KVA 4 4,35,000 17,40,000

125 KVA 6 5,24,000 31,44,000

250 KVA 8 9,36,000 74,88,000

500 KVA 4 22,00,000 88,00,000

Total 35 Rs 2,49,95,000




56

7.3 EXPENSES OF TEAM CONSIDERED

As suggested the team of this segment should have at least 10 members. These members can

be segregated as shown below…

Sr. Manager 1 Divisional/ Area/ BD Manager 2 Crew under BDM 6 Accountant 1

Divisional Managers should be divided under Delhi and Maharashtra region. In addition, the

crew of six Persons under them should be divided region wise. Assuming that Sr. Manager

Reporting to GM-Engines under whom this new business unit can work the further total

expenses of the complete department will be as shown…

Name No Expense Total (In Rs)

Sr. Manager 1 800,000 800,000

BDM 2 650,000 1,300,000

Crew under BDM 6 275,000 1,650,000

Accountant 1 275,000 275,000

Telephone (Monthly) 12 17,000 204,000

Department Expenses (Monthly) 12 50,000 600,000

Total 10 - 48,29,000

Hence the total yearly expenses of the team will occur nearly as 48,29,000Rs.

7.4 BREAK EVEN PERIOD FOR BUSINESS

Taking into consideration the Initial investment of Rs. 1,17,52,000 with yearly expenses of

Rs. 45,20,000 the breakeven for the complete Business should be deduced. Assuming that an

set is on hire at an average period of 10 months in an year and at an average it is given at

240hrs usage and not considering the capital cost interest which was shown previously.

Hence the yearly income will be…

Dg Range Margin Per Month Margin Rate Yearly Income

30 KVA 13,541 51% 541,640

40 KVA 13,838 50% 830,280

62.5 KVA 16,231 53% 486,930

100 KVA 23,470 57% 938,800

125 KVA 24,902 56% 1,494,120

250 KVA 45,763 64% 3,661,040

500 KVA 90,805 72% 3,632,200

Total Yearly Income Rs.1,15,85,010




57

This achieved margin and margin rate is strictly considering Investment cost zero as shown in

contracting sheet to the AL.

For the Break Even of the project we have formula as…

Break Even = (Total Initial Investment) / (Yearly Income – Yearly Investment)

Break Even = (2,49,95,000) / (1,15,85,010– 48,29,000) (All in Rs.)

Hence the Break Even of the complete project can occur in a minimum of 3.7 years or 4

years approximately.

7.5 LIMITATIONS OF REPORT

1. The Market rentals taken are most from tele-conversation and 1-2-1 conversation

basis. These data where however confirmed by competitors but may be misleading.

2. Running cost of DG calculated is more of the information delivered by dealers and

OEM’s. These data may not be highly true due to approximations and business

details.

3. Monthly margins taken are assumed on approximation of 240hrs and 10 months

utility, this might or might not be the exact utility of DG.

4. Expenses of the team and department may vary as per usage and hence the total

breakeven of the project may be varied.

5. Investment required to be done in this new project needs to follow organization

policies and hence may vary. If investment is decreased the breakeven will increase

while if investment is increased the breakeven decreases.

6. A complete and proper analysis of Indian market could not be done due to non-

touring facilities.

7.6 WHY NOT CHENNAI?

The survey being done in Chennai does inclines for the option to select it as one of the

starting pockets. However, there are some reasons due to which the choice of Chennai was

not preferred. They can be stated as;

1. Non-availability of actual Leypower DG sets near Chennai.

2. Load shedding in less in T. N. region.

3. No. of genset players are lesser in Chennai as compared to Delhi and Maharashtra.

This shows less demand here.




58

4. The fleet size with the players is also less. These fleet of DG are used in Chennai and

nearby region which also deflects less demand.

7.7 RECOMMENDATIONS

The implementation of the project should be done keeping the following recommendations in

mind.

1. The network should have strength with all dealers and vendors given proper share.

2. The DG sets on rentals should have the tag of Ashok Leyland’s “Leypower”, and not

the tag of the OEM assembling it.

3. The study of Maharashtra and Delhi market should be done properly before entering

into it.

4. Ashok Leyland needs to properly link with the local players who can use their DG for

rehire purpose.

5. The team should be trusted and given free hand to deliver their best for the

organization.

7.8 CONCLUSION

The complete project is quite lucrative and gives good margin to the DG rental player. As the

Power demand will remain unfulfilled for at least 8-10 years from now, this project is certainly a

good option to look for expansion, which could be implemented considering the recommendations

and limitations of the work.

final report on leypower rentals

Documents