$$Sunshine Forging Pvt Ltd$,$ was a medium scale manufacturing company catering to

the auto industry in Perambur, Tamil Nadu. The owner Mr Alam, had started as a smalltime supplier to the different auto companies and the railways and had established this

company in the late nineties. Gradually over the years, this company grew and today its

product, the $$Sunshine$$ brand of forgings, were an established name in the industry.

Mr$.$ Alam paid his workmen quite well $$ they were paid a consolidated monthly salary

$($which was about $25\%$ higher as compared to others in the industry$)$ and a yearly

production bonus. There was no system of paying incentives or any sort of $$benefits$$ apart

from paid weekly off and paid festival leave. However, there was a small clinic inside the

works, where a doctor and a nurse were available for the benefit of the workmen.

This system was working well for the company but recently with the increase in domestic

and also foreign competition, the company$$s profits had stagnated and this financial year

they had just managed to break$-$even. This was mainly because the production costs were

increasing but the actual output was not increasing enough to offset the rising costs. Thus

naturally, Mr Alam was quite worried and wanted to discuss this problem with his very

experienced General Manager, Mr Roberts, for his opinion.

Mr$.$ Roberts, from his experience in previous organisations felt that in the absence of any

financial incentives it would be very difficult to induce the workmen to raise the

production level much above the present figures. So$,$ he suggested Mr Alam to engage a

reputed consultant to recommend how this improved output could be achieved.

Accordingly, Mr Alam contacted you, and requested you to conduct a preliminary study

and give an $$overall assessment$$ to Mr Alam and other senior managers of the company

within a week. Based on this preliminary report, future strategy could be decided.

a$)$ What do you think this $$overall assessment$$ could be$?(5$ marks$)$

b$)$ What future strategy, you feel could be taken to improve profitability? $(5$ marks$)$