Submitted by
AN ORGANIZATIONAL STUDY AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR
Project Guide
Internal Examiner
External Examiner
DECLARATION
I affirm that the project work titled AN ORGANIZATIONAL STUDY AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR being submitted in partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION is the original work carried out by me. It has not formed the part of any other project work submitted for award of any degree or diploma, either in this or any other University.
I certify that the declaration made above by the candidate is true. (Signature of the Guide) K.NATHIYA, MBA, M.Phil. Assistant professor
ACKNOWLEDGEMENT I would like to express my gratitude to Chairman Thiru.V.SHANMUGAM of NANDHA ENGINEERING COLLEGE, ERODE for giving me an opportunity and facility to complete this project. I wish to place my deep sense of gratitude to principal Dr.V.R.SAMPATH, of NANDHA ENGINEERING COLLEGE, ERODE. I offer my profound gratitude to Mr.N.DEVRAJ, B.E., MBA. Department of Management Studies, NANDHA Head,
ENGINEERING
COLLEGE, ERODE. for his entire support to complete this project report. I owe my boundless gratitude to my faculty guide K.NATHIYA, MBA. MPhil. Assistant Professor of MBA Department, for his guidance and supervise of this project for successful completion. I sincerely thank to Mr.THIRUNAVUKARASU, HUMAN
RESOURCE MANAGER, CHETTINAD CEMENT CORPORATION LIMITED, KARUR. for giving me permission to do this project at their concern. I express my sincere thanks to my beloved parents, friends and the staff member for and those who are encouraged and supported for completion and this project report.
L.BOOPATHI
PAGE NO I II III 1 2 15 25 26 27 27 29 30 32 33 34 35 35 36 37 38 39
1.1 1.1 1.2 1.3 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3
Introduction to the study Industry profile Company profile Organization chart Production Department Store Department Human Resource Department Marketing Department Financial Department Quality Department Scope of the study Limitations of the study
DEPARTMENT PROFILE
3.3 Research Methodology 3.4 Tools for Analysis 3.5 Review Literature 4 5
DATA ANALYSIS & INTERPRETATION SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
56 57 58 59
DESCRIPTION
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40 42 44 46 48 50 52 54
DESCRIPTION
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41 43 45 47 49 51 53 55
ABSTRACT
The purpose of inventory management is to ensure availability of raw material in sufficient qualities as and when required and also minimize investment in inventories. There is an essential to manage inventories efficiently and effectively in order to avoid excess investment. It is possible for a company to reduce the level of inventories to a considerable extent without any adverse effect on production and sales by using simple inventory planning and control techniques. The reduction of excessive inventories will create a favorable impact on the company profitability. Inventory turnover ratio, inventory conversion period are very helpful to know how effectively plays and control in the organization EOQ analysis will enables the organization to use of EOQ analysis is very effective and useful tool for classifying, monitoring and control of inventories.
CHAPTER 1
1.1 INTRODUCTION TO THE STUDY The study entitled as A study on Inventory Management of Chettinad Cement Corporation Ltd, Karur. We are going to see the importance of Inventory Management in production and how it will helps to controlling the inventory cost. Controlling the inventory cost which enable to earn more profit. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is recurred at different locations within a facility or within multiple locations of a supply or network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of Inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, Inventory forecasting, physical inventory, available physical space for Inventory, quality management, returns and defective goods and demand and forecasting. Types of inventory Normally the inventory has divided into two types. These, 1. 2. Merchandising inventory, Manufacturing inventory.
The manufacturing inventory has been subdivided into three types. These, 1. 2. 3. Raw materials, Work in process, Finished goods.
Modern cement
Modern hydraulic cement began to be developed from the start of the industrial Revolution (around 1800) driven by three main needs: Hydraulic renders for finishing brick buildings in wet climates Hydraulic mortars for masonry construction of harbor works etc. in contact with sea water.
cement one can reduce the impact of damage to the structure. This cement has high these cement one can reduce the impact of damage to the structure. This cement has high demand in India.
High early strength cement, Hydrophobic cement, High aluminum cement and Masonry cement. 1.2.1 CEMENT INDUSTRY IN GLOBAL Cement is a basic ingredient for the construction industry. It is estimated there are 1500 integrated cement production plants in the world. Although the players such a Lafarge or CEMEX, the share of the four largest firms account only for 23% of the overall demand.
Demand
World cement demand was 2,283MT in 2005, with China accounting for 1,064MT (47% of total). The expected demand for 2010 is estimated at 2,836 MT. China will increase its demand by 250MT during the period, an increase higher than the total yearly European demand.
Demand of Cement
2005
2010
Growth rate
North America
170
200
2.9%
Western Europe
208
236
2.2%
Asia/Pacific
1500
1900
5.2%
Other regions
405
500
4.7%
2283
2836
4.7%
Year of establishment 4. Barak Valley Cements Ltd Head quarters Web site
Year of establishment 6. Binani Cement Ltd Head quarters Web site Year of establishment 7. Birla Corporation Limited Head quarters Web site Year of establishment 8. Burnpur Cement Ltd Head quarters Web site Year of establishment 9. Chettinad Cement Corporation Limited Head quarters Web site Year of establishment 10. Dalmia Limited Cement (Bharat) Head quarters Web site 11. Deccan Cements Ltd Year of establishment Head quarters
1996 West Bengal www.binani.com 1919 West Bengal www.grasim.com 1986 West Bengal www.burnpurcement.com 1962 Tamil Nadu www.chettinadcement.com 1951 Tamil Nadu www.dalmiacement.com 1979 Andhra Pradesh
Web site
www.deccancem.com
12.
Year of establishment 1934 Head quarters Maharashtra Web site Year of establishment www.everestind.com 1948 Madhya Pradesh www.grasim.com 1973 Gujarat www.gujaratsidhee.com 1958 Karnataka www.mycemco.com 1946 Andhra Pradesh www.hil.in 1962 Maharashtra www.indianhumepipe.com 1994 Uttar Pradesh www.jkcement.com 1938 Rajasthan www.jklcem.com
13.
14.
15.
16.
17.
Indian Hume Pipe Company Ltd Head quarters Web site Year of establishment
18.
J. K. Cement Limited
19.
Year of establishment 20. Kalyanpur Cements Ltd Head quarters Web site Year of establishment 21. Katwa Cements Ltd Head quarters Web site Year of establishment 22. Kesoram Industries Ltd Head quarters Web site Year of establishment 23. Madras Cements Limited Head quarters Web site Year of establishment 24. Mangalam Cement Ltd Head quarters Web site Year of establishment 25. NCL Industries Ltd Head quarters Web site Year of establishment 26. Nirman Cements Ltd Head quarters Web site Year of establishment 27. OCL India Ltd Head quarters Web site 28. Panyam Cements & Mineral Year of establishment Inds Ltd Head quarters
1937 West Bengal www.kalyancemenet.com 1993 Karnataka www.katwagroup.com 1919 West Bengal www.kesocorp.com 1954 Tamil Nadu www.madrascements.com 1976 Rajasthan www.mangalamcement.com 1979 Andhra Pradesh www.nclind.com 1983 Bihar www.nirmancements.com 1949 Orissa www.ocl.in 1955 Andhra Pradesh
Web site Year of establishment 29. Prism Cement Ltd Head quarters Web site Year of establishment 30. Rose Zinc Ltd Head quarters Web site Year of establishment 31. Sagar Cements Ltd Head quarters Web site Year of establishment 32. Sainik Cement Inds. Ltd Head quarters Web site Year of establishment 33. Sanghi Industries Ltd Head quarters Web site Year of establishment 34. Saurashtra Cement Ltd Head quarters Web site Year of establishment 35. Shiva Cement Ltd Head quarters Web site
www.panyamcements.com 1992 Andhra Pradesh www.prismcement.com 1990 Rajasthan www.rosezinc.com 1981 Andhra Pradesh www.sagarcements.in 1991 Delhi www.sainikcem.in 1985 Andhra Pradesh www.sanghicement.com 1956 Gujarat www.saurashtra.com 1985 Orissa www.shivacement.com
Year of establishment 36. Shree Digvijay Cement Head quarters Web site Company Ltd
Year of establishment Head quarters 37. Somani Cement Company Ltd Web site Year of establishment 38. Sri VasaviInds. Ltd Head quarters Web site Year of establishment 39. Sri Chakra Cements Ltd Head quarters Web site Year of establishment 40. Stresscrete India Ltd Head quarters Web site Year of establishment 41. The India cements Ltd Head quarters Web site Year of establishment 42. Udaipur Cement Works Ltd Head quarters Web site
1983 Andhra Pradesh www.anjanicement.com 1985 Andhra Pradesh www.srivasavi.com 1981 Andhra Pradesh www.chakracement.com 1983 Maharashtra www.stresscrete.com 1946 Tamil Nadu www.ramcocement.in 1993 Rajasthan www.udaipurcement.com
Year of establishment 43. UltraTech Cement Limited Head quarters Web site
Year of establishment 45. Visaka industries Ltd Head quarters Web site Year of establishment 46. Zuari cement corporation Ltd Head quarters Web site
1.2.3 CEMENT INDUSTRY IN TAMILNADU The cement industry of India hopes the most in Tamilnadu. The Tamilnadu is the state which has produces the quality cement in India. The Tamilnadu government was formed a company name is Tamilnadu cement corporation limited (TANCEM) in the February 1976 as public limited company. The TANCEM was formed two cement plants in Tamilnadu. These, 1. Alangulam cement works. Alangulam, virudhunagar districts. 2. Ariylur cement works. Ariyalur, perambalur districts. The following table shows the details of cement companies in districts of Tamilnadu. These,
S.NO
Details
Year of 1962 establishment
Chettinad Limited
Cement
Corporation Corporate office Chennai Plant Places Brand name Karur, Ariyalur Chettinad. Dhindukal,
Year of 1946 establishment Corporate office Chennai. 2 The India cements Ltd Plant Places Ramanathapuram, Sangakiri, Ariyalur. Sankar cement, Coromandel cement.
Brand name
Corporate office Chennai. Plant place Brand name Ariyalur. Ram co cement.
Year of 1976 establishment Corporate office Madurai. 5 Janathacem industries limited Plant place Brand name Rajapalayam,madurai. Janatha cement, agsar cement.
Chennai
Telephone Fax No :
No:
+91-44-28292727 +91-44-28291594
VISION
With almost a century of continuous growth and prosperity behind us we envisage our future as another opportunity to which greater heights and to perfect the art of perfectionism upholding the vision of our founder Dr. Rajah sir Annamalai Chettiar STRIVE, SAVE AND SERVE. The nature ethics and style of business believe that nothing can supplement the idealism which motivates the business we fall back on the time tested. Principles of total customers orientation technology in service of man and business as an instrument of social service to this timeless truth we remind steady fast forever.
MISSION
To achieve & sustain cost leadership in the cement market. The harness technology to its full potential in a safe & clear environment in the entire business cycle & integrate quality with continuous improvement. To became a vibrant learning organization by building skills and competitiveness of employees for growth. To be the best and most respectable corporate citizen.
Mines-Karikkali works
Limestone Mines are located at about 3 kms. from the factory. The mines are fully mechanized and have also a terminator for mechanized breaking of individual boulders. The Crusher is located at Mines and crushed limestone is transported by long belt conveyors to factory.
Kiln-Puliyur Works
The finely grounded blended raw material is sent to a five stage kiln. Kiln is a key process in the manufacture of cement where the calcinations & chemical reaction take place. Coal fired burner (Controlled through latest solid & low feeder) is used to heat the air to 1400c and is fed from one end of the kiln. The data accusation and control center meticulously monitor the entire process including the temperature.
AWARDS
National Safety Award (for outstanding performance in Industrial Safety in frequency rate in Industry)
YEAR
1976 1977 1972 1978 1985 1986 1995 1996 1997
Runners up Highest % reduction in frequency rate Merit Awards from Regional Directorate of Workers Education Tamil Nadu Film Arts Association, Chennai Shield National Productivity Award (Best Productivity Performance in Cement Industry issued by NPC) Second Best
Best Best Second Best National Safety Award (Mines)-(for lowest injury frequency rate Metal Mines Mechanized Open Cast).
Longest Accident Free Period. Best performance of the year. Conservationist of the year (for outstanding progress in the field of
Conservation of Energy, Metal Components & Machinery) NCBM Second National Awards (Improvement in Energy Performance). Best
Best Best TNEB Energy Conservation Award - (One among the 15 Energy Efficient
8 9
H.T. Industries of 2000 KVA) NCBM National Award Second Best for Energy Efficiency Performance
1998
1998
MILESTONES
0.4 MTPA cement production capacity with wet process plant installed at Puliyur. Modernized into dry process plant to a capacity of 0.8 MTPA with a kiln
YEAR
1967
capacity of 2000 TPD commissioned with modern vertical roller mills for fuel & limestone grinding.
1989
3 4 5 6 7 8
2 Nos. of 5.4 MVA Capacity WARTSILA DG set installed. 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed at PoolavadiUdumapletTaluk. ISO 9002 Certificate received. Stacker & Re-claimer for Limestone installed. Belt Elevator for Raw mill and Kiln feed installed. A) Impact Crusher for lime stone crushing at mines installed. B) Bag filter for coal mill grinding system. Vertical roller mill for cement grinding installed. Additional ESP installed for Kiln/ Raw mill to handle excess process gases. CIS/CFG Cooler installed. Low pressure cyclone installed.
1998
10
Latest
2000
capacity increased to 1.2 MTPA cement. 11 12 13 14 15 16 Green field Cement plant with capacity of 0.9 MTPA was commissioned at Karikkali. Rock breaker (Terminator) installed in mines. ISO 14001:2004 is implemented. Environment Management Service Certificate option. 1 No. 15MW Coal based Captive Power Plant commissioned in 12 Months at Karikkali. Fly Ash Silo construction work completed at Puliyur and Karikkali. 2001 2001 2003 2004 2004 2005
17
Roller press with ball mill for cement grinding with capacity 0.7 MTPA installed at Karikkali. 2006
18
Vertical roller mill for cement grinding installed. Additional ESP installed for Kiln/ Raw mill to handle excess process gases. Karikkali plant capacity increased to 2.0 MTPA by increasing of blended cement production. Bag House installed in Raw Mill/Kiln Circuit in addition to the existing ESP at Puliyur. Energy dispersive X-Ray specto meter was put into service for increasing the output and economical mines operation & conservation of minerals. Advance Research laboratories, Switzerland make X-Ray Spectrometer
2006
19
2007
20
2007
21
2007
22
Sequential type was commissioned for augmenting clinker production and its quality.
2007
23
Seethainagar Mines crusher capacity was upgraded for supply of 40% Karikkali plant requirement of limestone. Coal based 15 MW capacity CPP was commissioned during Feb-2008 at Puliyur Works. Automation & control sections PLC's OS software up gradation and PLC's capacity. KHD make Burner Management System for kiln operation to improve quality of clinker and to save thermal energy. Coal based 2 x 15 MW capacity CPP was commissioned during Sep-2008 at Ariyalur. Green field Cement plant with capacity 2.75 MTPA was commissioned during Dec-2008 at Ariyalur. Video conferencing facility was commissioned between Puliyur, Karikkali,
2007
24
2008
25
2008
26
2008
27
2008
28
2008
29
Ariyalur and Head Office for more effective and faster communications and project monitoring. Brown field Cement plant with capacity 2.75 MTPA was commissioned at Ariyalur during October-2009. Coal based 1 x 15 MW capacity CPP was commissioned during Jan-
2008
30
2009
31
2010 Erection and Commissioning of 2 Cement Plants in World Record time at ariyalur 30 months from BhoomiPooja to commissioning highest production capacity for cement in a single location at Ariyalur Three No. 15
2010
MW coal based captive power plants commissioned in 18 months at Ariyalur Chettinad Cement Technical team rated No1 by FLS Denmark at Ariyalur. 32 Roller press with ball mill for cement grinding with capacity 0.5 million commissioned during February -2010 at Puliyur. Brown field Cement Plant with capacity of 2.5 MTPA was commissioned 33 at Karikkali in March 2011 along with coal based 30MW captive power plant within the same premises Work is under progress for a new Green field production line of 2.5 MTPA 34 cement with 1 No. of 30MW Coal based captive power plant in Kallur Village, ChincholiTaluk and GulburgaDist of Karnataka state and expected to be commissioned in year 2012. 2011 2011 2010
Executive Chairman
MD & CEO
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
HEAD PRODUCTION
HEAD PERSONAL
HEAD ADMINISTRATION
HEAD ACCOUNTS
HEAD PURCHASE
HEAD PURCHASE
MANAGER
MANAGER
ASST.MANAGER
ASST.MANAGER
ASST.MANAGER
HEAD CUSTOMER
WORKERS
WORKERS
CHAPTER 2
DEPARTMENT PROFILE 2.1 PRODUCTION DEPARTMENT Chettinad Cement Corporation Ltd., (CCCL) initially the cement was manufactured in the wet processing technology. Due to hike in the fuel price company went for expansion in the year 1989 to produce with the least dry process technology PRODUCTION PROCESS Limestone is the basic raw material for producing cement. Limestone is received from the quarry by tippers. The size of limestone is 1 cubic feet. The lime stones are crushed in the limestone crusher and are brought to a size of 1 inch and below then that. The crushed limestone is conveyed by and inclined belt conveyer to the raw mill hoppers. The active are red mud and blue dust (around 2%) to get the required composition of kiln feed slurry. The crushed lime stone with additives are grade in raw mills along with water to produced slurry with around 30%-40% moisture cement. The slurry is pumped by slurry pumps to the slurry silo. In the silo the compressed is pumped to mix the slurry well. The composition is slurry is checked and pumped to slurry basis, if the composition is ok, if the slurry composition is not ok high grade limestone is crushed ground in raw mills and pumped to the same silo to the correct composition. The sludge is tipped into the wash mill; water is added and availed well to produce sludge slurry. This is pumped to slurry silo as a sweetener. The slurry from the basis is pumped to the kiln through variable speed slurry feeding arrangement of the required rate determined by the kiln operators. The kiln feed slurry enters the kiln, pass through drying, preheating zone. In this zone the kiln feed slurry gets tried and pre heated to 8000 c. Now the material is in powder form and inters claiming zone where the temperature will around 800-9000c. Now the materials enters burning zone where the materials is treated to 1350-14500 c. Here the reaction takes place between Sio2, Cao, AI203, and Fe203 to for di calcium silicate.C2S tri calcium, silicate C3S, tri calcium aluminate, terra calcium, Aluminum Ferrite C4AF. The mixtures of product are called clinker. RAW MATERIALS Limestone Iron ore
Bauxite Gypsum Fly ash Slag Coal Raw lignite Power 2.2 STORE DEPARTMENT Store plays a vital role in the operations of a company. It is in direct contact with the user department in it is day to day activities. The most important objective of store is to provide uninterrupted supply of material section is located to production with to save material cost in ash in an effective manner. FUNCTIONS OF STORE DEPARTMENT Management of receipts Issue control on materials Documentation received Inspection of materials Computerization of data received from user department. Codification of materials. Physical verification of stores Stores vacation. SECTION IN STORE DEPARTMENT The store is divide d into three section and they are, Receipt section. Issue section. Inventory section. 2.3 HUMAN RESOURCE DEPARTMENT RECRUITMENT In CCCL there is no recruitment policy. Recruitment is made based on the requirement of man power based on the nature of the requirement of man power. The company either goes for advertising in newspaper & considers unsolicited application experience is depends on the job nature.
TRAINING AND DEVELOPMENT In CCCL there is short term process of training for non-managerial to learn the technical. Training program is formulated personal department may unable to execute, the take more care and on internal training program and external training program such as firefighting safety and occupational work etc. PROMOTION Promotion is given for the experienced and qualified person this improves the status skills and earning if the workman SAFETY MEASURES 1. Personal safety 2. Industrial safety 3. Housekeeping safety
TOTAL STRENGTH Workman Staffs Executives Contract Workers TOTAL - 172 - 56 - 107 - 131 = 466
HOURS WORKING IN FACTORY 1 shift 12.00 pm to 8.00 Am 2 shift 8.00 Am to 4.00 pm 3 shift 4.00pm to12.00 pm
WELFARE FACILITIES OF THE COMPANY First aid Uniform and shoes Insurance scheme Drinking water
ALLOWANCES Housing rent allowances, Conveyance allowances, Dust impact reduction allowances, Washing out dirt allowances
2.4 MARKETING DEPARTMENT MARKETING AND SALES DEPARTMENT The sales area over in Tamil Nadu, Karnataka and Andhra Pradesh. This section includes zonal manager officers and staff dealers and contractors. The order is for customer through telephone and fax. The order bags dispatch through road and rail the cost includes transport package and tax. The enter in the lorry permit slip. It includes the party name designation serial number distance date and time order number of tones type of product and package code. The order is supplied through goods train to Kerala and Karnataka. The train per vegan capacity is 63 tones product price includes excise duty and sales tax. PACKING AND DISPATCH The cement is extracted from the silo bottom and are place in automatic packers. There are four automatic packers which help to pack the cement in 50kg per bags and are transported to destination by means of trucks.
MARKET VIEW Chettinad is also looking at setting up a new plant and some split location grinding and packing units. By 2012 they hope to reach 15 million tones and, if the market continues to grow, 20 million in 2015. 2.5 FINANCIAL DEPARTMENT Finance is necessary for survival and smooth running of business. The accounts are computerized and maintained in Tally in Chettinad cement Corporation Limited, Puliyur. Every year the company presents its financial performance in the form of an annual report which is sent to the shareholders along with AGM notice. PRORIT AND LOSS ACCOUNT In the annual report the profit and loss account and the balance sheet which is authorized by the auditor would be published in the report. Profit and loss account is prepared to determine the net profit or net loss for a specified period, normally one year. BALANCE SHEET Balance sheet is a statement which shows the financial position of the business at the end of the financial period. The financial position, solvency and liquidity can be evaluated with the help of balance sheet.
o VOUCHER
o RECEPIT
o LEDGER BOOK
o SALES INVOICE
o SUBSIDARY BOOK
o CREDIT BOOK
o DEBIT BOOK
o STOCK REGISTER
o DATABASE OF EMPLOYEE
o JOURNAL ENTRIES
o BALANCESHEET
o ANNUAL REPORT
o PURCHASE ORDER
o SALES INVOICE
2.7 SCOPE OF THE STUDY The study helps the management to improve its profitability through a
reduction in non- moving inventory.
The study helps to show the level of the inventory in the organization. The
company will make the proper inventory methods from the suggestions of the study.
CHAPTER 3
3.1 OBJECTIVES OF THE STUDY
To analyze the inventory to perform production and sales activities smoothly. To identify the existing inventory management and its effectiveness. To study the management of inventories efficiently and effectively in order to avoid excess investment. To analysis the performance of inventory management.
Secondary data
The necessary data calculated from annual report, books, journals and websites.
Period of study
This study covers a period of five years from 2006 2007 to 2010 2011. The accounting year commenced from April and ending with March of the next year.
Area of study
This study was conducted in Chettinad cement corporation limited, Puliyur, Karur District.
3.4 TOOLS FOR ANALYSIS The following tools have been applied in the present study. They are listed below Ration analysis (inventory) and EOQ analysis
3.5 REVIEW OF LITERATURE Bharathipathak 1991 the bulk of the banking business in the country is in the public sector comprising the state bank of India and its seven associated banks and twenty nationalized commercial banks till 1991, the Indian banking industry was operating in a highly regulated and protected regime. But with the acceptance of Norseman committee recommendation, competition has been injected into the banking industry in two forms. The study has been found that HDFC Bank emerged as a leader in this financial analysis of the year ended 2000-01. It closest competitor was ICICI Bank. Financial performance of the other three, no doubt, lagged behind them, but it by no means, depressing. These Bank obviously, have to focus more improving parameters like credit quality and cost control for emerge as the top performance. R. Hamsalakshmi-M.Manicham 2000 The study, it has been found the liquidity position and working capital positions were favorable and good during period of study. Regarding turnover ratio, efficiency in management of fixed assets and total assets must be increased. Regarding return on investment and return on equity was proved that the overall profitability position of the software companies had been increasing at a moderate way. DrR.Dharmaraj 2003 The study article positing in Indian management industry have concluded that for the last five year, there has been proliferation of international and domestic providence of mutual funds. He says that this increased growth is due to the increasing cash flows among innovative young companies through India. Bharathipathak, Finance India Dec 2003 R. Hamsalakshmi-M.Manicham, Finance India Sep2 2009 DrR.Dharmaraj Indian journal of finance volume4 Allen and Carolinian (2003)
Dr Harish kumar2008 A capital adequacy ratio was constant over a period of time. During the study period it was observed that the return on net worth had negative correlation with the debt equity ratio. Inters income to working funds also had a negative association with interest coverage ratio and the non performing to net advance was negatively correlated with interest coverage ratio.
J R Raiyani2009 During the periods of high inflation depending on conventional accounting wisdom. May results in firms financial information losing its meaning and creation of unrealistic expectation among information users. Dr.KavithaChavvali 2009 Inventory analysis of gold exchange trade funds. Mathew T.Jones and Maurice ousted (2007) revised and evaluated pre-world war ii current date for countries by treating gold follows on a continuous basis. The historical data of saving and investment was taken over a time period of 1850- 1945. N.Prasanna 2009 Stock performance Aitkin 1997 the external effect foreign direct investment on export with example of Bangladesh where entry of a koala multinational in garment exports led establishment of a member of domestic export firms creating the countrys largest export industry. Awedh2005 defend that inflator does not have really an effect on the profitability measured by return on equity of foreign banks exerting in Lebanon. In the same way, the author steers that the level of inflation affect more than the return on assets of Lebanese bank than foreign banks in Lebanon. Dr Harish kumarsingle,Theicfai journal of inventory management (vol vii Feb. 2008) J R Raiyani, The infancys university journal of inventory research (vol viii, No 2 Feb. 2009) Dr.R.B.Bhatasna, Indian journal of inventory (vol 5 No: 2 Feb 2011)
CHAPTER 4
4.1 RATIO ANALYSIS (INVENTORY)
1387.83
2154.11
3496.76
4629.10
4693.96
INFERENCE The inventory level was found to be increased trend from 2006-2007 to 2010-2011. The raw material was increasing from 2007 -2008 to 2010-2011
20000
I N 15000 V E N T O 10000 R Y
5000
0 2006-07 Raw materials Work in process Finished goods 2007-08 2008-09 YEAR 2009-10 2010-11
The inventory turnover ratio measures the number of times a company sells its
Inventoryturnoverratio =
Average stock =
Cost of goods sold S.No Year (`in lakhs) 2663028 2844494 3094850 4010580 4521886 Average stock (in tones) Inventory turnover ratio
1 2 3 4 5
5.46 per cent 5.65 per cent 3.78 per cent 4.24 per cent 5.50 per cent
INFERENCE The inventory turnover ratio was high in the year 2006-07 after that 2007-08 the inventory turnover ratio was decreased.
4.241793818 3.77696404
INVENTORY CONVERSION PERIOD The inventory conversion period is the time required to obtain materials for a product, manufactured it, sell it. No. of days in the year Inventory turnover ratio
S.No 1 2 3 4 5
Inventory turnover ratio 5.46 per cent 5.65 per cent 3.78 per cent 4.24 per cent 5.50 per cent
INFERENCE The inventory conversion period is normally indicates the wealth of the company. The company wants to concentrates with its inventory conversion period.
100 C O N V E R S I O N P E R I O D
96 86
80 66 60
64
65
40
20
Item
Annual requirement
EOQ
36 40 42 34.5 35 36.5
INFERENCE The companys annual requirement for the year 2006-07 is 101000 tons of raw materials. They using investment with EOQ spent ` 787168. When the same in without investingEOQis882551. So the company saved ` 169432 in the year 2006-07.
111982
110801
81794
20000
0 Iron Ore Lime Stones Clay Ash Sulphur RAW MATERIALS Gypsum Bauxite
Item
Annual requirement
EOQ
Iron Ore
33500
35
1.5
75
1250
95626
169675
74049
41 55 35 36 37
INFERENCE
The companys annual requirement for the year 2007-08 is 103700 tons of raw materials. They using investment with EOQ spent ` 590000. When the same in without investing EOQ is
` 921215. So the company saved ` 195739 in the year 2007-08.
180000
169675
171050
120000 95626
100000
92787
80000
60000
40000
20000
Item
Annual requirement
EOQ
13500 13500
34 36
1.5 1.5
65 167
1260 805
83789 135642
153905 151515
7046 15873
38 37 35
36.5 1.75
INFERENCE The companys annual requirement for the year 2008-09 is 98500 tons of raw materials. They using investment with EOQ spent 68646. When the same in without investing EOQ is 800543. So the company saved 114076 in the year 2008-09.
180000 160000 140000 I N V E S T M E N T 120000 100000 83789 80000 60000 40000 20000 0 Iron Ore Lime Stones 153905 151515 135642
166775
Clay Ash
Sulphur
Gypsum
Bauxite
RAW MATERIAL Total investment with EOQ Total investment without EOQ
Item
Annual requirement
EOQ
Iron Ore
34000
36
1.5
95
1271
123231
217605
94374
Lime Stones
12500
37
1.75 174
727
127770
146226
18456
Clay Ash
14000
40
1.5
175
864
152496
164575
12079
38 36 37
INFERENCE The companys annual requirement for the year 2009-10 is 111500 tons of raw materials. They using investment with EOQ spent `875092. When the same in without investing EOQ is 1132819. So the company saved `2577276 in the year 2009-10.
146575 121938
100000
50000
0 Iron Ore Lime Stones Clay Ash RAW MATERIAL Sulphur Gypsum Bauxite
Item
Annual requirement
EOQ
Iron Ore
38000
37
1.75 105
1268
135358
268736
133378
Lime Stones
13500
35
1.25 185
869
161852
167588
5736
Clay Ash
12000
38
195
551
109099
157770
48671
Sulphur
15000
40
3.25 185
608
114455
187225
72770
Gypsum
17000
40
1.25 194
1043
203646
221110
17464
Bauxite
18000
39
2.75 200
715
144965
242235
97270
INFERENCE The companys annual requirement for the year 2010-11 is 113500 tons of raw materials. They using investment with EOQ spent 869375. When the same in without investing EOQ is 1244664. So the company saved 375289 in the year 2010-11.
300000 268736 250000 221110 203646 I 200000 N V E S 150000 T M E N T 100000 187225 167588 161852 135358 109099 114455 157770 144965 242235
50000
0 Iron Ore Lime Stones Total investment with EOQ Total investment without EOQ Clay Ash Sulphur RAW MATERIAL Gypsum Bauxite
CHAPTER 5
5.1FINDINGS
In inventory level of the company shows the increase of the raw materials, work-inprocess and finished goods in the year 2006-2009 but not increasing marginally in the year of 2010-2011 In inventory turnover ratio the ratios of the year has been founded as low in the years of 2008-09 and 2009-10. After those periods the inventory turnover ratio has slightly increased in the year 2010-11. Even though that level is quite low when compare with 2007-08. In inventory conversion period is funded as good level. Even though they wants to keep the inventory conversion period as low. The company annual requirements of raw materials was increasing in 2006-2007, 20082009, 2009-2010, 2010-2011. Even though annual requirements is quiet low in 20072008. The inventory level is affected when unqualified employees in charge of inventory it creates impact on production, investment and profit. They have a problem in maintaining the accounts regarding inventory management and 10 percent Computer assessment of inventory items for sale is inaccurate.
5.2 SUGGESTION
Chettinad Cement Corporation Limited sells the 75percent of the cements produced, remaining 25 percent of cement used for own purpose and for sales to others they should allowed more days as credit to their agent. Chettinad Corporation should take steps to increase the level raw materials. To ensure availability of raw material thorough increase the investment with help of EOQ. Appointment of good employees to take in charge of inventory and ensure proper training to employees this helps to make the effective inventory. They should follow proper accounting system for inventory management and computer assessment of inventory item for sale.
5.3 CONCLUSION
Chettinad cement is one of the leading cement manufacturers in Tamilnadu. They produce high quality cement. The study covers the inventory management for effective inventory control. Which helps to control the excess investment on inventory? I have used a technique Economic Order Quantity Analysis named as EOQ Analysis for find out the rate with EOQ and without EOQ investment for purchasing of good in the manufacturing the cement in Chettinad Cement Corporation Limited.
BIBLIOGRAPHY BOOKS
Khan MY Jain P.K Management Accounting : Text, problems and cases 4th Edition Tata McGraw Hill 2007 Pandikumar Management Accounting Excel Books 2007 Ramachandran N Kakani Kumar Ram Financial Acccounting For Management Tata McGraw Hill 2006
ANNEXTURE
PROFIT AND LOSS A/C OF CHETTINAD CORPORATION LTD Particulars INCOME : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalized Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit tax Deferred Tax Reported Net Profit Extraordinary Items Adjusted Net Profit Adjst. below Net Profit P & L Balance brought forward Statutory Appropriations Appropriations P & L Balance carried down Dividend Preference Dividend Equity Dividend % Earnings Per Share-Unit Earnings Per Mar-11 Mar-10 Mar-09
(Rs. in Crores)
Mar-08 Mar-07 Mar-06 840.47 115.17 725.30 50.40 -3.02 772.68 110.26 183.28 28.74 77.27 130.31 2.56 0.00 532.42 240.26 18.18 222.08 53.17 168.91 58.32 NA -4.39 114.71 0.00 114.71 0.00 73.97 0.00 39.89 148.79 22.13 0.00 75.00 37.61 37.61 584.17 98.68 485.49 45.03 12.54 543.06 83.79 168.90 19.16 46.97 102.17 2.41 0.00 423.40 119.66 19.42 100.24 36.09 64.15 0.98 NA 22.71 40.06 0.02 40.04 0.00 57.23 0.00 23.32 73.97 14.75 0.00 50.00 12.88 12.88
1,720.31 1,522.68 1,321.48 1,107.20 220.70 166.38 183.81 177.02 1,499.61 1,356.30 1,137.67 930.18 101.53 13.94 6.14 5.80 -6.00 -9.94 25.09 14.94 1,595.14 1,360.30 1,168.90 950.92 209.71 426.82 80.00 100.54 248.09 7.47 0.00 1,072.63 522.51 64.57 457.94 362.87 95.07 19.50 0.00 0.40 75.17 43.03 32.14 0.00 314.24 0.00 30.77 358.64 19.10 0.00 50.00 18.85 18.85 172.17 310.57 64.54 80.45 209.12 10.24 0.00 847.09 513.21 77.91 435.30 308.08 127.22 30.80 0.00 -0.21 96.63 0.00 96.63 11.91 205.70 0.00 0.00 314.24 0.00 0.00 0.00 32.76 32.76 158.90 243.37 37.70 85.58 167.89 3.34 0.00 696.78 472.12 52.26 419.86 429.00 -9.14 51.25 0.60 -56.78 -4.21 0.00 -4.21 1.39 253.04 0.00 44.52 205.70 29.50 0.00 100.00 0.00 0.00 157.66 181.71 41.32 71.53 147.04 3.70 0.00 602.96 347.96 19.62 328.34 81.50 246.84 92.62 0.50 -10.05 163.77 0.00 163.77 0.00 148.79 0.00 59.52 253.04 29.50 0.00 100.00 53.81 53.81
242.33
289.84
120.39
133.05
89.23
59.13
Particulars SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS Gross Block Less : Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets Contingent Liabilities
Mar-11
Mar-10
Mar-09 Mar-08 Mar-07 Mar-06 29.50 362.99 392.49 37.61 398.58 436.19 828.68 913.20 420.77 0.00 492.43 0.00 353.65 0.58 29.50 233.74 263.24 9.03 222.33 231.36 494.60 824.24 339.27 NA NA 0.00 38.47 0.58 29.50 144.92 174.42 24.04 280.87 304.91 479.33 765.58 286.10 NA NA 0.00 2.80 3.61
38.20 38.20 29.50 887.51 825.52 325.65 925.71 863.72 355.15 406.28 343.89 282.00 489.78 414.98 715.03 896.06 758.87 997.03 1,821.77 1,622.59 1,352.18 2,836.59 2,315.69 1,660.39 1,462.81 1,167.89 850.98 0.00 0.00 1,373.78 1,147.80 0.00 0.00 233.54 95.46 0.58 0.58 0.00 809.41 0.00 313.16 0.58
156.40 201.97 358.37 46.32 0.00 0.73 65.03 -64.30 828.68 16.13
74.57 98.39 172.96 44.93 0.00 1.40 75.75 -74.35 494.60 32.60
77.59 30.09 107.68 72.18 0.00 2.99 81.73 -78.74 479.33 11.06
2.05 1.41 0.84 9.76 8.72 8.36 -7.71 -7.31 -7.52 1,821.77 1,622.59 1,352.18 43.38 12.95 29.68