A Study on Inventory Management in Zuari Cement Pvt

5/24/2018 A Study on Inventory Management in Zuari Cement Pvt

1CARLTON BUSINESS SCHOOL

A STUDY ON INVENTORY MANAGEMENT IN ZUARI

CEMENT PVT. LTD, KADAPA

Project Report submitted in partial fulfillment of the

Requirement for the Award of

Post Graduate Diploma

In

Management

By

BHASKAR NAIDU. M

(CB12HPGDM017)

Under the guidance of

Syed Ali Luqman Hussaini,Visiting Professor and Trainer in PMA and Leadership

2014



Certificate

This is to certify that A STUDY ON INVENTORY MANAGEMENT IN

ZUARI CEMENT PVT. LTD, KADAPA is the bonafide work and has been

submitted by BHASKAR NAIDU .M (CB12HPGDM017) in partial fulfillment

of the requirements for the award of PGDM (International Business), for the

academic year 2012-2014.

The project work has not been submitted to any other University or Institute for the

award of any degree, diploma etc.

Internal Guide Dean of academics

External Examiner



Acknowledgement

I would like to express my gratitude to Sri D. Vittal RaoChairman and Sri D. Satish,

CEO-Carlton Business School, Hyderabad for giving me an opportunity and facility to complete

this project.

I owe my boundless gratitude to my faculty guide, Syed Ali Luqman Hussaini

Professorof PGDM Department, for his guidance and supervision of this project for successful

completion.

I sincerely thank Mr Ravi Shankar, Production manager, ZuariCement Pvt. limited,

Kadapa for giving me permission to do this project at their concern.

I express my sincere thanks to my beloved parents, friendsand the staff membersand

those who encouraged and supported the completion of this project report.

BHASKAR NAIDU.M



TABLE OF CONTENTS

CHAPTER NO DESCRIPTION PAGE NO

TITLE 1CERTIFICATE 2

ACKNOWLEDGEMENT 3

TABLE OF CONTENTS 4

ABSTRACT 7

I

INTRODUCTION

1.1 ABOUT THE STUDY

8

9

1.2 SCOPE OF THE STUDY 10

1.3 STATEMENT OF THE PROBLEM 10

1.4 OBJECTIVES OF THE STUDY 101.5RESEARCH METHODOLOGY

1.5.1 RESEARCH DESIGN

1.5.2 DATA COLLECTION

1.5.3 PERIOD OF STUDY

1.5.4 AREA OF STUDY

1.5.5 TOOLS FOR ANALYSIS

1.5.5.1RATIO ANALYSIS (INVENTORY)

1.5.5.2ECONOMIC ORDER QUANTITY (EOQ)

1111

11

1111

11

1112

II

INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY PROFILE2.1.1 CEMENT INDUSTRY IN GLOBAL

2.1.2 CEMENT INDUSTRY IN INDIA

13

1416

18

2.2 COMPANY PROFILE

2.2.1 THE COMPANY

2.2.2 PROMOTER OF THE COMPANY2.2.3 FINANCIAL SUPPORT

2.2.4 TECHNOLOGY ADOPTED

2.2.5 EXPANSION OF CAPACITY

2.2.6 QUALITY CUSTOMER SERVICE2.2.7 DEVELOPMENT ACTIVITIES

2.2.8 ITALCEMENTI GROUP

2.2.9 COMPETITORS FOR ZUARI CEMENT LIMITED2.2.10 LOCATION OF THE PLANT

2.2.11 PRODUCTION

2.2.12 RAW MATERIALS

2.2.13 POWER

2020

2020

202021

21

212122

23232324



2.2.14 WATER

2.2.15 TRANSPORT2.2.16 MAN POWER

2.2.17 QUARRY

2.2.18 A WIDE RANGE TO ADDRESS EVERY NEED

2.2.19 QUALITY CUSTOMER SERVICE2.2.20 PRODUCTS

2.2.21 PROCESS TECHNOLOGY, THE SOLIDFOUNDATION

2.2.21.1 THE PROCESS TECHNOLOGY

ADVANTAGES

2.2.21.2 VENTOMATIC ELECTRONIC PACKING2.2.21.3 ENVIRONMENT-FRIENDLY TECHNOLOGY

2.2.22 BOARD OF DIRECTORS

24

2425

25

25

252626

27

2829

30

III

CONCEPTUAL AND THEORETICAL FRAMEWORK

3.1 CONCEPTUAL AND THEORETICAL FRAME

WORK OF INVENTORY MANAGEMENT3.1.1 OBJECTIVES OF INVENTORY TURNOVER

ANALYSIS, EOQ ANALYSIS

3.1.2 USES OF INVENTORY TURNOVERANALYSIS, EOQ ANALYSIS

3.1.3 INVENTORY TURNOVER RATIOS

3.1.3.1 INVENTORY TURNOVER RATIO

3.1.3.2 INVENTORY TURNOVER PERIOD

3.1.4 ECONOMIC ORDER QUANTITY

31

32

32

32

33

33

33

33

3.2 REVIEW OF LITERATURE

3.2.1 MEANING AND NATURE OF INVENTORY3.2.2 BENEFITS OF HOLDING INVENTORIES

3.2.3 OBJECTS OF INVENTORY MANAGEMENT

3.2.4 TOOLS AND TECHNIQUES OF INVENTORYMANAGEMENT

3.2.4.1 DETERMINATION OF STOCK LEVELS

3.2.4.2 DETERMINATION OF SAFETY STOCKS

3.2.4.3 ECONOMIC ORDER QUANTITY (EOQ)3.2.4.4 ABCANALYSIS: (ALWAYS BETTER

CONTROL ANALYSIS)

3.2.4.5 VED ANALYSIS: (VITALLY ESSENTIALDESIRE)


3.2.4.7 CLASSIFICATION AND CODIFICATION

34

3435

35

36

36

38

3839

39

39

40



OF INVENTORIES

3.2.4.8 VALUATION OF INVENTORIESMETHOD OF VALUATION

3.2.4.8.1 THE FIFO METHOD (FIRSTIN FIRST

OUT METHOD)

3.2.4.8.2 THE LIFO METHOD (LASTINFIRSTOUT METHOD)

3.2.4.8.3 BASE STOCK METHOD3.2.4.8.4 WEIGHTED AVERAGE PRICE METHOD

40

41

42

4242

IV

ANALYSIS OF INVENTORY MANAGEMENT

4.1 ANALYSIS PART-1 RATIO

ANALYSIS(INVENTORY)4.1.1 LEVEL OF INVENTORY

4.1.2 INVENTORY TURNOVER RATIO

4.1.3 INVENTORY CONVERSION PERIOD

43

44

45

46

46

4.2 ANALYSIS PART-2 EOQ ANALYSIS4.2.1 EOQ ANALYSIS FOR THE YEAR 2009-10 (TABLE)

4.2.2 EOQ ANALYSIS FOR THE YEAR 2009-10 (CHART)4.2.3 EOQ ANALYSIS FOR THE YEAR 2010-11(TABLE)

4.2.4 EOQ ANALYSIS FOR THE YEAR 2010-11(CHART)4.2.5 EOQ ANALYSIS FOR THE YEAR 2011-12 (TABLE)4.2.6 EOQ ANALYSIS FOR THE YEAR 2011-12(CHART)

4.2.7 EOQ ANALYSIS FOR THE YEAR 2012-13 (TABLE)4.2.8 EOQ ANALYSIS FOR THE YEAR 2012-13 (CHART)

4.2.9 EOQ ANALYSIS FOR THE YEAR 2013-14 (TABLE)4.2.10EOQ ANALYSIS FOR THE YEAR 2013-14 (CHART)

4749

5051525354

5556

5758

V

SUMMARY OF FINDINGS, SUGGESTIONS AND

CONCLUSION

5.1 FINDINGS

5.1.1 RATIO ANALYSIS (INVENTORY)

5.1.2 EOQ ANALYSIS

59

60

60

60

5.2 SUGGESTIONS


61

61

5.3 CONCLUSION 61

BIBLIOGRAPHY 62



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. This is

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 inventory plays a role in the organization. The use of EOQ analysis is very effective

and is useful tool for classifying, monitoring and controlling of the inventories.



CHAPTER-IINRODUCTION



1 1 ABOUT THE STUDY

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. Merchandising inventory,

2. Manufacturing inventory.

The manufacturing inventory has been subdivided into three types. These,

1. Raw materials,

2. Work in process,

3. Finished goods.

Raw materials:Everything the crafter buys to make the product is classified as raw

materials. That includes leather, dyes, snaps and grommets. The raw material inventory

only includes items that have not yet been put into the production process.

Work in process:This includes all the leather raw materials that are in various stages of

development. For the leather crafting business, it would include leather pieces cut and in

the process of being sewn together and the leather belts and purse etc. that are partially

constructed.

In addition to the raw materials, the work in process inventory includes the cost of the

labor directly doing the work and manufacturing overhead. Manufacturing overhead is a



catchall phrase for any other expenses the leather crafting business has that indirectly

relate to making the products. A good example is depreciation of leather making fixed

assets.

Finished goods:When the leather items are completely ready to sell at craft shows or

other venues, they are finished goods. The finished goods inventory also consists of the

cost of raw materials, labor and manufacturing overhead, now for the entire product.

1.2 SCOPE OF THE STUDY

The study helps the management to improve its profitability through a reduction in non-

moving inventory.

It develops the policies for both continuous review of inventory management system.

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.

1.3 STATEMENT OF THE PROBLEM

The research problem statement for the project is How far EOQ (Economic Order

Quantity) Analysis is useful for effective inventory management at Zuari Cement

Pvt. Limited?

1.4 OBJECTIVES OF THE STUDY

To study the inventory management followed in Zuari cement.

To identify the existing inventory management and its effectiveness.

To calculate analysis for their performance in inventory management.



1.5 RESEARCH METHODOLOGY

1.5.1 RESEARCH DESIGN

The Descriptive type of research has been applied in the study. In this research the

researcher has no control over the variables. He only reports what has happened or what is

happening. The research can only discover causes but cannot control the variables.

1.5.2 DATA COLLECTION

This study purely based on secondary sources of information. The necessary data

calculated from annual report, books, journals and websites.

1.5.3 PERIOD OF STUDY

This study covers a period of five years from 2009 2010 to 2013 2014. The

accounting year commenced from April and ending with March of the next year.

1.5.4 AREA OF STUDY

This study was conducted in Zuari cement pvt.ltd Yerraguntla, Kadapa District.

1.5.5 TOOLS FOR ANALYSIS

The following tools have been applied in the present study.

They are listed below

Ration analysis (inventory) and

EOQ analysis



1.5.5.1 RATIO ANALYSIS (INVENTORY)

The percentage of a mutual fund or other investment vehicle's holdings that have been "turned

over" or replaced with other holdings in a given year. The type of mutual fund, its investment

objective and/or the portfolio manager's investing style will play an important role in

determining its turnover ratio.

1.5.5.2 ECONOMIC ORDER QUANTITY (EOQ)

Economic order quantity is that level of inventory that minimizes the total of

inventory holding cost and ordering cost. The framework used to determine this order quantity is

also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913 .The most

economical quantity of a product that should be purchased at one time. The EOQ is based on all

associated costs for ordering and maintaining the product. EOQ refers to the size of the order

which gives maximum economy in punches of materials.

Where



CHAPTER-IIINDUSTRY AND COMPANY PROFILE



2.1 INDUSTRY PROFILE

History of the origin of cement

It is uncertain where it was first discovered that a combination of hydrate non-hydraulic limeade

a pozzolanproduces a hydraulic mixture, but concrete made from such mixture was first used on

large scale by roman engineers. They used both natural pozzolans (tress or pumice) and artificial

pozzolans in the concretes. Many excellent examples of structures made from these concretes are

still standing. Notably the huge monolithic dome of the pantheon in Rome and the massive Bath

of Caracalla. The vast system of roman aqueducts also made extensive use of hydraulic cement.

The use of structural concrete disappeared in medieval Europe. Although weak pozzolanic

concretes continued to be used as a core fills in stone walls and columns.

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.

Varieties of the cement

There are some varieties in cement that always find good demand in the market. To know their

characteristics and in which area they are most required, it will be better to take a look at some of

the details given below.

.

Sulphate resisting Portland Cement (SRPC)

This cement is beneficial in the areas where concrete has an exposure to seacoast or sea water or

soil or ground water. Under any such instances, the concrete is vulnerable to sulphates attack in

large amounts and can damage to the structure. Hence, by using this 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.



Rapid hardening Portland Cement (RHPC)

The texture of this cement type is quite to that OPC. But, it is bit more fine than OPC and

possesses immense compressible strength, which makes casting work easy.

Ordinary Portland Cement (OPC)

Also referred to as grey cement or OPC, it is of much use in ordinary concrete construction. In

the production of this type of cement in India, Iron (fe2O3), Magnesium (MgO), Silica (SiO2),

and Sulphur, trioxide (SO3) components are used.

Portland Pozolona Cement (PPC)

As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The rate of

hydration heat is lower in this cement type. Coal waste or waste or burnt clay is used in the

production of this category of cement. It can be availed at low cost in comparison to OPC.

Oil Well Cement (OWC)

Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing or fixing

oil wells. This is applied on both the off-shore and on-shore of the wells.

Clinker Cement (CC)

Produced at the temperature of about 1400 to 14560 degree Celsius, Clinker cement is needed in

the construction work of complexes, houses and bridges. The ingredients for this cement

comprise iron, quartz, clay, limestone and bauxite.

A part from these, some of the other types of cement that are available in India can be classified

as:

Low heat cement,

High early strength cement,

Hydrophobic cement,

High aluminum cement and

Masonry cement.



2.1.1 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 willpower increase its

demand by 250MT during the period, an increase higher than the total yearly European demand.

The Demand of Cement

Demand for cement in MT 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%

World cement demand 2283 2836 4.7%

Source:www.cementhistory.com,www.google.com
http://www.cementhistory.com/http://www.cementhistory.com/http://www.google.com/http://www.google.com/http://www.google.com/http://www.google.com/http://www.cementhistory.com/



S.NO Name of the Company Name of the

Country

1 Aditya Birla Group-Grasim India2. Al-Ghurair Group Dubai

3. Ambuja Cements Limited India

4. Anhui Conch Cement Company China

5. Arabian Cement Company Egypt

6. Ararat Cement Co. South Africa

7. Cement Cruz Azul Cement Co. Armenia

8. CEMEX Co. U.S.A

9. China National Cement Materials Group Corporation China

10. Cimpor Cement corp. China

11. Companhia Siderurgical National S.A Brazil

12. Concrete Casting Cement Company Pacific Alloy

13. CRH plc. America

14. Eagle Materials Inc. U.S.A

15. Heidelberg Cement Company Germany

16. James Hardier Cements U.S.A

17. Lafarge India

18. Libyan Cement Company Libya

19. Monarch Cement Ltd. U.S.A, California

20. Noricum Germany

21. Pretoria Portland Cement Company South Africa

22. Ready Mix Inc. India

23. Rinker Group Australia

24. Semapa Group Europe

25. Smith-Midland Cement Company U.S.A, Milford
http://en.wikipedia.org/wiki/Armeniahttp://en.wikipedia.org/wiki/Armenia



Top 25 Cement companies in the world

2.1.2 Cement Industry in India

The cement industry in India has undergone a major shift over the last 6 years. The Indian

cement industry is the second largest producer of quality cement. Indian cement industry is

engaged in the production of several varieties of cement such as, ordinary Portland cement

(OPC), Portland pozzoland cement (PPC), Portland blast furnace slag Portland cement

(PBFSPC), sulfate resistance Portland cement (SRPC), white cement, etc.,. They are produce

strictly as per the Bureau of Indian standards (BIS) specifications and their quality is comparable

with the best in the world.

The industry occupies an important place in the national economy because of its strong linkage

to other sectors such as, construction, transportation, coal and power. The cement industry is also

one of the major contributors to the exchequer by way of indirect taxes.

Cement Companies in India

ACC Limited

Ambuja Cements Limited

Andhra Cements Ltd

Barak Valley Cements Ltd

Binani Cement Ltd

Birla Corporation Limited

Chettinad Cement Corporation Limited

Dalmia Cement (Bharat) Limited

Deccan Cements Ltd.

Everest Industries Ltd

Grasim Industries Limited

Gujarat Sidhee Cement Ltd

Heidelberg Cement India Ltd



Hyderabad Industries Ltd

Indian Hume Pipe Company Ltd

J. K. Cement Limited

JK Lakshmi Cement Ltd

Kalyanpur Cements Ltd.

Katwa Cements Ltd

Kesoram Industries Ltd.

Madras Cements Limited

Mangalam Cement Ltd.

Panyam Cements & Mineral Inds . Ltd

Prism Cement Ltd

Rose Zinc Ltd

Saurashtra Cement Ltd.

Shiva Cement Ltd

Shree Digvijay Cement Company Ltd.

Somani Cement Company Ltd

Sri Vasavi Inds . Ltd

Srichakra Cements Ltd

Stresscrete India Ltd

The India Cements Limited

Udaipur Cement Works Ltd

UltraTech Cement Limited

Vinay Cements Ltd



2.2 COMPANY PROFILE

2.2.1 THE COMPANY

The Zuari cement was started in 1994 to operate the cement plant of Texaco ltd.,under a working arrangement. Subsequently Texacos cement business was taken over by

the company in 1995. Today Zuari Cements manufacturing facility at yerraguntla in

Andhra Pradesh is one of the largest in South India.

In the year 2000 Zuari enters in to a joint venture with the italcementi group the second largest

cement produce in Europe and Zuari Ltd. Lived off of a separate company.

The Zuari Cement is strategically located at Yerraguntla. The plant location existence of

6km from Yerraguntla. It is connected to the railway station on by a railway track of 7km length

and is having an exchange plant inside the factory. Plant is connected to the nearest highway by0.2km land private road.

2.2.2 PROMOTER OF THE COMPANY

This investment was initially made through a 50:50 joint venture with the KK Birla group

in Zuari Cement Ltd., but subsequently in May 2006. Italicement group acquired the full central

of the company.

Now Company is under joint venture having rated capacity of 17 Lakhs per annum company for

that diversified that production of the cement making EPC along with OPC.

2.2.3 FINANCIAL SUPPORT

The required finances for the cement co., are provided by several financial institutions

like S.B.I BNP Paribas, Andhra Bank, Standard Charted Bank.

2.2.4 TECHNOLOGY ADOPTED

The technology adopted in the plant is an open pre-blending stockpiles system for

limestone and clinker. This is a special feature compared to the conventional system of storagewhich has its own weakness on the case of the failure of cranes.



2.2.5 EXPANSION OF CAPACITY

The expansion of clinker capacity at Yerraguntla by way of new line with a capacity of 5500

tons per day and new grinding unit at Chennai with a capacity of 0.8 million have been finalized

with an estimate capital outlay of MINR 6760. Major permits and clearness requires for the

projects have been obtained and the supply contract for main equipment for Yerraguntla new line

are finalized with M/s F.L.Smith Limited. M/s Claudius Peter Technologies, M/s Maag Gear AG

and M/s Honeywell Automation India Limited. For Chennai grinding unit main equipment are

finalized with M/s Walchandnagar Industries limited, including contracts for erection and

commissioning. On implementation of these projects the total capacity of the company will

increase to 5 million tons.

2.2.6 QUALITY CUSTOMER SERVICE

In an effort to reach out to customers better, Zuari cement had setup a technical cell named Zuarihome partner. This cell gives guidance in the field of building.

Technology, architecture, housing finance and economical usage of the high quality cement.

Technology experts provide the assistance according to individual requirements. So that

customers get the best value for the investment they have made.

2.2.7 DEVELOPMENT ACTIVITIES

The plant in Yerraguntla had adopted four nearby villages as part of its program of

corporate social responsibility towards the local community. These villages are Thumallapalli,

Yalasapalli, Koduru and Peddanapadu, part of the Kadapa district of Andhra Pradesh State. In

particular, the planet intends to contribute to the improvement of living standards of the people in

the surrounding villages. The strategy focuses on three basis areas: health and hygiene, education

and sustainable livelihoods.

2.2.8 ITALCEMENTI GROUP

Italcemanti Group, with a production capacity of approximately 70 million tons of

cement annually, is the fifth largest cement producer in the world with leadership in the

Mediterranean area. Italcementi, one of the 10 largest Italian industries companies is included in

S&P/MIB Index of Italian Stock Exchange.



The core business cement (over 65% of sales) is combined with the production of ready mixed

concrete and aggregates, Italcementi Group, with 2007 annual salesamounting to 5,854 million

Euro and a net income of 651 million Euro, combines the expertise, knows how and cultures of

19 countries. With over 22,850 employees, the Group boasts, as at 31 December 2007, an

industrial network of 62 cement plants, 15 grinding centers, 3 terminals, 152 aggregate quarries

and 588 concrete, batching units Italcement group in India

Italcement group made its debut in India in January 2001, through the partial acquisition of the

2.1 Mint Yerragunta Cement plant, located in the southern part of Andhra Pradesh State. The

plant supplies material to south India that accounts for one fourth of the entire population of the

country. The plant is strategically located to cater to the major markets of Bangalore and Chennai

In January 2002, Zuari cement took over another company, Sri Vishnu Cement Limited (SVCL)

whose 1.3 Mint plant is situated at Sitapuram, Andhra Pradesh State, near the capital,

Hyderabad, 3rd

highest consumption center of the South.

Until now, Italcement group has invested around 200 million euro in India, the Group actually

counts on 3.4 Mint production capacity, with net sales of about 116 million euro in 2006.

2.2.9 COMPETITORS FOR ZUARI CEMENT LIMITED

Coramandal cement

Penna cement

Ultra tech cement

Priya cement

Maha cement

Nagarjuna cement

Lanco cement

Bharathi cement



2.2.10 LOCATION OF THE PLANT

Cement and its raw materials namely coal and lime stone, are all bulky that make

transportation difficult and uneconomical. Given this, cement plants are located close to both

sources of raw materials and markets.

Location of the plant at this place is having the following advantages. Location in

industrial belt of Rayalaseema with sophisticated facilities like water.

Present of best suited limestone proved scientifically for cement.

Low free limestone to ensure reduce surface cracks.

Low heat of hydration from better soundness.

Low magnesia content to ensure reduced tensile cracks.

Specially designed setting time to suit Indian working conditions.

2.2.11 PRODUCTION

Cement production during the period has also increased from about 72.23 million tons

about 90 million tons in 2006-2007 excluding the contribution of mini cement plants.

2.2.12 RAW MATERIALS

The actual requirements of raw material at 100% capacity utilization would be;

12.5 million tons of limestone per annum.

70000 tons of Gypsum per annum.

39000 tons of Bauxite per annum.

20000 tons of Iron ore per annum.



The limestone is major component required for the plant is net from the mines located

adjacent to the proposed site.

Gypsum is procured from fertilizer factories at Madras and Cochin.

Iron is soured partly from mini steel plants located at Tirupathi and partially from

Bellary.

Bauxite is procured from Goa, Karnataka and Maharashtra.

2.2.13 POWER

Maximum estimated power demand is 45 M.V. The company has an existing contract 50 M.V

demands APSEB, the plant presents has D.G sets with an aggregate general capacity of 12.6

M.V.

2.2.14 WATER

Water is required for seeds of consumption make for plant and machinery for general

need in plant. Company has a pumping station and underground bore wells near Hanuman Gutty

village at Penna River to tap the undergrounds water in riverbed.

2.2.15 TRANSPORT

The factory is when connected to different part of the country through rail and road

facilities is near to Yerraguntla railway station and has a railway lint to the factory with an extern

point within the factory premises 605 of the cement is dispatched by rail gal is received through

rail. The plant is connected to the nearest state highway to Bangalore, Hyderabad and Chennai.



2.2.16 MAN POWER

Existing plant has a total of 500 employees. After and addition of employees may be

required.

2.2.17 QUARRY

It is situated adjacent to the factory. It constituted limestone, one of the major materials for

cement industry. The quarry has a mining base area of 1027.56 acres.

2.2.18 A WIDE RANGE TO ADDRESS EVERY NEED:

Residential, commercial, multistoried buildings and complex.

Mass concreting-dams, canals, spillways

Construction and repair of pavements, roads, flyovers and runways.

Spun pipes and poles manufacturing

Cold weather concreting

Pre-fabricated elements such a pipes, sleepers, windows, door frames etc.

2.2.19 QUALITY CUSTOMER SERVICE

In an effort to reach out to customers better, Zuari cement as set up a technical cell named

Zuari home partner. This cell gives guidance in the field of building. Technology, architecture,

housing finance and economical usage of the high quality. Technical experts provide the

assistance according to the individual requirements. So that customers get the best value for the

investment they have made.



2.2.20 PRODUCTS

Zuari Cement manufactures and distributes its own main product lines of cement .Its aim

is to optimize production across all of our markets, providing a complete solution for customer's

needs at the lowest possible cost, an approach and it is called as strategic integration of activities.

Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are crushed

and ground to provide the "raw meal, a pale, flour-like powder. Heated to around 1450 C

(2642 F) in rotating kilns, the meal undergoes complex chemical changes and is transformed

into clinker.

2.2.21 PROCESS TECHNOLOGY, THE SOLID FOUNDATION

The culture of quality that has always prevailed in Zuari Cement's manufacturing

facilities is best exemplified in the process technology employed. Advanced technology

methods are used to ensure that a high level of quality is attained and sustained right through the

manufacturing process. Yet, these high standards are constantly improved upon by an

experienced and dedicated R&D team to attain performance oriented cement.
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Centralized On-line Process Control

2.2.21.1 THE PROCESS TECHNOLOGY ADVANTAGES

Complete homogenization of limestone is achieved by stacking the limestone in stock-

plies with the use of stackers and reclaiming it through recliners.

The optimum ratio of raw mix is attained by the use of X-ray analyzer and automatic

weigh feeder which are linked to the centralized computers control room.

Reduced variability in kiln feed and complete homogenization of raw meal is attained

through Continuous Flow Silo. This ensures that every grain of cement is of consistent

quality.

Online X-ray Analyzer Stacker and Reclaimed



Vertical Raw Mill Continuous Fluidized Silo

The totally computerized monitoring system enables quality clinkerisation. It dictates the

optimum retention time in the proclaimer and the kiln.

Equipped with a six stage double stream pre-heater cyclone system, the proclaimer only

adds to the quality.

The modern closed grinding units have a high efficiency separator that produces finer

particles of cement. This yields cement matrix with a lower pore diameter. This in turn

gives concrete of higher density and lower permeability.

2.2.21.2 VENTOMATIC ELECTRONIC PACKING

Zuari Cement employs Ventomatic packers to ensure that the customer gets exactly 50

kgs per bag. To minimize damages during transport, advanced loading techniques are used.

These steps reflect Zuari Cement's commitment to offer the best quality and correct quality to its

customers.



2.2.21.3 ENVIRONMENT-FRIENDLY TECHNOLOGY

To minimize dust emission, Zuari Cement has installed the latest pollution control

equipment such as electrostatic precipitators in the kiln, raw mills, coal mills and cement mills.

this environmental friendly aspect of Zuari's process technology has resulted in abundance of

greenery and clean air in the factory premises.



2.2.22 BOARD OF DIRECTORS

DIRECTORS Saroj Kumar Poddar, Chairman

Rodolfo Danielle (Alternate Mrs.

Regina Bouille)

Yves Rene Nanto (Alternate Giorgio Bodo)

Goran L.Seifert (Alternate Philippe Marchat

) Maurizio Caneppele, Managing Director

V. Raghunathan

EXECUTIVES Director Marketing : Krishna Srinivatava

Sr. Vice President works : L. Srivastava

Chief Finance Officer : Gabreil Morin

COMPANY SECRETARY L.R. Neelakanta

BANKERS State Bank of India

BNP Paribad

Andhra Bank



CHAPTER-III

CONCEPTUAL AND THEORITICAL FRAME

WORK



3.1. CONCEPTUAL AND THEORITICAL FRAME WORK OF

INVENTORY MANAGMENT

Inventory management is a process of evaluating and controlling method for inventory or stock

level of the company. The purpose of inventory management is to diagnose the information

contained in the stock book of the company, so as to judge the stock level and control methods of

the firm. The analysis and interpretation of inventory management is essential to bring out the

stock needed. The inventory management is an attempt to determine the stock and meaning of

the stock book statement data so that forecast may be made of the future cost control of the

company. The stock evaluation helps to understand how best the organization is functioning with

good stock control.

The analytical tools generally available to an analyst for this purpose are as follows,

Inventory turnover analysis

EOQ analysis

3.1.1 OBJECTIVES OF INVENTORY TURNOVER ANALYSIS, EOQ

ANALYSIS

The objectives of inventory turnover analysis EOQ analysis is to provide information

about the stock level and control when purchase of raw materials of an enterprise that is useful to

a wide range of purchasing power of raw materials. We have discussed in the previous

paragraphs the utility of the components of inventory turnover and EOQ. Later we will us

discussing how they are made use of by stock department

o To study the stock book of the company

o To evaluate the stock position of the company.

o To find out the efficiency in utilization of stock materials to produce the goods.



3.1.2 USES OF INVENTORY TURNOVER ANALYSIS, EOQ ANALYSIS

It is helpful in assessing the stock position and productivity position of a concern. The

main objectives of an inventory turnover analysis are to assess

The present and future stock capacity of a concern.

To give corrective solution for the inventory problem.

To differentiates the investment with EOQ and invest without EOQ for purchasing of the

raw material

3.1.3 INVENTORY TURNOVER RATIOS


A ratio showing how many times a company's inventory is sold and replaced over a period.

3.1.3.2 INVENTORY TURNOVER PERIOD

How often interest is calculated and added on to your investment? If you have two conversion

periods, it means that interest is calculated every six months. The inventory conversion period

for calculate the interest for credit sales to their agents

3.1.4 ECONOMIC ORDER QUANTITY

Economic order quantity is that level of inventory that minimizes the total of

inventory holding cost and ordering cost. The framework used to determine this order quantity is

also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913.The most

economical quantity of a product that should be purchased at one time. The EOQ is based on all

associated costs for ordering and maintaining the product. EOQ refers to the size of the order

which gives maximum economy in punches of materials.

Where



3.2 REVIEW OF LITERATURE

The investment in inventories constitutes the most significant part of current assets / working capital in

most of the undertakings. Thus, it is very essential to have proper control and management of inventories.

The purpose of inventory management is to ensure availability of materials in sufficient quantity

as and when required and also to minimize investment in inventories.

3.2.1 MEANING AND NATURE OF INVENTORY

In accounting language, inventory may mean the stock of finished goods only. In a manufacturing

concern, it may include raw materials, work- inprogress and stores etc.

Inventory includes the following things:

a) Raw Material: Raw material from a major input into the organization. They are required to

carry out production activities uninterruptedly. The quantity of raw materials required will be

determined by the rate of consumption and the time required for replenishing the supplies.

The factors like the availability of raw materials and Government regulations etc., too affect

the stock of raw materials.b) Work in progress: The work in progress is that stage of stocks which are in between raw

materials and finished goods. The quantum of work in progress depends upon the time taken

in the manufacturing process. The quantum of work in progress depends upon the time taken

in the manufacturing process. The greater the time taken in manufacturing, the more will be

the amount of work in progress.

Consumables: These are the materials which are needed to smoother the process of

production but they act as catalysts. Consumables may be classified according to their

consumption add critically. Generally, consumable stores does not create any supply problem

and firm a small part of production cost. There can be instances where these materials may

account for much value than the raw materials. The fuel oil may form a substantial part of

cost.



c) Finished goods: These are the goods, which are ready for the consumers. The stock of

finished goods provides a buffer between production and market, the purpose of maintaining

inventory is to ensure proper supply of goods to customers.

d) Spares: The stock policies of spares fifer from industry to industry. Some industries like

transport will require more spares than the other concerns. The costly spare parts like engines,

maintenance spares etc., are not discarded after use, rather they are kept in ready position for

further use.

All decisions about spares are based on the financial cost of inventory on such spares and the

costs that may arise due to their nonavailability.

3.2.2 BENEFITS OF HOLDING INVENTORIES

Although holding inventories involves blocking of a firms and the costs of storage and handling,

every business enterprise has to be maintain certain level of inventories of facilitate un interrupted

production and smooth running of business. In the absence of inventories a firm will have to make

purchases as soon as it receives orders. It will mean loss of time and delays in execution of orders which

sometimes may cause loss of customers and business.

A firm also needs to maintain inventories to reduce ordering cost and avail quantity discounts etc.

There are three main purpose of holding inventories.

1. The transaction motive: This facilitates continuous production and timely execution of sales

order.

2. The precautionary motive: Which necessitates the holding of inventories for meeting the

unpredictable changes in demand and supplies of materials

3. The speculative motive: Which induces to keep inventories for taking advantage of price

fluctuations, saving in reordering costs and quantity discounts

3.2.3 OBJECTS OF INVENTORY MANAGEMENT

Definition of Inventory Management: Inventory Management is concerned with the determination

of optimum level of investment for each components of inventory and the operation of an effective

control and review of mechanism



Objectives of inventory management:

1. To ensure continuous supply of materials, spares and finished goods so that production should not

suffer at any time and the customers demand should also be met.

2. To avoid both overstocking and understocking of inventory.

3. To maintain investment in inventories at the optimum level as required by the operational and

sales activities.

4. To keep material cost under control so that they contribute in reducing the cost of production and

overall costs.

5. To eliminate duplication in ordering or replenishing stocks. This is possible with the help of

centralizing purchases.

6. To minimize loses through deterioration, pilferages, wastages and damages.

7. To ensure perpetual inventory control so that materials shown in stock ledgers should be actuallylying in the stores.

8. To ensure right quality goods at reasonable prices. Suitable quality standards will ensure proper

quality of stocks. The priceanalysis, the cost analysis and valueanalysis will ensure payment

of proper prices.

9. To facilitate furnishing of data for shortterm and longterm planning and control of inventory.

3.2.4 TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT

A proper inventory control not only helps in solving the acute problem of liquidity but also

increases profit and causes substantial reduction in the working capital of the concern.

The following are the important tools and techniques of inventory management and control.

3.2.4.1 DETERMINATION OF STOCK LEVELS

Carrying of too much and too little of inventory is detrimental to the firm. If the inventory level is

too little, the firm will face frequent stock outs involving heavy ordering cost and if the inventory level is

too high it will be unnecessary tie up of capital.

An efficient inventory management requires that a firm should maintain an optimum level of

inventory where inventory costs are the minimum and at the same time there is no stock out which may

result in loss or sale or shortage of production.



a) Minimum stock level:

It represents the quantity below its stock of any item should not be allowed to fall.

Lead time: A purchasing firm requires sometime to process the order and time is also required by

the supplying firm to execute the order.

The time in processing the order and then executing it is known as lead time.

Rate of Consumption: It is the average consumption of materials in the factory. The rate of

consumption will be decided on the basis of past experience and production plans.

Nature of materials: The nature of material also affects the minimum level. If a material is

required only against the special orders of the customer then minimum stock will not be required for such

material.

Minimum stock level can be calculated with the help of following formula.

Minimum stock levelReordering level(Normal consumption x Normal reorder period)

b) Reordering Level:

When the quantity of materials reaches at a certain figure then fresh order is sent to get materials

again. The order is sent before the materials reach minimum stock level.

Reordering level is fixed between minimum level maximum level.

c) Maximum Level:

It is the quantity of materials beyond which a firm should not exceeds its stocks. If the quantity

exceeds maximum level limit then it will be overstocking.

Overstocking will mean blocking of more working capital, more space for storing the materials,

more wastage of materials and more chances of losses from obsolescence.

Maximum stock levelReordering Level + Reorder Quantity(Maximum Consumption x

Minimum reorder period)



d) Danger Stock Level:

It is fixed below minimum stock level. The danger stock level indicates emergency of stock

position and urgency of obtaining fresh supply at any cost.

Danger Stock level = Average rate of consumption x emergency delivery time.

e) Average Stock Level:

This stock level indicates the average stock held by the concern.

Average stock level = Minimum stock level + x reorder quantity.

3.2.4.2 DETERMINATION OF SAFETY STOCKS

Safety stock is a buffer to meet some unanticipated increase in usage. The demand for materialsmay fluctuate and delivery of inventory may also be delayed in such a situation the firm can be face a

problem of stock out.

In order to protect against the stock out arising out of usage fluctuations, firms usually maintain

some margin of safety stocks.

Two costs are involved in the determination of this stock that is opportunity cost of stock outs and

the carrying costs.

If a firm maintains low level of safety frequent stock outs will occur resulting into the larger

opportunity costs. On the other hand, the larger quantity of safety stocks involves carrying costs.

3.2.4.3 ECONOMIC ORDER QUANTITY (EOQ)

The quantity of material to be ordered at one time is known as economic ordering quantity.

This quantity is fixed in such a manner as to minimize the cost of ordering and carrying costs.

Total cost material = Acquisition Cost + Cost + Carrying Costs + Ordering Cost.

Carrying Cost:

It is the cost of holding the materials in the store.



Ordering Cost:

It is the cost of placing orders for the purchase of materials.

EOQ can be calculated with the help of the following formula

EOQ = 2CO / I

Where C = Consumption of the material in units during the year

O = Ordering Cost

I = Carrying Cost or Interest payment on the capital.

3.2.4.4 ABCANALYSIS: (ALWAYS BETTER CONTROL ANALYSIS)

Under ABC Analysis. The materials are divided into 3 categories viz., A, B and C.

Almost 10% of the items contribute to 70% of value of consumption and this category is called

A category.

About 20% of the items contribute about 20% of value of category C covers about 70% of items

of materials which contribute only 10% of value of consumption.

3.2.4.5 VED ANALYSIS: (VITALLY ESSENTIAL DESIRE)

The VED analysis is used generally for spare parts. Spare parts classified as Vital (V), Essential

(E) and Desirable (D).

The vital spares are a must for running the concern smoothly and these must be stored adequately.

The E type of spares is also necessary but their stocks may be kept at low figures. The stocking of D

type spares may be avoided at times. If the lead time of these spares is less, then stocking of these spares

can be avoided.


Inventory turnover ratios are calculated to indicate whether inventories have been used efficiently

or not.



The inventory turnover ratio also known as stock velocity is normally calculated as sales /

average inventory of cost of goods sold / average inventory.

Inventory conversion period may also be calculated to find the average time taken for clearing the

stocks. Symbolically.

Inventory Turnover Ratio = Cost of goods sold_________________________Average inventory at cost

(Or)

Net sales

= ________________________(Average) Inventory

And,

Inventory conversion period = Days in a year______________________Inventory Turnover ratio

3.2.4.7 CLASSIFICATION AND CODIFICATION OF INVENTORIES

The inventories should first be classified can then code numbers should be assigned for their

identification. The identification of short names are useful for inventory management not only for largeconcerns but also for small concerns. Lack of proper classification may also lead to reduction in

production.

Generally, materials are classified accordingly to their nature such as construction materials,

consumable stocks, spares, lubricants etc. After classification the materials are given code numbers. The

coding may be done alphabetically or numerically. The later method is generally used for coding.

The class of materials is assigned two digits and then two or three digits are assigned to the

categories of items divided into 15 groups. Two numbers will be category of materials in that class.

The third distinction is needed for the quality of goods and decimals are used to note this factor.

3.2.4.8 VALUATION OF INVENTORIESMETHOD OF VALUATION

FIFO method



LIFO method

Base Stock method

Weighted average price method

3.2.4.8.1 THE FIFO METHOD (FIRSTIN FIRSTOUT METHOD)

Under this method it is assumed that the materials or goods first received are the first to be issued

or sold. Thus, according to this method, the inventory on a particular date is presumed to be composed of

the items which were acquired most recently.

The value inventory would remain the same even if the perpetual inventory system is followed.

Advantages:- The FIFO method has the following advantages.

1) It values stock nearer to current market prices since stock is presumed to be consisting of

2) The most recent purchases.

3) It is based on cost and, therefore, no unrealized profit enters into the financial accounts of the

company.

4) The method is realistic since it takes into account the normal procedure of utilizing or selling

those materials or goods which have been longer longest in stock.

Disadvantages: - The method suffers from the following disadvantages.

1) It involves complicated calculations and hence increases the possibility of clerical errors.

2) Comparison between different jobs using the same type of material becomes sometimes

difficult. A job commenced a few minutes after another job may have to bear an entirely

different charge for materials because the first job completely exhausted the supply of

materials of the particular lot.

The FIFO method of valuation of inventories is particularly suitable in the following

circumstances:

I. The materials or goods are of a perishable nature.

II. The frequency of purchases is not large.

III. There are only moderate fluctuations in the prices of materials or goods purchased.

IV. Materials are easily identifiable as belonging to a particular purchase lot.



3.2.4.8.2 THE LIFO METHOD (LASTINFIRSTOUT METHOD)

This method is based on the assumption that last item of materials or goods purchased are the first

to be issued or sold. Thus, according to this method, inventory consists of items purchased at the earliest

cost.

Advantages: - This method has the following advantages:

1) It takes into account the current market conditions while valuing materials issued to different

jobs or calculating the cost of goods sold.

2) The method is based on cost and, therefore, no unrealized profit or loss is made on account of

use of this method.

The method is most suitable for materials which are of bulky and nonPerishable type.

3.2.4.8.3 BASE STOCK METHOD

This method is based on the contention that each enterprise maintains at all times a minimum

quantity of materials or finished goods in its stock. This quantity is termed as base stock. The base stock

is always valued at this price and its carried forward as a fixed asset. Any quantity over and above the

base stock is valued in accordance with any other appropriate method. As this method aims at matching

current costs to current sales, the LIFO method will be most suitable for valuing stock of materials or

finished goods other than the base stock. The base stock method has advantage of charging out material /

goods at actual cost. Its other merits or demerits will depend on the method which is used for valuingmaterials other than the base stock.

3.2.4.8.4 WEIGHTED AVERAGE PRICE METHOD

This method is based on the presumption that once the materials are put into a common bin, they

lose their identity. Hence, the inventory consists of no specific batch of goods. The inventory is thus

priced on the basis of average priced on the quantity purchased at each price.

Weighted average price method is very popular on account of its being based on the total quantity

and value of materials purchased besides reducing number of calculations. As a matter of fact the new

average price is to be calculated only when a fresh purchase of materials is made in place of calculating it

every now and then as is the case with FIFO, LIFO methods. However, in case of this method different

prices of materials are charged from production particularly when the frequency of purchases and

issues/sales in quite large and the concern is following perpetual inventory system.



CHAPTER-IVANALYSIS OF INVENTORY MANAGEMENT



4.1 ANALYSIS PART-1RATIO ANALYSIS INVENTORY)



4.1.1 LEVEL OF INVENTORY

TABLE

The inventory level was found to be increased trend from 2006-2007 to 2010-2011. The

overall inventory level position for the five years is satisfactory.

S.No Particulars 2009-10 2010-11 2011-12 2009-1 2013-14

1

Raw materials

Lime stone

(stacker 60 Per cent)

Iron ore


Clay ash


3330.80

1387.83

832.70

5169.86

2154.11

1292.47

8392.21

3496.76

2098.05

11109.76

4629.10

2777.44

11265.50

4693.96

2816.40

TOTAL(clinker) 5551.33 8616.44 13937.02 18516.26 18775.86

2 Work in process 5386.48 8451.74 13822.02 18351.46 18611.09

3 Finished goods 6251.55 9316.59 14522.32 19216.54 19416.11

Total 17189.36 26384.77 42331.36 56084.26 56803.06

Qty in thousand tones



4.1.2 INVENTORY TURNOVER RATIO

. The inventory turnover ratio measures the number of times a company sells its inventory

during the year.

TABLE

INVENTORY TURNOVER RATIO

S.No YearCost of goods sold

(`in lakhs)Average stock (in tons) Inventory turnover ra

1 2009-10 2663028 487428 5.46 per cent

2 2010-11 2844494 503184 5.65 per cent

3 2011-12 3094850 819401.5 3.78 per cent

4 2012-13 4010580 945491.5 4.24 per cent

5 2013-14 4521886 822538.5 5.50 per cent

Source: Annual reports of Zuari cement pvt limited

The inventory turnover ratio was high in the year 2009-10 after that 2010-11 the

inventory turnover ratio was decreased. The present value of inventory turnover ratio is good.



4.1.3 INVENTORY CONVERSION PERIOD

The inventory conversion period is the time required to obtain materials for a product,

manufactured it, sell it.

TABLE

INVENTORY CONVERSION PERIOD

S.No Year No. of days Inventory turnover ratio

Inventory conversion

period (in days)

1 2009-10 365 5.46 per cent 66

2 2010-11 366 5.65 per cent 64

3 2011-12 365 3.78 per cent 96

4 2012-13 365 4.24 per cent 86

5 2013-14 365 5.50 per cent 65

Source: Annual reports of Zuari cement pvt limited

The inventory conversion period is normally indicates the wealth of the company. The

company wants to concentrates with its inventory conversion period.



4.2 ANALYSIS PART-2EOQ ANALYSIS



4.2.1 EOQ ANALYSIS FOR THE YEAR 2009-10 (TABLE)

ItemAnnual

requirementO C P EOQ

Total

investment

with EOQ

Total

investment

without EOQ

Savin

invent

cost

Iron Ore 31500 36 1.5 65 1230 81794 138615 5682

Lime Stones 15000 40 1.25 144 980 142345 145225 2880

Clay Ash 14000 42 2 144 767 111982 135915 2393

Sulphur 13000 34.5 1.75 153 716 110801 133927 2313

Gypsum 13500 35 1.25 144 869 126223 130688 446

Bauxite 11500 36.5 1.5 150 748 113322 116173 285

Source: Annual report of Zuari cement pvt limited

The companys annual requirement for the year 2009-10 is 101000 tons of raw materials.

They using investment with EOQ spent ` 787168. When the same in without investing EOQ is

` 882551. So the company saved ` 169432 in the year 2009-10.



4.2.2 EOQ ANALYSIS FOR THE YEAR 2009-10 (CHART)

0

20000

40000

60000

80000

100000

120000

140000

160000

Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite

81794

142345

111982 110801

126223

113322

138615

145225

135915 133927130688

116173

Total investment with EOQ

Total investment without EOQ



4.2.3 EOQ ANALYSIS FOR THE YEAR 2010-11(TABLE)

ItemAnnual


Total

investment

with EOQ

Total

investment

without

EOQ

Saving

inventory co

Iron Ore 33500 35 1.5 75 1250 95626 169675 74049

Lime Stones 13500 41 2 154 744 116064 140115 24051

Clay Ash 16500 55 1.55 154 1100 171050 171050 0

Sulphur 14000 35 1.5 163 808 132916 153304 20388

Gypsum 12500 36 2 154 671 104676 153304 20388

Bauxite 11000 37 2.5 160 571 92787 118752 25965







4.2.4 EOQ ANALYSIS FOR THE YEAR 2010-11(CHART)

0

20000

40000

60000

80000

100000

120000

140000

160000

180000


95626

116064

171050

132916

104676

92787

169675

140115

171050

153304 153304

118752






ItemAnnual


Total

investment

with EOQ

Total

investment

without EOQ

Savin

invento

cost

Iron Ore 13500 341.

5 65 1260 83789 153905 704

Lime Stones 13500 36 1.5 167 805 135642 151515 1587

Clay Ash 15000 38 1.75 165 807 134567 166445 1387

Sulphur 14000 37 1.75 164 769 127462 154384 2692

Gypsum 15000 35 2.5 165 648 108540 166775 5823

Bauxite 11200 36.5 1.75 170 684 117476 128191 1071



They using investment with EOQ spent ` 68646. When the same in without investing EOQ is `

800543. So the company saved ` 114076 in the year 2011-12.



4.2.6 EOQ ANALYSIS FOR THE YEAR 2011-12(CHART)

0

20000

40000

60000

80000

100000

120000

140000

160000

180000


83789

135642 134567

127462

108540

117476

153905 151515

166445

154384

166775

128191






ItemAnnual


Total

investment

with EOQ

Total

investment

without EOQ

Saving

inventory

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

Sulphur 16000 38 1.75 174 834 146575 187161 40586

Gypsum 18000 36 2.75 175 686 121938 212190 90252

Bauxite 17000 37 1 180 1122 203082 205062 1980



They using investment with EOQ spent `875092. When the same in without investing EOQ is

`

1132819. So the company saved`

2577276 in the year 2012-13.




0

50000

100000

150000

200000

250000


123231127770

152496146575

121938

203082217605

146226

164575

187161

212190 205062






ItemAnnual


Total

investment

with EOQ

Total

investment

without EOQ

Saving

inventory c

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 3 195 551 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








135358

161852

109099114455

203646

144965

268736

167588

157770

187225

221110

242235

0

50000

100000

150000

200000

250000

300000






CHAPTER-VSUMMARY OF FINDINGS, SUGGESTIONS AND

CONCLUSION



5.1 FINDINGS


Inventory level of the company has increased year by year. However there is no

problem in the inventory level of the Zuari cement pvt.limited.

Inventory turnover ratio the ratios of the year has been found as low in the years

of 2011-12 and 2012-13. After those periods the inventory turnover ratio has

slightly increased in the year 2013-14. Even though that level is quite low when

compare with 2010-11.

Inventory conversion period is found at good level though the effort is to keep

the inventory conversion period as low.

5.1.2 EOQ ANALYSIS

EOQ analysis for the year 2009-10 to 2013-14 is good. For this year they

followed EOQ with investment for purchase of goods.

EOQ analysis for the year 2010-11 to 2013-14 is good. For this year they


In EOQ analysis for the year 2011-12 to 2013-14 is good. For this year they


In EOQ analysis for the year 2012-13 to 2013-14 is good. In this year the EOQ

with investment and EOQ without investment are same.

In EOQ analysis for the year 2013-14 to 2013-14 is good. All years of EOQ is

followed only investment with EOQ.



5.2 SUGGESTIONS


Inventory level of the company shows the increase of the raw materials, work-in-

process and finished goods. The inventory level of Zuari cement pvt limited is

well.

Inventory turnover ratio detected some problems. Now they use their cement

which are produced in Zuari cement pvt limited for their own purpose. If they sell

that to others also then only the ratio will be increased.

Zuari cement pvt limited sells the 25 per cent of the cements produced, remaining

they used for own purpose. For sales to others more credit days may be allowed to

their agents.

5.3 CONCLUSION

The study covers the inventory management for effective inventory control. The

technique used is Economic Order Quantity Analysis named as EOQ Analysis to find out

the rate with EOQ and without EOQ investment for purchasing of good in manufacturing

the cement at Zuari Cement Pvt Limited. With this the inventory management of the

organization was found to be quite good during the years 2009-2014. From this study it

can be concluded that the organization has been in effective in inventory management.

The study will be used for Zuari Cement Pvt Limited in varied ways.



BIBLIOGRAPHY

BOOKS

Asohok Banerjee - Financial AccountingA Managerial EmphasisExcel Books

2005

CollisBusiness AccountingPalgrave Macmillan2007

Khan MY Jain P.KManagement Accounting : Text, problems and cases 4th

Edition

Tata McGraw Hill2007

PandikumarManagement AccountingExcel Books2007

Ramachandran N Kakani Kumar RamFinancial Accounting For ManagementTata

McGraw Hill2006

Robert Anthony David Hawkins Kenneth A.MerchantAccounting Text and Cases

Tata McGraw Hill2007

S.K Bhattacharyya JohnDeadenCosting for ManagementVikas Publishing2002

S.N Maheswari S.K MaheswariAccounting for ManagementVikas Publishing

2006

WEBSITES

en.wikipedia.com

Info.shine.com

www.ask.com

www zuaricements.com

www.google.com

www.indiacatalog.com

www.inventoryquzz.com

www.reportjunction.com

www.scribed.com

www.yahoo.com
http://www.wikipedia.com/http://www.ask.com/http://www.chettinad.com/http://www.google.com/http://www.indiacatalog.com/http://www.inventoryquzz.com/http://www.reportjunction.com/http://www.scribed.com/http://www.scribed.com/http://www.reportjunction.com/http://www.inventoryquzz.com/http://www.indiacatalog.com/http://www.google.com/http://www.chettinad.com/http://www.ask.com/http://www.wikipedia.com/

A Study on Inventory Management in Zuari Cement Pvt

Documents

Transcript of A Study on Inventory Management in Zuari Cement Pvt