AN ORGANIZATIONAL STUDY AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR
INTERNSHIP PROJECT REPORT
Submitted by
L.BOOPATHI Register No: 732211631005
in partial fulfillment for the award of the degree Of
MASTER OF BUSINESS ADMINISTRATION
in DEPARTMENT OF MANAGEMENT STUDIES
NANDHA ENGINEERING COLLEGE ERODE – 638052
JULY 2012
BONAFIDE CERTIFICATE NANDHA ENGINEERING COLLEGE ERODE – 638052
DEPARTMENT OF MANAGEMENT STUDIES INTERNSHIP PROJECT WORK This is to certify that the project entitled
AN ORGANIZATIONAL STUDY AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR
is the bonafide record of project work done by
L.BOOPATHI Register No: 732211631005
of MBA during the year 2011-2013
Project Guide
Head of the Department
Submitted for the Summer Internship Training Viva-Voce examination held on
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.
(Signature of the Candidate) L.BOOPATHI
Register No: 732211631005
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
CONTENTS CHAPTER` DESCRIPTION
ABSTRACT LIST OF TABLES LIST OF CHARTS INTRODUCTION
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 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
MAIN THEME OF THE PROJECT 3.1 Objectives of the study
3.2 Need of the study
3.3 Research Methodology 3.4 Tools for Analysis 3.5 Review Literature 4 5
DATA ANALYSIS & INTERPRETATION SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 Findings 5.2 Suggestions 5.3 Conclusion
BIBILOGRAPHY & ANNEXTURE
56 57 58 59
LIST OF TABLES TABLE NO
4.1.1 4.1.2 4.1.3 4.2.1 4.2.2 4.2.3 4.2.4 4.2.5 Level of inventory Inventory turnover Ratio Inventory conversion period EOQ analysis for the year 2006-07 EOQ analysis for the year 2007-08 EOQ analysis for the year 2008-09 EOQ analysis for the year 2009-10 EOQ analysis for the year 2010-11
DESCRIPTION
PAGE NO
40 42 44 46 48 50 52 54
LIST OF CHARTS CHART NO
4.1.1 4.1.2 4.1.3 4.2.1 4.2.2 4.2.3 4.2.4 4.2.5 Level of inventory Inventory turnover ratio Inventory conversion period EOQ analysis for the year 2006-07 EOQ analysis for the year 2007-08 EOQ analysis for the year 2008-09 EOQ analysis for the year 2009-10 EOQ analysis for the year 2010-11
DESCRIPTION
PAGE NO
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.
1.2 INDUSTRY PROFILE
History of the origin of cement
It is uncertain where it was first discovered that a combination of hydrate nonhydraulic lime and a pozzolan produces a hydraulic mixture, but concrete made from such mixture was first used on large scale by roman engineers. They used both natural pozzolans (trass or pumice) and artificial pozzolans (ground brick or pottery) 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.
Portland blast furnace slag cement (PBFSC)
The rate of hydration heat is found lower in this cement type in comparison to PPC. It is most useful in massive construction projects, for example-dams.
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. 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
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%
Top 25 Cement companies in the world
S.NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Name of the Company Aditya Birla Group-Grasim Al-Ghurair Group Ambuja Cements Limited Anhui Conch Cement Company Arabian Cement Company Ararat Cement Co. Cement Cruz Azul Cement Co. CEMEX Co. China National Cement Materials Group Corporation Cimpor Cement corp. CompanhiaSiderurgical National S.A Concrete Casting Cement Company CRH plc Eagle Materials Inc Heidelberg Cement Company James Hardie Cements Lafarge Libyan Cement Company Monarch Cement Ltd. Norcem Pretoria Portland Cement Company Ready Mix Inc Rinker Group Semapa Group Smith-Midland Cement Company Name of the Country India Dubai India China Egypt South Africa Armenia U.S.A China China Brazil Pacific Alloy America U.S.A Germany U.S.A India Libya U.S.A, California Germany South Africa India Australia Europe U.S.A, Milford
1.2.2 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. S.NO Name of the company Details of the company
Year of establishment 1. ACC Limited Head quarters Web site
1994 Maharashtra www.acclimited.com
Year of establishment 2. Ambuja Cements Limited Head quarters Web site
1981 Gujarat www.ambujacement.com
Year of establishment 3. Andhra Cements Ltd Head quarters Web site
1936 Andhra Pradesh www.andhracements.com
Year of establishment 4. Barak Valley Cements Ltd Head quarters Web site
1999 Assam www.barakcement.com
Year of establishment 5. Bheema Cements Ltd Head quarters Web site
1978 Andhra Pradesh www.bheemacement.com
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.
Everest Industries Ltd
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.
Grasim Industries Limited
Head quarters Web site Year of establishment
14.
Gujarat Sidhee Cement Ltd
Head quarters Web site Year of establishment
15.
Heidelberg Cement India Ltd
Head quarters Web site Year of establishment
16.
Hyderabad Industries Ltd
Head quarters Web site Year of establishment
17.
Indian Hume Pipe Company Ltd Head quarters Web site Year of establishment
18.
J. K. Cement Limited
Head quarters Web site Year of establishment
19.
JK Lakshmi Cement Ltd
Head quarters Web site
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
1983 Gujarat www.digvijaycement.com
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
2000 Maharashtra www.ultratechcement.com
Year of establishment 44. Vinaycements Ltd Head quarters Web site
1986 Assam www.vinaycements.com
Year of establishment 45. Visaka industries Ltd Head quarters Web site Year of establishment 46. Zuari cement corporation Ltd Head quarters Web site
1981 Andhra Pradesh www.visaka.org 1985 Andhra Pradesh www.zuaricement.com
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
Name of the company
Details
Year of 1962 establishment
1
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
Year of 1950 establishment
3
Madras cement Ltd
Corporate office Chennai. Plant place Brand name Ariyalur. Ram co cement.
Year of 1979 establishment Corporate office Chennai (Govt).
4
Tamilnadu cements corporation Ltd
Plant place Brand name
Ariyalur. Arasu cement
Year of 1976 establishment Corporate office Madurai. 5 Janathacem industries limited Plant place Brand name Rajapalayam,madurai. Janatha cement, agsar cement.
Cement Company in Karur District
Chettinad Cement Corporation limited, karur is the one of most popular cement manufacturer in Tamilnadu. The Chettinad cement work plants other than karur district, 1. Karikalini cement works, Dhindukal district, 2. Ariyalur cement works, Ariyalur district, The Chettinad cement corporation limited, Karur is the head company in Chettinad cement companies. They are produced 5,00,000 tons of cement per year. They are used those cement for their own company use such as, 1. Chettinad builders pvt ltd, 2. Chettinad house pvt ltd, 3. Chettinad group of companies.
1.3 COMPANY PROFILE History of the company
The history of the group house of Chettinad is linked with the 9 decades old saga. In 1912 took birth the House of Chettinad through a visionary idealist, born entrepreneur Dr. Rajah Sir Annamalai Chettiar who believed in Social Transformation through business. The founder of the House of Chettinad envisioned, his companies providing the stimulus for Industrial Growth and conceived business as a means of improving the living standards of people. The corporate credo of the House of Chettinad “STRIVE, SAVE AND SERVE” is the very thought of our founder. IN order to continue fulfilling his dreams and aspirations. To reach greater heights and the reins were taken over by equally visionary businessmen his son, Dr. Rajah Sir Muthiah Chettiar and grandson Dr. MAM. Ramaswamy. The house of Chettinad reached new heights with generations of hard work, dedications and remains the stamp of quality, integrity and reliability under the versatile, pragmatic and visionary leaderships.
Present position of the company
Today, a 8500 million business group has ventured and diversified in varying fields including manufacturing (Cement, Silica, Quartz, Grits), services (construction Transports, Steel fabrication, Ship management and stevedoring. Clearing and forwarding) Trading, power generation, plantation, farms, logistics. Education, sports management, literature, art and music fields have also been contributed vastly. It is a matter of great pride and satisfaction that the group finds worldwide patronage and earns precious foreign exchange for the country. The group aims to broaden its horizons and reach and the zenith in this millennium under the yond, dynamic, enthusiastic, able leadership of Mr. MAMR Muthiah. The future of the companies in the house of Chettinad is based on the time tested and proved guidelines of total customer orientation, technology in the service of man and business as an instrument of social service. To these timeless truths, we remain steadfast forever.
Management of Chettinad Cement Corporation Limited
CHAIRMAN MD STARTED DIRECTORS : : : : MR.M.A.M.RAMASWAMY SRI.M.A.M.R.MUTHAIAH 1962 SRI.RAMANATHAN PALANIAPPAN SRI.R.KRISHNA MOORTHY SRI.SP.S.T.PALANIAPPAN SRI.K.GANAPATHY&C.S.PARI Dr.T.PRABHAKARA NOMINEE) COMPANY SECRETARY : TYPE CO-SECRETARY AUDITORS : : : SRI.S.HARIHARAN PUBLIC SRI.S.HARIHARAN M/S.P.B.VIJAYARAGRAN&CO M/S V.SOUNDARARAJAN&CO M/S KRISHAAN &CO REGISTERED OFFICE : Chettinad 5th 603 Cement Rani Corporation Seethai 600 Ltd, Hall, 006. RAO, IAS (TIIC
Floor, Anna Salai,
Chennai
Telephone Fax No :
No:
+91-44-28292727 +91-44-28291594
e-mail :
[email protected] PRODUCTION PLANTS WEBSITE : : PULIYUR, KARIKKALI, ARIYALORE. www.chettinad.com
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 customer’s 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.
Product profile of Chettinad Cement Corporation Ltd.
Pavithram: Unique cement manufactured at Puliyur works having high quality for special concrete applications. Chettinad Grade 53: Superior finely ground cement, suitable for plastering works, giving a silky finished look. For RCC applications laser controlled manufacturing would yield best result. Chettinad Grade 43: Multipurpose cement, suitable for plastering and binding. Chettinad PPC: A finely blended cement, providing very fine result for plastering work, devoid of hair line cracks and giving excellent appearance to the building. Sulphur Resistant Cement: Finds applications in the construction activity in the coastal areas to save from corrosiveness due to salty environment.
MANUFACTURING DETAILS Mines-Puliyur Works
Limestone is sourced from our mines at palayam which is located 40kms from the factory. The mines are equipped with the latest machinery and technology including for sequential blasting. The mined limestone is then crushed through primary and secondary crusher.
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.
Stacker and Reclaimer-Puliyur Works
The crushed limestone is then sent through the X-Ray analyzer and approved for further process only on meeting quality standards backbone of the quality control.
Stacker and Reclaimer- Karikkali works
The entire quantity of crushed limestone passes through the online cross belt analyzers’ and is stacked at the pile in the factory. Three numbers of separate stackerreclaimer are available with truck tipplers for proper stacking and Reclaiming of corrective raw materials, fuels and additives. Stacker Declaimer’s help to achieve high degree of stacking and ensure maximum level of consistency for the input materials to raw mill, coal mill and cement mill.
Raw Mill-Puliyur Works
The limestone from the reclaimed is mixed with additive of bauxite and Iron ore and transported to the vertical roller mill through weigh feeders (which control the additive addition). The operator takes corrective steps on viewing any deviation. The loesche-German make vertical roller mill is similar in principle to the tilting grinder with gigantic roller and operated by the hydraulic system, to give fine blended raw material. From the loesche mill the raw material is the taken to two silos to produce Varity of cement.
Raw Mill- Karikkali works
Pre-stacked limestone of stockpile is ground in the VRM along with corrective materials with required ratios are made to produce raw meal and that is stored in Blending cum Storage Silo. There are separate hoppers with weigh feeders for continuous and regulated addition of each raw material. The mix passes through the cross belt analyzers which analyze the mix chemistry and solve the mix ratio every minute to have very good consistency in the raw mix.
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 1400°c and is fed from one end of the kiln. The data accusation and control center meticulously monitor the entire process including the temperature.
Kiln- Karikkali works
Raw meal extracted from silo is fed to the kiln where it is sintered at about 1400o C to clinker. This process is called preprocessing which consists of a five stage suspension heaters with precalciner, the kiln and the clinker cooler. Clinker cooler with CIS and CFG for maximum heat recuperation and the cooled clinker is transported to a storage silo.
Cement Mill-Puliyur Works
The clinker is then ground, depending upon the grade, the additive is added. For all grades of cement 5% gypsum is added to control setting of cement we use Japanese technology in fine grinding with vertical roller mill from anode Kobe, Japan, laser practical size analyzer is used to monitor fineness of the cement for yielding very good quality cement.
Cement Mill- Karikkali works
Finally, grinding is done in OK Vertical Roller Mill for optical particle size distribution and less power consumption with excellent ease of operation for feeding, grinding and classification. To maintain quality of various types/grades of cement, there are separate hoppers with weigh feeders for the addition of fly ash, gypsum, etc. Quality of final product is monitored and controlled every hour by testing samples in the XRF analyzer. Final products are stored in cement silos.
Packing House - Puliyur woks
The four automatic packing machines have been installed, together they have the capacity to deliver 4800 tons per day of packed cement. These packing equipment’s are very accurate and any fault can be rectified as each bag is verified before the next is filled. These are also cross-checked by the Electronic weighing scale used to note the load carried by the Lorries.
Packing House - Karikkali works
There are 2 nos. of Electronic Rot packer which automatically pack cement in bags, each with a capacity of 150 tons/hour. Packed cement is loaded into trucks/wagons with automatic loading machines.
ACHIEVEMENTS OF CHETTINAD CEMENT CORPORATION LTD.
S.No 1 2 3
achieving lowest
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
4
Best Best Second Best National Safety Award (Mines)-(for lowest injury frequency rate Metal Mines Mechanized Open Cast).
1986 1986 1989
5
Longest Accident Free Period. Best performance of the year. Conservationist of the year (for outstanding progress in the field of
6
Conservation of Energy, Metal Components & Machinery) NCBM Second National Awards (Improvement in Energy Performance). Best
1987 1994 1995 1998
7
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
Source: Annual report of Chettinad Cement Corporation Limited
MILESTONES OF CHETTINAD CEMENT CORPORATION LIMITED
Sl. No.
1
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
2
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.
1990 1994 1995 1996 1996 1997
9
1998
10
Latest
Technology LV-Tech classifier installed in Raw Mill. The plant
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
1.4 ORGANISATION CHART
Executive Chairman
Chief Operating Manager
MD & CEO
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR CUSTOMER SUPPORT
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, passé 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
SAFETY POLICY The company’s SAFETY FIRST DUTY NEXT
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
LOAN FACILITIES Housing loans Society loans. Education loans.
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.
LIST OF DOCUMENT AND RECORD MAINTAINED
o VOUCHER
o RECEPIT
o TRANSANCTION ENTRY BOOK
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
o OTHER VALUABLE DOCUMENT
2.6 QUALITY DEPARTMENT
Quality control is process by which entities review the quality of all factors involve in production. This approach places an emphasis on three aspects; Element such as controls, job management, defined, and well managed processes, performance and integrity criteria, and identification of controls. Competence, such as knowledge, skills, experience, and qualifications. Soft elements, such as personnel integrity, confidence, organizational culture, motivation, team spirit, and quality relationship.
2.7 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.
2.8 LIMITATIONS OF THE STUDY
It is difficult to get information from management. The study period covers for five years which restricts to know more about the Inventory management of the company. Only quantitative analysis is possible through the statistical tools are used.
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.
3.2 NEED OF STUDY:
To find out the Inventory level of the company. To increase sale of the product To avoid excess Investment in Inventory.
3.3 RESEARCH METHODOLOGY
Research Design
The Descriptive type of research has been applied in the study. This research the researcher has no control over the variables. Only reports what has happened or what is happening. The research can only discover causes but cannot control the variables.
Data collection Primary data
Primary data relating to the inventory management of Chettinad Cement, Karur have been collected through personal interviews hold with the officials of the selected concern under study.
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
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.
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. EOQ = Where A = Annualusageinunit O = Orderingcost C = Carriyingcost 2AO C
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 firm’s 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 country’s 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 infancy’s 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)
4.1.1- Table shows level of Inventory
Qty in thousand tones
S.No Particulars Raw materials Lime stone (stacker 60 Per cent) 1 Iron ore (stacker 25 Per cent) Clay ash (stacker 15 Per cent) TOTAL(clinker) 2 3 Work in process Finished goods Total 832.70 5551.33 5386.48 6251.55 17189.36 1292.47 8616.44 8451.74 9316.59 26384.77 2098.05 13937.02 13822.02 14522.32 42331.36 2777.44 18516.26 18351.46 19216.54 56084.26 2816.40 18775.86 18611.09 19416.11 56803.06 3330.80 5169.86 8392.21 11109.76 11265.50 2006-07 2007-08 2008-09 2009-10 2010-11
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
The inventory level was not increasing subsequently in 2010-2011
4.1.1- Chart shows level of inventory
INVENTORY LEVEL OF THE COMPANY(in thousand tons)
25000
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
INVENTORY TURNOVER RARIO
.
The inventory turnover ratio measures the number of times a company sells its
inventory during the year. Costofsales Averagestock
Inventoryturnoverratio =
Costofsales = sales − Grossprofit Opening stock + Closing stock 2
Average stock =
4.1.2 Table shows inventory turnover ratio
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
2006-07 2007-08 2008-09 2009-10 2010-11
487428 503184 819401.5 945491.5 822538.5
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.
4.1.2- Chart shows inventory turnover ratio
6 5.652989761 I N V 5 E N T O R 4 Y 5.463428445 5.49747641
4.241793818 3.77696404
T U 3 R N O V E 2 R R A 1 T I O 0 2006-07 2007-08 2008-09 YEAR 2009-10 2010-11
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
Inventory conversion period =
4.1.3- Table shows inventory conversion period
Inventory conversion period (in days) 66 64 96 86 65
S.No 1 2 3 4 5
Year 2006-07 2007-08 2008-09 2009-10 2010-11
No. of days 365 366 365 365 365
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.
4.1.3 - Chart shows inventory conversion period
120
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
0 2006-07 2007-08 2008-09 YEAR 2009-10 2010-11
4.2 EOQ ANALYSIS
4.2.1 – Table shows EOQ analysis for the year 2006-2007
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total investment without EOQ
Saving inventory cost
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
31500 15000 14000 13000 13500 11500
36 40 42 34.5 35 36.5
1.5 1.25 2 1.75 1.25 1.5
65 144 144 153 144 150
1230 980 767 716 869 748
81794 142345 111982 110801 126223 113322
138615 145225 135915 133927 130688 116173
56821 2880 23933 23136 4465 2851
INFERENCE The company’s 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.
4.2.1 – Chart shows EOQ analysis for the year 2006-2007
160000 138615 140000
145225 142345 135915 133927 130688 126223 116173 113322
120000 I N 100000 V E S 80000 T M E 60000 N T 40000
111982
110801
81794
20000
0 Iron Ore Lime Stones Clay Ash Sulphur RAW MATERIALS Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
4.2.2 – Table shows EOQ analysis for the year 2007-2008
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total investment without EOQ
Saving inventory cost
Iron Ore
33500
35
1.5
75
1250
95626
169675
74049
Lime Stones Clay Ash Sulphur Gypsum Bauxite
13500 16500 14000 12500 11000
41 55 35 36 37
2 1.55 1.5 2 2.5
154 154 163 154 160
744 1100 808 671 571
116064 171050 132916 104676 92787
140115 171050 153304 153304 118752
24051 0 20388 20388 25965
INFERENCE
The company’s 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.
4.2.3 – Chart shows EOQ analysis for the year 2007-2008
180000
169675
171050
171050 153304 153304
160000 140115 140000 116064
132916 118752 104676
120000 95626
100000
92787
80000
60000
40000
20000
0 Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
4.2.3 – Table shows EOQ analysis for the year 2008-2009
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total investment without EOQ
Saving inventory cost
Iron Ore Lime Stones
13500 13500
34 36
1.5 1.5
65 167
1260 805
83789 135642
153905 151515
7046 15873
Clay Ash Sulphur Gypsum Bauxite
15000 14000 15000 11200
38 37 35
1.75 1.75 2.5
165 164 165 170
807 769 648 684
134567 127462 108540 117476
166445 154384 166775 128191
13878 26922 58235 10715
36.5 1.75
INFERENCE The company’s 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.
4.2.3 – Chart shows EOQ analysis for the year 2008-2009
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
166445 154384 134567 127462
166775
128191 117476 108540
Clay Ash
Sulphur
Gypsum
Bauxite
RAW MATERIAL Total investment with EOQ Total investment without EOQ
4.2.4 – Table shows EOQ analysis for the year 2009-2010
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total investment without EOQ
Saving inventory cost
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 Gypsum Bauxite
16000 18000 17000
38 36 37
1.75 174 2.75 175 1 180
834 686 1122
146575 121938 203082
187161 212190 205062
40586 90252 1980
INFERENCE The company’s 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.
4.2.4 – Chart shows EOQ analysis for the year 2009-2010
250000 217605 200000 I N V E S T M E N T 164575 152496 187161 212190 203082 205062
146226 150000 123231 127770
146575 121938
100000
50000
0 Iron Ore Lime Stones Clay Ash RAW MATERIAL Sulphur Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
4.2.5 – Table shows EOQ analysis for the year 2010-2011
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total investment without EOQ
Saving inventory cost
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
INFERENCE The company’s 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.
4.2.5 – Chart shows EOQ analysis for the year 2010-2011
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
S.N Maheswari S.K Maheswari – Accounting for Management – Vikas
Publishing – 2006
WEBSITES www.chettinad.com www.reportjunction.com
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
Share(Adj)-Unit Curr Book Value-Unit Curr (Rs in crores)
242.33
289.84
120.39
133.05
89.23
59.13
BALANCE SHEET OF CHETTINAD CORPORATION LTD, KARUR
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
231.62 106.57 20.73 341.67 700.59
224.09 72.51 73.07 381.76 751.43
214.61 38.70 42.99 329.84 626.14
166.17 14.87 25.85 197.80 404.69
78.27 16.99 28.25 94.38 217.89
100.17 17.44 21.49 40.76 179.86
214.19 264.82 479.01 221.58 0.00
143.24 222.13 365.37 386.06 0.00
146.20 243.39 389.59 236.55 0.00
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