Paavai Engineering College
A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR
PROJECT REPORT Submitted by
S.GOKUL Register No: 108001612014
In partial fulfillment for the award of the degree Of
MASTER OF BUSINESS ADMINISTRATION
In
DEPARTMENT OF MANAGEMENT STUDIES
PAAVAI ENGINEERING COLLEGE PACHAL, NAMAKKAL-637 018
JUNE 2012
Chettinad Cement Corporation Limited
Paavai Engineering College BONAFIDE CERTIFICATE
PAAVAI ENGINEERING COLLEGE DEPARTMENT OF MANAGEMENT STUDIES PROJECT REPORT JUNE 2012
This is to certify that the project A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR Is the bonafied record of project done by
S.GOKUL Register No: 108001612014
Of MBA during the year 2011-2012
--------------------------Project Guide
------------------------HOD
Submitted for the Project Viva-Voce examination held on ----------------------------
----------------------------Internal Examiner
-------------------------External Examiner
Chettinad Cement Corporation Limited
Paavai Engineering College DECLARATION
I affirm that the project work entitled A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITTED, KARUR being submitted in partial fulfillment for the award of Master of Business Administration (MBA) 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
I certify that the declaration made above by the candidate is true
Signature of the Guide
Chettinad Cement Corporation Limited
Paavai Engineering College ACKNOWLEDGEMENT
I would like to express my gratitude to Shri.CA. N. V. Natarajan, B.Com., FCA., Chairman and Smt. Mangai Natarajan, M.Sc., Correspondent, Paavai Institutions, Namakkal for giving me an opportunity and facility to complete this project. I wish to place my deep sense of gratitude to
Dr. K. K. Ramaswamy, M.E., Ph.D., Director Admin. Paavai institutions and I would like to express my gratitude to Dr. C. Jegadheesan, M.E., MS., Ph.D., Principal, Paavai
Engineering College, Namakkal. I offer my profound gratitude to Dr.G.Gopalakrishnan, M.B.A, M.Phil, Ph.D Head, Department of Management Studies, Paavai Engineering College, Namakkal, for his entire support to complete this project report. I owe my boundless gratitude to my faculty guide, Dr.A.Arumugam.M.Com, M.Phil, M.B.A., Ph.D Professor of MBA Department, for his guidance and supervise of this project for successful completion. I sincerely thank to Mr.Thirunavukarasu, HR 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.
S.GOKUL
Chettinad Cement Corporation Limited
Paavai Engineering College
TABLE OF CONTENTS
CHAPTER NO
LIST OF TABLES LIST OF CHARTS ABSTRACT
DESCRIPTION
PAGE NO
I
II
III
INTRODUCTION 1.1 About the study 1.2 Scope of the study 1.3 Statement of the problem 1.4 Objectives of the study 1.5 Research methodology INDUSTRY AND COMPANY PROFILE 2.1 Industry profile 2.1.1 Cement industry in Global 2.1.2 Cement industry in India 2.1.3 Cement industry in Tamilnadu 2.1.4 Cement company in Karur 2.2 Company profile CONCEPTUAL AND THEORETICAL FRAME WORK 3.1 Conceptual and theoretical frame work of inventory management 3.2 Review of literature ANALYSIS OF INVENTORY MANAGEMENT 4.1 Analysis Part-1 Ratio Analysis(Inventory) 4.2 Analysis Part-2 EOQ Analysis SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION 5.1 Findings 5.2 Suggestions 5.3 Conclusion BIBLIOGRAPHY
IV
V
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Paavai Engineering College
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.
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
Description
Page No.
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
Chettinad Cement Corporation Limited
Paavai Engineering College
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.
Chettinad Cement Corporation Limited
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CHAPTER-I INRODUCTION
Chettinad Cement Corporation Limited
Paavai Engineering College 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. 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. 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.
Chettinad Cement Corporation Limited
Paavai Engineering College
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 nonmoving 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
There are a number of problems that can cause havoc with inventory management. Some happen more frequently than others. Here are some of the more common problems with inventory systems. Unqualified employees in charge of inventory, Using a measure of performance for their business that is too narrow, Not identifying shortages ahead of time, Bottlenecks and weak points can interfere with on-time product delivery, Too much distressed stock in inventory, Excessive inventory in stock and unable to move it quickly enough, Computer assessment of inventory items for sale is inaccurate, Computer inventory systems are too complicated, Items in-stock gets misplaced, Not keeping up with the rising price of raw materials.
Chettinad Cement Corporation Limited
Paavai Engineering College 1.4 OBJECTIVES OF THE STUDY
To analyze the inventory those are sufficient to perform production and sales activities smoothly. To study the inventory management followed in chettinad cement. To identify the existing inventory management and its effectiveness. To calculate analysis for their performance in inventory management.
1.5 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
This study purely based on secondary sources of information. 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.
Chettinad Cement Corporation Limited
Paavai Engineering College
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. √ Where
Chettinad Cement Corporation Limited
Paavai Engineering College
CHAPTER-II INDUSTRY AND COMPANY PROFILE
Chettinad Cement Corporation Limited
Paavai Engineering College 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 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 known 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.
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Paavai Engineering College
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.
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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 will increase its demand by 250MT during the period, an increase higher than the total yearly European demand.
Chettinad Cement Corporation Limited
Paavai Engineering College 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.
Chettinad Cement Corporation Limited
Paavai Engineering College 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. Companhia Siderurgical 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
Cement industry in India Source: www.google.com, www.ask.com, www.linkedin.com, en.wikipedia.com Chettinad Cement Corporation Limited
Paavai Engineering College 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. 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
Chettinad Cement Corporation Limited
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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 Cement (Bharat) Limited Head quarters Web site
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
Chettinad Cement Corporation Limited
Paavai Engineering College
Year of establishment 11. Deccan Cements Ltd Head quarters Web site Year of establishment Head quarters Web site Year of establishment 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 Maharashtra www.indianhumepipe.com 1994 Uttar Pradesh www.jkcement.com 1979 Andhra Pradesh www.deccancem.com 1934 Maharashtra 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
12. Everest Industries Ltd
Chettinad Cement Corporation Limited
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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 1938 Rajasthan www.jklcem.com 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
Chettinad Cement Corporation Limited
Paavai Engineering College
Year of establishment 27. OCL India Ltd Head quarters Web site Year of establishment 28. Panyam Cements & Mineral Inds Ltd Head quarters 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 Andhra Pradesh 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 1949 Orissa www.ocl.in 1955
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Paavai Engineering College
Year of establishment 35. Shiva Cement Ltd Head quarters Web site 1985 Orissa www.shivacement.com
Year of establishment 36. Shree Digvijay Cement Company Ltd Head quarters Web site
1983 Gujarat www.digvijaycement.com
Year of establishment Head quarters 37. Somani Cement Company Ltd Web site Year of establishment 38. Sri Vasavi Inds. 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
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
Chettinad Cement Corporation Limited
Paavai Engineering College
Year of establishment 42. Udaipur Cement Works Ltd Head quarters Web site 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 Source: www.google.com, info.shine.com, www.indiacatalog.com
1981 Andhra Pradesh www.visaka.org 1985 Andhra Pradesh www.zuaricement.com
Chettinad Cement Corporation Limited
Paavai Engineering College 2.1.3 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 establishment 1962
1
Chettinad Cement Corporation Limited
Corporate office Chennai Karur, Dhindukal, Ariyalur Chettinad. 1946
Plant Places Brand name Year of establishment
Corporate office Chennai. 2 The India cements Ltd Plant Places Ramanathapuram, Sangakiri, Ariyalur. Sankar cement, Coromandel cement.
Brand name
Chettinad Cement Corporation Limited
Paavai Engineering College
Year of establishment
1950
3
Madras cement Ltd
Corporate office Chennai. Plant place Brand name Year of establishment Ariyalur. Ram co cement. 1979
4
Tamilnadu cements corporation Ltd
Corporate office Chennai (Govt).
Plant place Brand name Year of establishment
Ariyalur. Arasu cement 1976
Corporate office Madurai. 5 Janathacem industries limited Plant place Brand name Rajapalayam,madurai. Janatha cement, agsar cement.
Source: www.indiacatalog.com, www.ask.com, en.wikipedia.com
Chettinad Cement Corporation Limited
Paavai Engineering College 2.1.4 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.
2.2 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.
Chettinad Cement Corporation Limited
Paavai Engineering College 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 stead fast forever.
Chettinad Cement Corporation Limited
Paavai Engineering College 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 RAO, IAS (TIIC 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 Cement Corporation Ltd, 5th Floor, Rani Seethai Hall, 603 Anna Salai, Chennai - 600 006. Telephone No: +91-44-28292727 Fax No : +91-44-28291594 e-mail :
[email protected] PRODUCTION PLANTS WEBSITE : : PULIYUR, KARIKKALI, ARIYALORE. www.chettinad.com
Chettinad Cement Corporation Limited
Paavai Engineering College VISION
With almost a century of continuous growth and prosperity behind us we envisage our future as another opportunity to which greater heights and to perfect the art of perfectionism upholding the vision of our founder Dr. Rajah sir Annamalai Chettiar STRIVE, SAVE AND SERVE. The nature ethics and style of business believe that nothing can supplement the idealism which motivates the business we fall back on the time tested. Principles of total customers orientation technology in service of man and business as an instrument of social service to this timeless truth we remind steady fast forever.
MISSION
To achieve & sustain cost leadership in the cement market. The harness technology to its full potential in a safe & clear environment in the entire business cycle & integrate quality with continuous improvement. To became a vibrant learning organization by building skills and competitiveness of employees for growth. To be the best and most respectable corporate citizen.
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.
Chettinad Cement Corporation Limited
Paavai Engineering College Organizational chart of Chettinad Cement Corporation Ltd.
Chairman
Managing Director
Board of directors
President
Vice president
Senior general manager
Additional General Manager
Chettinad Cement Corporation Limited
Paavai Engineering College
Deputy General Manager
Senior Manger
Senior Assistance Manager
Supervisor
Sales Officer
Chief Security Officer
Vigilance Officer
Accounts Officer
Junior Officers
Chettinad Cement Corporation Limited
Paavai Engineering College 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 stacker-reclaimer are available with truck tipplers for proper stacking and Reclaiming of corrective raw materials, fuels and additives. Stacker Reclaimers 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.
Chettinad Cement Corporation Limited
Paavai Engineering College 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.
Chettinad Cement Corporation Limited
Paavai Engineering College 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 equipments are very accurate and any fault can be rectified as each bag is verified before the next is filled. These are also crosschecked 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.
Chettinad Cement Corporation Limited
Paavai Engineering College
WET PROCESS TECHNOLOGY
Calcareous Material
Argilseeous
Limestone
Material Clay
Crushing
Water Washing
Storage Tank
Storage Tank
Mixing IN Correct Production
Slurry Formation
Correction Basin
Pumping
Rotary Kiln
Coal Dust
Chettinad Cement Corporation Limited
Paavai Engineering College
Formation Of Clinker
Clinker Cooler
Grinding In Ball and Tube Mill
Gyp sum
Storage In silos
Weighing and packaging in Bags
Distribution
Chettinad Cement Corporation Limited
Paavai Engineering College
DRY PROCESS TECHNOLOGY
Calcareous Material
Argilseeous
Limestone
Material Clay
Crushing
Crushin g Grinding
Grinding
Storag e
Storage
Mixing In Correct Proportion
Storage of raw materials
Coal Dust
Rotary Kiln
Formation of Clinker
Chettinad Cement Corporation Limited
Paavai Engineering College
Clinker Cooler
Grinding In Ball and Tube Mill
Gyp sum
Storage in Silos
Weighing and Packing in bags
Distribution
Chettinad Cement Corporation Limited
Paavai Engineering College
ACHIEVEMENTS OF CHETTINAD CEMENT CORPORATION LTD.
S.No 1 2 3 AWARDS
National Safety Award (for outstanding performance in Industrial Safety in achieving lowest frequency rate in Industry) 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 1985 1986 1995 1996 1997
YEAR
1976 1977 1972 1978
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 National Awards (Improvement in Energy Performance). Second 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
Chettinad Cement Corporation Limited
Paavai Engineering College
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 Poolavadi Udumaplet Taluk. 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 capacity increased to 1.2 MTPA cement.
2000
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
Chettinad Cement Corporation Limited
Paavai Engineering College
17 Roller press with ball mill for cement grinding with capacity 0.7 MTPA installed at Karikkali. 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 – 22 Sequential type was commissioned for augmenting clinker production and its quality. 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, 29 Ariyalur and Head Office for more effective and faster communications and project monitoring. 2008 2007 2007 2006 2006
19
2007
20
2007
21
2007
24
2008
25
2008
26
2008
27
2008
28
2008
Chettinad Cement Corporation Limited
Paavai Engineering College
30
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 Jan2010 Erection and Commissioning of 2 Cement Plants in World Record time at ariyalur – 30 months from Bhoomi Pooja to commissioning highest
2009
31
production capacity for cement in a single location at Ariyalur Three No. 15 MW coal based captive power plants commissioned in 18 months at Ariyalur Chettinad Cement Technical team rated No1 by FLS Denmark at Ariyalur.
2010
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
2010
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
2011
34
cement with 1 No. of 30MW Coal based captive power plant in Kallur Village, Chincholi Taluk and Gulburga Dist of Karnataka state and expected to be commissioned in year 2012.
2011
Chettinad Cement Corporation Limited
Paavai Engineering College
CHAPTER-III CONCEPTUAL AND THEORITICAL FRAME WORK
Chettinad Cement Corporation Limited
Paavai Engineering College 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
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.
Chettinad Cement Corporation Limited
Paavai Engineering College
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 a 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 INVENTORY TURNOVER RATIOS
Inventory turnover ratio
A ratio showing how many times a company's inventory is sold and replaced over a period.
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
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
Chettinad Cement Corporation Limited
Paavai Engineering College
3.2 REVIEW OF LITERATURE Bharathi pathak 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 the 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. Dr R.Dharmaraj 2003 ”The study airtical “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.
.Bharathi pathak, Finance India Dec 2003 R. Hamsalakshmi-M.Manicham, Finance India Sep2 2009 Dr R.Dharmaraj Indian journal of finance volume4 Allen and Carolinian (2003)
Chettinad Cement Corporation Limited
Paavai Engineering College
Dr Harish kumar 2008 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 Raiyani 2009 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.Kavitha Chavvali 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. Awedh 2005 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 kumar single,The icfai journal of inventory management (vol vii Feb. 2008) J R Raiyani, The infaciS university journal of inventory research (vol viii, No 2 Feb. 2009) Dr.Kavitha Chavvali, Indian journal of inventory (vol 3 No: 2 dec 2009) N.Prasanna, Indian journal of inventory (vol 5 No: 1 Jan 2008) Dr.R.B.Bhatasna, Indian journal of inventory (vol 5 No: 2 Feb 2011)
Chettinad Cement Corporation Limited
Paavai Engineering College
Dr Sushil kumar Mehta 2010 The financial performance mutual funds schemes. Jayadew (1996) attempted of evaluate the performance of two growth oriented mutual funds on the basis of monthly return. It was found that master gain performed better according to Jensen and trey nor measures and basis of sharps ratio. Monika uppal 2010 Financial performance factors a survey of the literature shows that the foreign bank performance is affected by factors like the economic and financial environment. Among these factors one can equate the growth rate of gross domestic product, monetary market rate, inflation rate and foreign exchange rate. (Williams 1998).
Dr Sushil kumar Mehta, Indian Journal of inventory vol: 4 No: 2 Feb, 2010 Monika uppal, Indian Journal of inventory vol: 5 No: 1 Jan 2011
Chettinad Cement Corporation Limited
Paavai Engineering College
CHAPTER-IV ANALYSIS OF INVENTORY MANAGEMENT
Chettinad Cement Corporation Limited
Paavai Engineering College
ANALYSIS PART-1 RATIO ANALYSIS (INVENTORY)
Chettinad Cement Corporation Limited
Paavai Engineering College TABLE - 4.1.1 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
Source: Annual report of Chettinad Cement Corporation Limited
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.
Chettinad Cement Corporation Limited
Paavai Engineering College CHART - 4.1.1 LEVEL OF INVENTORY
INVENTORY LEVEL OF THE COMPANY(in thousand tons)
25000
20000
15000
10000
5000
0 2006-07 2007-08 2008-09 2009-10 2010-11
Raw materials Finished goods
Work in process
Chettinad Cement Corporation Limited
Paavai Engineering College INVENTORY TURNOVER RARIO
.
The inventory turnover ratio measures the number of times a company sells its inventory
during the year.
TABLE - 4.1.2 INVENTORY TURNOVER RARIO
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
Source: Annual reports of Chettinad Cement Corporation Limited The inventory turnover ratio was high in the year 2006-07 after that 2007-08 the inventory turnover ratio was decreased. The present value of inventory turnover ratio is good.
Chettinad Cement Corporation Limited
Paavai Engineering College CHART - 4.1.2 INVENTORY TURNOVER RATIO
6 5.652989761 5.463428445 5.49747641
5
4.241793818 4 3.77696404
3
2
1
0 2006-07 2007-08 2008-09 2009-10 2010-11
Chettinad Cement Corporation Limited
Paavai Engineering College INVENTORY CONVERSION PERIOD
The inventory conversion period is the time required to obtain materials for a product, manufactured it, sell it.
TABLE – 4.1.3 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
Source: Annual reports of Chettinad Cement Corporation Limited The inventory conversion period is normally indicates the wealth of the company. The company wants to concentrates with its inventory conversion period.
Chettinad Cement Corporation Limited
Paavai Engineering College CHART – 4.1.3 INVENTORY CONVERSION PERIOD
120
100
96 86
80
66 60
64
65
40
20
0 2006-07 2007-08 2008-09 2009-10 2010-11
Chettinad Cement Corporation Limited
Paavai Engineering College
ANALYSIS PART-2 EOQ ANALYSIS
Chettinad Cement Corporation Limited
Paavai Engineering College TABLE-4.2.1 EOQ ANALYSIS FOR THE YEAR 2006-07
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
Source: Annual report of Chettinad Cement Corporation Limited 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 investing EOQ is
` 882551. So the company saved ` 169432 in the year 2006-07.
Chettinad Cement Corporation Limited
Paavai Engineering College
CHART-4.2.1 EOQ ANALYSIS FOR THE YEAR 2006-07
160000 138615 140000
145225 142345 135915 133927 130688 126223 116173 113322
120000
111982
110801
100000 81794 80000
60000
40000
20000
0 Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
Chettinad Cement Corporation Limited
Paavai Engineering College
TABLE-4.2.2 EOQ ANALYSIS FOR THE YEAR 2007-08
Total investment without EOQ
Item
Annual requirement
O
C
P
EOQ
Total investment with 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
Source: Annual report of Chettinad Cement Corporation Limited 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.
Chettinad Cement Corporation Limited
Paavai Engineering College
CHART-4.2.3 EOQ ANALYSIS FOR THE YEAR 2007-08
180000
169675
171050
171050
160000 140115 140000 116064
153304
153304
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
Chettinad Cement Corporation Limited
Paavai Engineering College
TABLE-4.2.3
EOQ ANALYSIS FOR THE YEAR 2008-09
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
1.75 165 1.75 164 2.5 165
807 769 648 684
134567 127462 108540 117476
166445 154384 166775 128191
13878 26922 58235 10715
36.5 1.75 170
Source: Annual report of Chettinad Cement Corporation Limited
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.
`
Chettinad Cement Corporation Limited
Paavai Engineering College
CHART-4.2.3
EOQ ANALYSIS FOR THE YEAR 2008-09
180000 160000 140000 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
Total investment with EOQ Total investment without EOQ
Chettinad Cement Corporation Limited
Paavai Engineering College
TABLE-4.2.4
EOQ ANALYSIS FOR THE YEAR 2009-10
Item
Annual requirement
O
C
P
EOQ
Total investment with EOQ
Total Saving investment inventory cost without EOQ
Iron Ore
34000
36
1.5
95
1271
123231
217605
94374
Lime Stones
12500
37
1.75 174 1.5
727
127770
146226
18456
Clay Ash
14000
40
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
Source: Annual report of Chettinad Cement Corporation Limited 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.
Chettinad Cement Corporation Limited
Paavai Engineering College
CHART-4.2.4 EOQ ANALYSIS FOR THE YEAR 2009-10
250000 217605 200000 164575 152496 187161 212190 203082 205062
146226 150000 123231 127770
146575 121938
100000
50000
0 Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
Chettinad Cement Corporation Limited
Paavai Engineering College
TABLE-4.2.5 EOQ ANALYSIS FOR THE YEAR 2010-11
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
Source: Annual report of Chettinad Cement Corporation Limited
Chettinad Cement Corporation Limited
Paavai Engineering College
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.
CHART-4.2.5 EOQ ANALYSIS FOR THE YEAR 2010-11
Chettinad Cement Corporation Limited
Paavai Engineering College
300000 268736 250000 221110 203646 200000 167588 161852 150000 135358 109099 100000 114455 187225 242235
157770 144965
50000
0 Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
Total investment with EOQ Total investment without EOQ
Chettinad Cement Corporation Limited
Paavai Engineering College
CHAPTER-V SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 FINDINGS
RATIO ANALYSIS (INVENTORY)
Chettinad Cement Corporation Limited
Paavai Engineering College In inventory level of the company, the in inventory level has been increased year
by yea. There is no problem in the inventory level of the Chettinad Cement Corporation Limited. In inventory turnover ratio the ratios of the year has been finded 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 finded as good level. Even though they wants to keep the inventory conversion period as low.
EOQ ANALYSIS
In EOQ analysis for the year 2006-07 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.
In EOQ analysis for the year 2007-08 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.
In EOQ analysis for the year 2008-09 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.
In EOQ analysis for the year 2009-10 to 2010-11 is good. In this year the EOQ with investment and EOQ without investment are same.
In EOQ analysis for the year 2010-11 to 2010-11 is good. All years of EOQ is followed only investment with EOQ.
5.2 SUGGESTION
RATIO ANALYSIS (INVENTORY)
Chettinad Cement Corporation Limited
Paavai Engineering College
In inventory level of the company shows the increase of the raw materials, workin-process and finished goods. The inventory level of Chettinad Cement Corporation Limited is well. In inventory turnover ratio finded some problems. They want sell their product to outside also. Now they use their cement which are produced in Chettinad Cement Corporation Limited for their own purpose. They want to sell that to others also then only the ratio will be increased. Chettinad Cement Corporation Limited sells the 25 per cent of the cements produced, remaining they used for own purpose. For sales to others they allowed more days as credit to their agents.
EOQ ANALYSIS
In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.
In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.
In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.
In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. The EOQ was finded as same in the concept of EOQ with
Chettinad Cement Corporation Limited
Paavai Engineering College
investment and EOQ without investment, even though they followed EOQ with investment. In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.
5.3 CONCLUSION
Chettinad Cement Corporation Limited
Paavai Engineering College
The study covers the inventory management for effective inventory control. 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. Hence the inventory management of the organization quite good. During the year 2006-2011 from this study I concluded that organization would be efsfective inventory management. The study will be use for Chettinad Cement Corporation Limited in various ways.
Chettinad Cement Corporation Limited
Paavai Engineering College
BIBLIOGRAPHY
BIBLIOGRAPHY Chettinad Cement Corporation Limited
Paavai Engineering College BOOKS
Asohok Banerjee - Financial Accounting – A Managerial Emphasis – Excel Books – 2005 Collis – Business Accounting – Palgrave Macmillan – 2007 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 Robert N.Anthony David F.Hawkins Kenneth A.Merchant – Accounting Text and Cases – Tata McGraw Hill – 2007 S.K Bhattacharyya Jhon Dearden – Costing for Management – Vikas Publishing – 2002
S.N Maheswari S.K Maheswari – Accounting for Management – Vikas Publishing
– 2006
WEBSITES en.wikipedia.com Info.shine.com www.ask.com www.chettinad.com www.google.com www.indiacatalog.com www.inventoryquzz.com www.reportjunction.com www.scribed.com www.yahoo.com
Chettinad Cement Corporation Limited