A Study on Inventory Management

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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

Paavai Engineering College

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.

Chettinad Cement Corporation Limited

Paavai Engineering College
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

Paavai Engineering College

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

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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

Chettinad Cement Corporation Limited

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

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