a study on inventory management
DESCRIPTION
it helps to analysis the inventory management of the company.TRANSCRIPT
AN ORGANIZATIONAL STUDY
AND
A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD
CEMENT CORPORATION LIMITED, KARUR
INTERNSHIP PROJECT REPORT
Submitted by
L.BOOPATHI
Register No: 732211631005
in partial fulfillment for the award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION
in
DEPARTMENT OF MANAGEMENT STUDIES
NANDHA ENGINEERING COLLEGE
ERODE – 638052
JULY 2012
BONAFIDE CERTIFICATE
NANDHA ENGINEERING COLLEGE
ERODE – 638052
DEPARTMENT OF MANAGEMENT STUDIES
INTERNSHIP PROJECT WORK
This is to certify that the project entitled
AN ORGANIZATIONAL STUDY
AND
A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD
CEMENT CORPORATION LIMITED, KARUR
is the bonafide record of project work done by
L.BOOPATHI
Register No: 732211631005
of MBA during the year 2011-2013
Project Guide Head of the Department
Submitted for the Summer Internship Training Viva-Voce examination held on
Internal Examiner External Examiner
DECLARATION
I affirm that the project work titled AN ORGANIZATIONAL STUDY
AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD
CEMENT CORPORATION LIMITED, KARUR being submitted in partial
fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION
is the original work carried out by me. It has not formed the part of any other
project work submitted for award of any degree or diploma, either in this or any
other University.
(Signature of the Candidate)
L.BOOPATHI
Register No: 732211631005
I certify that the declaration made above by the candidate is true.
(Signature of the Guide)
K.NATHIYA, MBA, M.Phil.
Assistant professor
ACKNOWLEDGEMENT
I would like to express my gratitude to Chairman Thiru.V.SHANMUGAM
of NANDHA ENGINEERING COLLEGE, ERODE for giving me an
opportunity and facility to complete this project.
I wish to place my deep sense of gratitude to principal Dr.V.R.SAMPATH,
of NANDHA ENGINEERING COLLEGE, ERODE.
I offer my profound gratitude to Mr.N.DEVRAJ, B.E., MBA. Head,
Department of Management Studies, NANDHA ENGINEERING
COLLEGE, ERODE. for his entire support to complete this project report.
I owe my boundless gratitude to my faculty guide K.NATHIYA, MBA.
MPhil. Assistant Professor of MBA Department, for his guidance and
supervise of this project for successful completion.
I sincerely thank to Mr.THIRUNAVUKARASU, HUMAN
RESOURCE MANAGER, CHETTINAD CEMENT CORPORATION
LIMITED, KARUR. for giving me permission to do this project at their
concern.
I express my sincere thanks to my beloved parents, friends and the staff
member for and those who are encouraged and supported for completion and
this project report.
L.BOOPATHI
CONTENTS
CHAPTER` DESCRIPTION PAGE NO
ABSTRACT I
LIST OF TABLES II LIST OF CHARTS III
1 INTRODUCTION
1.1 Introduction to the study 1 1.1 Industry profile 2 1.2 Company profile 15 1.3 Organization chart 25
2 DEPARTMENT PROFILE
2.1 Production Department 26 2.2 Store Department 27 2.3 Human Resource Department 27 2.4 Marketing Department 29 2.5 Financial Department 30 2.6 Quality Department 32 2.7 Scope of the study 33 2.8 Limitations of the study 34
3 MAIN THEME OF THE PROJECT
3.1 Objectives of the study 35 3.2 Need of the study 35 3.3 Research Methodology 36 3.4 Tools for Analysis 37 3.5 Review Literature 38
4 DATA ANALYSIS & INTERPRETATION 39
5 SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 Findings 56 5.2 Suggestions 57 5.3 Conclusion 58
BIBILOGRAPHY & ANNEXTURE 59
LIST OF TABLES
TABLE NO
DESCRIPTION
PAGE NO
4.1.1 Level of inventory 40
4.1.2 Inventory turnover Ratio 42
4.1.3 Inventory conversion period 44
4.2.1 EOQ analysis for the year 2006-07 46
4.2.2 EOQ analysis for the year 2007-08 48
4.2.3 EOQ analysis for the year 2008-09 50
4.2.4 EOQ analysis for the year 2009-10 52
4.2.5 EOQ analysis for the year 2010-11 54
LIST OF CHARTS
CHART NO
DESCRIPTION
PAGE NO
4.1.1 Level of inventory 41
4.1.2 Inventory turnover ratio 43
4.1.3 Inventory conversion period 45
4.2.1 EOQ analysis for the year 2006-07 47
4.2.2 EOQ analysis for the year 2007-08 49
4.2.3 EOQ analysis for the year 2008-09 51
4.2.4 EOQ analysis for the year 2009-10 53
4.2.5 EOQ analysis for the year 2010-11 55
ABSTRACT
The purpose of inventory management is to ensure availability of raw material
in sufficient qualities as and when required and also minimize investment in
inventories. There is an essential to manage inventories efficiently and effectively in
order to avoid excess investment. It is possible for a company to reduce the level of
inventories to a considerable extent without any adverse effect on production and sales
by using simple inventory planning and control techniques. The reduction of excessive
inventories will create a favorable impact on the company profitability. Inventory
turnover ratio, inventory conversion period are very helpful to know how effectively
plays and control in the organization EOQ analysis will enables the organization to
use of EOQ analysis is very effective and useful tool for classifying, monitoring and
control of inventories.
CHAPTER 1
1.1 INTRODUCTION TO THE STUDY
The study entitled as A study on Inventory Management of Chettinad Cement
Corporation Ltd, Karur. We are going to see the importance of Inventory Management in
production and how it will helps to controlling the inventory cost. Controlling the inventory
cost which enable to earn more profit. Inventory management is primarily about specifying
the size and placement of stocked goods. Inventory management is recurred at different
locations within a facility or within multiple locations of a supply or network to protect the
regular and planned course of production against the random disturbance of running out of
materials or goods. The scope of Inventory management also concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management, Inventory
forecasting, physical inventory, available physical space for Inventory, quality management,
returns and defective goods and demand and forecasting.
Types of inventory
Normally the inventory has divided into two types. These,
1. Merchandising inventory,
2. Manufacturing inventory.
The manufacturing inventory has been subdivided into three types. These,
1. Raw materials,
2. Work in process,
3. Finished goods.
1.2 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
know their characteristics and in which area they are most required, it will be better to take a
look at some of the details given below.
Portland blast furnace slag cement (PBFSC)
The rate of hydration heat is found lower in this cement type in comparison to PPC. It
is most useful in massive construction projects, for example-dams.
Sulphate resisting Portland Cement (SRPC)
This cement is beneficial in the areas where concrete has an exposure to seacoast or
sea water or soil or ground water. Under any such instances, the concrete is vulnerable to
sulphates attack in large amounts and can damage to the structure. Hence, by using this
cement one can reduce the impact of damage to the structure. This cement has high these
cement one can reduce the impact of damage to the structure. This cement has high demand
in India.
Rapid hardening Portland Cement (RHPC)
The texture of this cement type is quite to that OPC. But, it is bit more fine than OPC
and possesses immense compressible strength, which makes casting work easy.
Ordinary Portland Cement (OPC)
Also referred to as grey cement or OPC, it is of much use in ordinary concrete
construction. In the production of this type of cement in India, Iron (fe2O3), Magnesium
(MgO), Silica (SiO2), and Sulphur, trioxide (SO3) components are used.
Portland Pozolona Cement (PPC)
As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The
rate of hydration heat is lower in this cement type. Coal waste or waste or burnt clay is used
in the production of this category of cement. It can be availed at low cost in comparison to
OPC.
Oil Well Cement (OWC)
Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing
or fixing oil wells. This is applied on both the off-shore and on-shore of the wells.
Clinker Cement (CC)
Produced at the temperature of about 1400 to 14560 degree Celsius, Clinker cement is
needed in the construction work of complexes, houses and bridges. The ingredients for this
cement comprise iron, quartz, clay, limestone and bauxite.
A part from these, some of the other types of cement that are available in India can be
classified as:
Low heat cement,
High early strength cement,
Hydrophobic cement,
High aluminum cement and
Masonry cement.
1.2.1 CEMENT INDUSTRY IN GLOBAL
Cement is a basic ingredient for the construction industry. It is estimated there are
1500 integrated cement production plants in the world. Although the players such a Lafarge
or CEMEX, the share of the four largest firms account only for 23% of the overall demand.
Demand
World cement demand was 2,283MT in 2005, with China accounting for 1,064MT
(47% of total). The expected demand for 2010 is estimated at 2,836 MT. China will increase
its demand by 250MT during the period, an increase higher than the total yearly European
demand.
Demand of Cement
Demand for cement in MT 2005 2010 Growth rate
North America 170 200 2.9%
Western Europe 208 236 2.2%
Asia/Pacific 1500 1900 5.2%
Other regions 405 500 4.7%
World cement demand 2283 2836 4.7%
Top 25 Cement companies in the world
S.NO Name of the Company Name of the Country
1. Aditya Birla Group-Grasim India
2. Al-Ghurair Group Dubai
3. Ambuja Cements Limited India
4. Anhui Conch Cement Company China
5. Arabian Cement Company Egypt
6. Ararat Cement Co. South Africa
7. Cement Cruz Azul Cement Co. Armenia
8. CEMEX Co. U.S.A
9. China National Cement Materials Group Corporation China
10. Cimpor Cement corp. China
11. CompanhiaSiderurgical National S.A Brazil
12. Concrete Casting Cement Company Pacific Alloy
13. CRH plc America
14. Eagle Materials Inc U.S.A
15. Heidelberg Cement Company Germany
16. James Hardie Cements U.S.A
17. Lafarge India
18. Libyan Cement Company Libya
19. Monarch Cement Ltd. U.S.A, California
20. Norcem Germany
21. Pretoria Portland Cement Company South Africa
22. Ready Mix Inc India
23. Rinker Group Australia
24. Semapa Group Europe
25. Smith-Midland Cement Company U.S.A, Milford
1.2.2 CEMENT INDUSTRY IN INDIA
The cement industry in India has undergone a major shift over the last 6 years. The
Indian cement industry is the second largest producer of quality cement. Indian cement
industry is engaged in the production of several varieties of cement such as, ordinary Portland
cement (OPC), Portland pozzoland cement (PPC), Portland blast furnace slag Portland
cement (PBFSPC), sulfate resistance Portland cement (SRPC), white cement, etc., They are
produce strictly as per the Bureau of Indian standards (BIS) specifications and their quality is
comparable with the best in the world.
The industry occupies an important place in the national economy because of its
strong linkage to other sectors such as, construction, transportation, coal and power. The
cement industry is also one of the major contributors to the exchequer by way of indirect
taxes.
S.NO Name of the company Details of the company
1. ACC Limited
Year of establishment
Head quarters
Web site
1994
Maharashtra
www.acclimited.com
2. Ambuja Cements Limited
Year of establishment
Head quarters
Web site
1981
Gujarat
www.ambujacement.com
3. Andhra Cements Ltd
Year of establishment
Head quarters
Web site
1936
Andhra Pradesh
www.andhracements.com
4. Barak Valley Cements Ltd
Year of establishment
Head quarters
Web site
1999
Assam
www.barakcement.com
5. Bheema Cements Ltd
Year of establishment
Head quarters
Web site
1978
Andhra Pradesh
www.bheemacement.com
6. Binani Cement Ltd
Year of establishment
Head quarters
Web site
1996
West Bengal
www.binani.com
7. Birla Corporation Limited
Year of establishment
Head quarters
Web site
1919
West Bengal
www.grasim.com
8. Burnpur Cement Ltd
Year of establishment
Head quarters
Web site
1986
West Bengal
www.burnpurcement.com
9. Chettinad Cement Corporation
Limited
Year of establishment
Head quarters
Web site
1962
Tamil Nadu
www.chettinadcement.com
10. Dalmia Cement (Bharat)
Limited
Year of establishment
Head quarters
Web site
1951
Tamil Nadu
www.dalmiacement.com
11. Deccan Cements Ltd Year of establishment
Head quarters
1979
Andhra Pradesh
Web site www.deccancem.com
12. Everest Industries Ltd Year of establishment Head quarters
Web site
1934
Maharashtra
www.everestind.com
13. Grasim Industries Limited
Year of establishment
Head quarters
Web site
1948
Madhya Pradesh
www.grasim.com
14. Gujarat Sidhee Cement Ltd
Year of establishment
Head quarters
Web site
1973
Gujarat
www.gujaratsidhee.com
15. Heidelberg Cement India Ltd
Year of establishment
Head quarters
Web site
1958
Karnataka
www.mycemco.com
16. Hyderabad Industries Ltd
Year of establishment
Head quarters
Web site
1946
Andhra Pradesh
www.hil.in
17. Indian Hume Pipe Company
Ltd
Year of establishment
Head quarters
Web site
1962
Maharashtra
www.indianhumepipe.com
18. J. K. Cement Limited
Year of establishment
Head quarters
Web site
1994
Uttar Pradesh
www.jkcement.com
19. JK Lakshmi Cement Ltd
Year of establishment
Head quarters
Web site
1938
Rajasthan
www.jklcem.com
20. Kalyanpur Cements Ltd
Year of establishment
Head quarters
Web site
1937
West Bengal
www.kalyancemenet.com
21. Katwa Cements Ltd
Year of establishment
Head quarters
Web site
1993
Karnataka
www.katwagroup.com
22. Kesoram Industries Ltd
Year of establishment
Head quarters
Web site
1919
West Bengal
www.kesocorp.com
23. Madras Cements Limited
Year of establishment
Head quarters
Web site
1954
Tamil Nadu
www.madrascements.com
24. Mangalam Cement Ltd
Year of establishment
Head quarters
Web site
1976
Rajasthan
www.mangalamcement.com
25. NCL Industries Ltd
Year of establishment
Head quarters
Web site
1979
Andhra Pradesh
www.nclind.com
26. Nirman Cements Ltd
Year of establishment
Head quarters
Web site
1983
Bihar
www.nirmancements.com
27. OCL India Ltd
Year of establishment
Head quarters
Web site
1949
Orissa
www.ocl.in
28. Panyam Cements & Mineral
Inds Ltd
Year of establishment
Head quarters
1955
Andhra Pradesh
Web site www.panyamcements.com
29. Prism Cement Ltd
Year of establishment
Head quarters
Web site
1992
Andhra Pradesh
www.prismcement.com
30. Rose Zinc Ltd
Year of establishment
Head quarters
Web site
1990
Rajasthan
www.rosezinc.com
31. Sagar Cements Ltd
Year of establishment
Head quarters
Web site
1981
Andhra Pradesh
www.sagarcements.in
32. Sainik Cement Inds. Ltd
Year of establishment
Head quarters
Web site
1991
Delhi
www.sainikcem.in
33. Sanghi Industries Ltd
Year of establishment
Head quarters
Web site
1985
Andhra Pradesh
www.sanghicement.com
34. Saurashtra Cement Ltd
Year of establishment
Head quarters
Web site
1956
Gujarat
www.saurashtra.com
35. Shiva Cement Ltd
Year of establishment
Head quarters
Web site
1985
Orissa
www.shivacement.com
36. Shree Digvijay Cement
Company Ltd
Year of establishment
Head quarters
Web site
1983
Gujarat
www.digvijaycement.com
37.
Somani Cement Company Ltd
Year of establishment
Head quarters
Web site
1983
Andhra Pradesh
www.anjanicement.com
38. Sri VasaviInds. Ltd
Year of establishment
Head quarters
Web site
1985
Andhra Pradesh
www.srivasavi.com
39. Sri Chakra Cements Ltd
Year of establishment
Head quarters
Web site
1981
Andhra Pradesh
www.chakracement.com
40. Stresscrete India Ltd
Year of establishment
Head quarters
Web site
1983
Maharashtra
www.stresscrete.com
41. The India cements Ltd
Year of establishment
Head quarters
Web site
1946
Tamil Nadu
www.ramcocement.in
42. Udaipur Cement Works Ltd
Year of establishment
Head quarters
Web site
1993
Rajasthan
www.udaipurcement.com
43. UltraTech Cement Limited
Year of establishment
Head quarters
Web site
2000
Maharashtra
www.ultratechcement.com
44. Vinaycements Ltd
Year of establishment
Head quarters
Web site
1986
Assam
www.vinaycements.com
45. Visaka industries Ltd
Year of establishment
Head quarters
Web site
1981
Andhra Pradesh
www.visaka.org
46. Zuari cement corporation Ltd
Year of establishment
Head quarters
Web site
1985
Andhra Pradesh
www.zuaricement.com
1.2.3 CEMENT INDUSTRY IN TAMILNADU
The cement industry of India hopes the most in Tamilnadu. The Tamilnadu is the state
which has produces the quality cement in India.
The Tamilnadu government was formed a company name is “Tamilnadu cement
corporation limited (TANCEM) in the February 1976 as public limited company. The
TANCEM was formed two cement plants in Tamilnadu. These,
1. Alangulam cement works. Alangulam, virudhunagar districts.
2. Ariylur cement works. Ariyalur, perambalur districts.
The following table shows the details of cement companies in districts of Tamilnadu. These,
S.NO Name of the company
1 Chettinad Cement Corporation Limited
Year of establishment
1962
Corporate office Chennai
Plant Places Karur, Dhindukal, Ariyalur
Brand name Chettinad.
2 The India cements Ltd
Year of establishment
1946
Corporate office Chennai.
Plant Places Ramanathapuram, Sangakiri, Ariyalur.
Brand name Sankar cement, Coromandel cement.
3 Madras cement Ltd
Year of establishment
1950
Corporate office Chennai.
Plant place Ariyalur.
Brand name Ram co cement.
4
Tamilnadu cements corporation Ltd
Year of establishment
1979
Corporate office Chennai (Govt).
Plant place Ariyalur.
Brand name Arasu cement
Details
5 Janathacem industries limited
Year of establishment
1976
Corporate office Madurai.
Plant place Rajapalayam,madurai.
Brand name Janatha cement, agsar cement.
Cement Company in Karur District
Chettinad Cement Corporation limited, karur is the one of most popular cement
manufacturer in Tamilnadu. The Chettinad cement work plants other than karur district,
1. Karikalini cement works, Dhindukal district,
2. Ariyalur cement works, Ariyalur district,
The Chettinad cement corporation limited, Karur is the head company in Chettinad cement
companies. They are produced 5,00,000 tons of cement per year. They are used those cement
for their own company use such as,
1. Chettinad builders pvt ltd,
2. Chettinad house pvt ltd,
3. Chettinad group of companies.
1.3 COMPANY PROFILE
History of the company
The history of the group house of Chettinad is linked with the 9 decades old saga. In
1912 took birth the House of Chettinad through a visionary idealist, born entrepreneur Dr.
Rajah Sir Annamalai Chettiar who believed in Social Transformation through business. The
founder of the House of Chettinad envisioned, his companies providing the stimulus for
Industrial Growth and conceived business as a means of improving the living standards of
people.
The corporate credo of the House of Chettinad “STRIVE, SAVE AND SERVE” is the
very thought of our founder. IN order to continue fulfilling his dreams and aspirations. To
reach greater heights and the reins were taken over by equally visionary businessmen his son,
Dr. Rajah Sir Muthiah Chettiar and grandson Dr. MAM. Ramaswamy. The house of
Chettinad reached new heights with generations of hard work, dedications and remains the
stamp of quality, integrity and reliability under the versatile, pragmatic and visionary
leaderships.
Present position of the company
Today, a 8500 million business group has ventured and diversified in varying fields
including manufacturing (Cement, Silica, Quartz, Grits), services (construction Transports,
Steel fabrication, Ship management and stevedoring. Clearing and forwarding) Trading,
power generation, plantation, farms, logistics. Education, sports management, literature, art
and music fields have also been contributed vastly. It is a matter of great pride and
satisfaction that the group finds worldwide patronage and earns precious foreign exchange for
the country.
The group aims to broaden its horizons and reach and the zenith in this millennium
under the yond, dynamic, enthusiastic, able leadership of Mr. MAMR Muthiah. The future of
the companies in the house of Chettinad is based on the time tested and proved guidelines of
total customer orientation, technology in the service of man and business as an instrument of
social service. To these timeless truths, we remain steadfast forever.
Management of Chettinad Cement Corporation Limited
CHAIRMAN : MR.M.A.M.RAMASWAMY
MD : SRI.M.A.M.R.MUTHAIAH
STARTED : 1962
DIRECTORS : 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 : SRI.S.HARIHARAN
TYPE : PUBLIC
CO-SECRETARY : SRI.S.HARIHARAN
AUDITORS : 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 : PULIYUR, KARIKKALI, ARIYALORE.
WEBSITE : www.chettinad.com
VISION
With almost a century of continuous growth and prosperity behind us we envisage our
future as another opportunity to which greater heights and to perfect the art of perfectionism
upholding the vision of our founder Dr. Rajah sir Annamalai Chettiar STRIVE, SAVE AND
SERVE. The nature ethics and style of business believe that nothing can supplement the
idealism which motivates the business we fall back on the time tested. Principles of total
customer’s orientation technology in service of man and business as an instrument of social
service to this timeless truth we remind steady fast forever.
MISSION
To achieve & sustain cost leadership in the cement market. The harness technology to
its full potential in a safe & clear environment in the entire business cycle & integrate quality
with continuous improvement. To became a vibrant learning organization by building skills
and competitiveness of employees for growth. To be the best and most respectable corporate
citizen.
Product profile of Chettinad Cement Corporation Ltd.
Pavithram: Unique cement manufactured at Puliyur works having high quality for
special concrete applications.
Chettinad Grade 53: Superior finely ground cement, suitable for plastering works,
giving a silky finished look. For RCC applications laser controlled manufacturing
would yield best result.
Chettinad Grade 43: Multipurpose cement, suitable for plastering and binding.
Chettinad PPC: A finely blended cement, providing very fine result for plastering
work, devoid of hair line cracks and giving excellent appearance to the building.
Sulphur Resistant Cement: Finds applications in the construction activity in the
coastal areas to save from corrosiveness due to salty environment.
MANUFACTURING DETAILS
Mines-Puliyur Works
Limestone is sourced from our mines at palayam which is located 40kms from the
factory. The mines are equipped with the latest machinery and technology including for
sequential blasting. The mined limestone is then crushed through primary and secondary
crusher.
Mines-Karikkali works
Limestone Mines are located at about 3 kms. from the factory. The mines are fully
mechanized and have also a terminator for mechanized breaking of individual boulders. The
Crusher is located at Mines and crushed limestone is transported by long belt conveyors to
factory.
Stacker and Reclaimer-Puliyur Works
The crushed limestone is then sent through the X-Ray analyzer and approved for
further process only on meeting quality standards backbone of the quality control.
Stacker and Reclaimer- Karikkali works
The entire quantity of crushed limestone passes through the online cross belt
analyzers’ and is stacked at the pile in the factory. Three numbers of separate stacker-
reclaimer are available with truck tipplers for proper stacking and
Reclaiming of corrective raw materials, fuels and additives. Stacker Declaimer’s help to
achieve high degree of stacking and ensure maximum level of consistency for the input
materials to raw mill, coal mill and cement mill.
Raw Mill-Puliyur Works
The limestone from the reclaimed is mixed with additive of bauxite and Iron ore and
transported to the vertical roller mill through weigh feeders (which control the additive
addition). The operator takes corrective steps on viewing any deviation. The loesche-German
make vertical roller mill is similar in principle to the tilting grinder with gigantic roller and
operated by the hydraulic system, to give fine blended raw material. From the loesche mill
the raw material is the taken to two silos to produce Varity of cement.
Raw Mill- Karikkali works
Pre-stacked limestone of stockpile is ground in the VRM along with corrective
materials with required ratios are made to produce raw meal and that is stored in Blending
cum Storage Silo. There are separate hoppers with weigh feeders for continuous and
regulated addition of each raw material. The mix passes through the cross belt analyzers
which analyze the mix chemistry and solve the mix ratio every minute to have very good
consistency in the raw mix.
Kiln-Puliyur Works
The finely grounded blended raw material is sent to a five stage kiln. Kiln is a key
process in the manufacture of cement where the calcinations & chemical reaction take place.
Coal fired burner (Controlled through latest solid & low feeder) is used to heat the air to
1400°c and is fed from one end of the kiln. The data accusation and control center
meticulously monitor the entire process including the temperature.
Kiln- Karikkali works
Raw meal extracted from silo is fed to the kiln where it is sintered at about 1400o C to
clinker. This process is called preprocessing which consists of a five stage suspension heaters
with precalciner, the kiln and the clinker cooler. Clinker cooler with CIS and CFG for
maximum heat recuperation and the cooled clinker is transported to a storage silo.
Cement Mill-Puliyur Works
The clinker is then ground, depending upon the grade, the additive is added. For all
grades of cement 5% gypsum is added to control setting of cement we use Japanese
technology in fine grinding with vertical roller mill from anode Kobe, Japan, laser practical
size analyzer is used to monitor fineness of the cement for yielding very good quality cement.
Cement Mill- Karikkali works
Finally, grinding is done in OK Vertical Roller Mill for optical particle size
distribution and less power consumption with excellent ease of operation for feeding,
grinding and classification. To maintain quality of various types/grades of cement, there are
separate hoppers with weigh feeders for the addition of fly ash, gypsum, etc. Quality of final
product is monitored and controlled every hour by testing samples in the XRF analyzer. Final
products are stored in cement silos.
Packing House - Puliyur woks
The four automatic packing machines have been installed, together they have the
capacity to deliver 4800 tons per day of packed cement. These packing equipment’s are very
accurate and any fault can be rectified as each bag is verified before the next is filled. These
are also cross-checked by the Electronic weighing scale used to note the load carried by the
Lorries.
Packing House - Karikkali works
There are 2 nos. of Electronic Rot packer which automatically pack cement in bags,
each with a capacity of 150 tons/hour. Packed cement is loaded into trucks/wagons with
automatic loading machines.
ACHIEVEMENTS OF CHETTINAD CEMENT CORPORATION LTD.
S.No AWARDS YEAR
1
National Safety Award (for outstanding performance in Industrial Safety in
achieving lowest frequency rate in Industry)
Runners up Highest % reduction in frequency rate
1976
1977
2 Merit Awards from Regional Directorate of Workers Education 1972
3 Tamil Nadu Film Arts Association, Chennai Shield 1978
4
National Productivity Award (Best Productivity Performance in Cement
Industry issued by NPC)
Second Best
Best
Best
Second Best
1985
1986
1995
1996
1997
5
National Safety Award (Mines)-(for lowest injury frequency rate Metal Mines
Mechanized Open Cast).
Longest Accident Free Period.
Best performance of the year.
1986
1986
1989
6 Conservationist of the year (for outstanding progress in the field of
Conservation of Energy, Metal Components & Machinery)
1987
7
NCBM National Awards (Improvement in Energy Performance).
Second Best
Best
Best
1994
1995
1998
8 TNEB Energy Conservation Award - (One among the 15 Energy Efficient
H.T. Industries of 2000 KVA)
1998
9 NCBM National Award
Second Best for Energy Efficiency Performance
1998
Source: Annual report of Chettinad Cement Corporation Limited
MILESTONES OF CHETTINAD CEMENT CORPORATION LIMITED Sl. No. MILESTONES YEAR
1 0.4 MTPA cement production capacity with wet process plant installed at
Puliyur. 1967
2
Modernized into dry process plant to a capacity of 0.8 MTPA with a kiln
capacity of 2000 TPD commissioned with modern vertical roller mills for
fuel & limestone grinding.
1989
3 2 Nos. of 5.4 MVA Capacity WARTSILA DG set installed. 1990
4 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed at
PoolavadiUdumapletTaluk. 1994
5 ISO – 9002 Certificate received. 1995
6 Stacker & Re-claimer for Limestone installed. 1996
7 Belt Elevator for Raw mill and Kiln feed installed. 1996
8 A) Impact Crusher for lime stone crushing at mines installed.
B) Bag filter for coal mill grinding system. 1997
9 Vertical roller mill for cement grinding installed. Additional ESP installed
for Kiln/ Raw mill to handle excess process gases. 1998
10
CIS/CFG Cooler installed. Low pressure cyclone installed.
Latest Technology LV-Tech classifier installed in Raw Mill. The plant
capacity increased to 1.2 MTPA cement.
2000
11 Green field Cement plant with capacity of 0.9 MTPA was commissioned at
Karikkali. 2001
12 Rock breaker (Terminator) installed in mines. 2001
13 ISO 14001:2004 is implemented. 2003
14 Environment Management Service Certificate option. 2004
15 1 No. 15MW Coal based Captive Power Plant commissioned in 12 Months
at Karikkali. 2004
16 Fly Ash Silo construction work completed at Puliyur and Karikkali. 2005
17
Roller press with ball mill for cement grinding with capacity 0.7
MTPA installed at Karikkali.
2006
18 Vertical roller mill for cement grinding installed. Additional ESP installed
for Kiln/ Raw mill to handle excess process gases. 2006
19 Karikkali plant capacity increased to 2.0 MTPA by increasing of blended
cement production. 2007
20 Bag House installed in Raw Mill/Kiln Circuit in addition to the existing ESP
at Puliyur. 2007
21 Energy dispersive X-Ray specto meter was put into service for increasing
the output and economical mines operation & conservation of minerals. 2007
22
Advance Research laboratories, Switzerland make X-Ray Spectrometer –
Sequential type was commissioned for augmenting clinker production and
its quality.
2007
23 Seethainagar Mines crusher capacity was upgraded for supply of 40%
Karikkali plant requirement of limestone. 2007
24 Coal based 15 MW capacity CPP was commissioned during Feb-2008 at
Puliyur Works. 2008
25 Automation & control sections PLC's OS software up gradation and PLC's
capacity. 2008
26 KHD make Burner Management System for kiln operation to improve
quality of clinker and to save thermal energy. 2008
27 Coal based 2 x 15 MW capacity CPP was commissioned during Sep-2008 at
Ariyalur. 2008
28 Green field Cement plant with capacity 2.75 MTPA was commissioned
during Dec-2008 at Ariyalur. 2008
29
Video conferencing facility was commissioned between Puliyur, Karikkali,
Ariyalur and Head Office for more effective and faster communications and
project monitoring.
2008
30 Brown field Cement plant with capacity 2.75 MTPA was commissioned at
Ariyalur during October-2009. 2009
31
Coal based 1 x 15 MW capacity CPP was commissioned during Jan-
2010 Erection and Commissioning of 2 Cement Plants in World Record
time at ariyalur – 30 months from BhoomiPooja to commissioning highest
production capacity for cement in a single location at Ariyalur Three No. 15
2010
MW coal based captive power plants commissioned in 18 months at
Ariyalur Chettinad Cement Technical team rated No1 by FLS Denmark at
Ariyalur.
32 Roller press with ball mill for cement grinding with capacity 0.5 million
commissioned during February -2010 at Puliyur. 2010
33
Brown field Cement Plant with capacity of 2.5 MTPA was commissioned
at Karikkali in March 2011 along with coal based 30MW captive power
plant within the same premises
2011
34
Work is under progress for a new Green field production line of 2.5 MTPA
cement with 1 No. of 30MW Coal based captive power plant in Kallur
Village, ChincholiTaluk and GulburgaDist of Karnataka state and expected
to be commissioned in year 2012.
2011
1.4 ORGANISATION CHART
Executive Chairman
Chief Operating Manager
MD & CEO
DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR
DIRECTOR CUSTOMER
SUPPORT
MANAGER
HEAD PERSONAL
HEAD ADMINISTRATION
HEAD PRODUCTION
HEAD ACCOUNTS
HEAD PURCHASE
HEAD PURCHASE
WORKERS
HEAD CUSTOMER ASST.MANAGER ASST.MANAGER ASST.MANAGER MANAGER
WORKERS
CHAPTER 2
DEPARTMENT PROFILE
2.1 PRODUCTION DEPARTMENT
Chettinad Cement Corporation Ltd., (CCCL) initially the cement was manufactured in the
wet processing technology. Due to hike in the fuel price company went for expansion in the
year 1989 to produce with the least dry process technology
PRODUCTION PROCESS
Limestone is the basic raw material for producing cement. Limestone is received from the
quarry by tippers. The size of limestone is 1 cubic feet. The lime stones are crushed in the
limestone crusher and are brought to a size of 1 inch and below then that. The crushed
limestone is conveyed by and inclined belt conveyer to the raw mill hoppers. The active are
red mud and blue dust (around 2%) to get the required composition of kiln feed slurry.
The crushed lime stone with additives are grade in raw mills along with water to produced
slurry with around 30%-40% moisture cement. The slurry is pumped by slurry pumps to the
slurry silo. In the silo the compressed is pumped to mix the slurry well. The composition is
slurry is checked and pumped to slurry basis, if the composition is ok, if the slurry
composition is not ok high grade limestone is crushed ground in raw mills and pumped to the
same silo to the correct composition. The sludge is tipped into the wash mill; water is added
and availed well to produce sludge slurry. This is pumped to slurry silo as a sweetener.
The slurry from the basis is pumped to the kiln through variable speed slurry feeding
arrangement of the required rate determined by the kiln operators. The kiln feed slurry enters
the kiln, passé through drying, preheating zone. In this zone the kiln feed slurry gets tried and
pre heated to 8000 c. Now the material is in powder form and inters claiming zone where the
temperature will around 800-9000c. Now the materials enters burning zone where the
materials is treated to 1350-14500 c. Here the reaction takes place between Sio2, Cao, AI203,
and Fe203 to for di calcium silicate.C2S tri calcium, silicate C3S, tri calcium aluminate, terra
calcium, Aluminum Ferrite C4AF. The mixtures of product are called clinker.
RAW MATERIALS
Limestone
Iron ore
Bauxite
Gypsum
Fly ash
Slag
Coal
Raw lignite
Power
2.2 STORE DEPARTMENT
Store plays a vital role in the operations of a company. It is in direct contact with the user
department in it is day to day activities. The most important objective of store is to provide
uninterrupted supply of material section is located to production with to save material cost in
ash in an effective manner.
FUNCTIONS OF STORE DEPARTMENT
Management of receipts
Issue control on materials
Documentation received
Inspection of materials
Computerization of data received from user department.
Codification of materials.
Physical verification of stores
Stores vacation.
SECTION IN STORE DEPARTMENT
The store is divide d into three section and they are,
Receipt section. Issue section. Inventory section.
2.3 HUMAN RESOURCE DEPARTMENT
RECRUITMENT
In CCCL there is no recruitment policy. Recruitment is made based on the requirement of man power based on the nature of the requirement of man power. The company either goes for advertising in newspaper & considers unsolicited application experience is depends on the job nature.
TRAINING AND DEVELOPMENT
In CCCL there is short term process of training for non-managerial to learn the technical.
Training program is formulated personal department may unable to execute, the take more
care and on internal training program and external training program such as firefighting
safety and occupational work etc.
PROMOTION
Promotion is given for the experienced and qualified person this improves the status skills
and earning if the workman
SAFETY MEASURES
1. Personal safety
2. Industrial safety
3. Housekeeping safety
SAFETY POLICY
The company’s SAFETY FIRST DUTY NEXT
TOTAL STRENGTH
Workman - 172
Staffs - 56
Executives - 107
Contract Workers - 131
TOTAL = 466
HOURS WORKING IN FACTORY
1 shift 12.00 pm to 8.00 Am
2 shift 8.00 Am to 4.00 pm
3 shift 4.00pm to12.00 pm
WELFARE FACILITIES OF THE COMPANY
First aid Uniform and shoes Insurance scheme Drinking water
LOAN FACILITIES
Housing loans Society loans. Education loans.
ALLOWANCES
Housing rent allowances, Conveyance allowances, Dust impact reduction allowances, Washing out dirt allowances
2.4 MARKETING DEPARTMENT
MARKETING AND SALES DEPARTMENT
The sales area over in Tamil Nadu, Karnataka and Andhra Pradesh. This section includes
zonal manager officers and staff dealers and contractors. The order is for customer through
telephone and fax. The order bags dispatch through road and rail the cost includes transport
package and tax.
The enter in the lorry permit slip. It includes the party name designation serial number
distance date and time order number of tones type of product and package code. The order is
supplied through goods train to Kerala and Karnataka. The train per vegan capacity is 63
tones product price includes excise duty and sales tax.
PACKING AND DISPATCH
The cement is extracted from the silo bottom and are place in automatic packers. There
are four automatic packers which help to pack the cement in 50kg per bags and are
transported to destination by means of trucks.
MARKET VIEW
Chettinad is also looking at setting up a new plant and some split location grinding
and packing units. By 2012 they hope to reach 15 million tones and, if the market continues
to grow, 20 million in 2015.
2.5 FINANCIAL DEPARTMENT
Finance is necessary for survival and smooth running of business. The accounts are
computerized and maintained in Tally in Chettinad cement Corporation Limited, Puliyur.
Every year the company presents its financial performance in the form of an annual report
which is sent to the shareholders along with AGM notice.
PRORIT AND LOSS ACCOUNT
In the annual report the profit and loss account and the balance sheet which is authorized by
the auditor would be published in the report. Profit and loss account is prepared to determine
the net profit or net loss for a specified period, normally one year.
BALANCE SHEET
Balance sheet is a statement which shows the financial position of the business at the end of
the financial period. The financial position, solvency and liquidity can be evaluated with the
help of balance sheet.
LIST OF DOCUMENT AND RECORD MAINTAINED
o VOUCHER
o RECEPIT
o TRANSANCTION ENTRY BOOK
o LEDGER BOOK
o SALES INVOICE
o SUBSIDARY BOOK
o CREDIT BOOK
o DEBIT BOOK
o STOCK REGISTER
o DATABASE OF EMPLOYEE
o JOURNAL ENTRIES
o BALANCESHEET
o ANNUAL REPORT
o PURCHASE ORDER
o SALES INVOICE
o OTHER VALUABLE DOCUMENT
2.6 QUALITY DEPARTMENT
Quality control is process by which entities review the quality of all factors involve in
production. This approach places an emphasis on three aspects;
Element such as controls, job management, defined, and well managed
processes, performance and integrity criteria, and identification of controls.
Competence, such as knowledge, skills, experience, and qualifications.
Soft elements, such as personnel integrity, confidence, organizational culture,
motivation, team spirit, and quality relationship.
2.7 SCOPE OF THE STUDY
The study helps the management to improve its profitability through a
reduction in non- moving inventory.
It develops the policies for both continuous review of inventory management
system.
The study helps to show the level of the inventory in the organization. The
company will make the proper inventory methods from the suggestions of the
study.
2.8 LIMITATIONS OF THE STUDY
It is difficult to get information from management.
The study period covers for five years which restricts to know more about the Inventory
management of the company.
Only quantitative analysis is possible through the statistical tools are used.
CHAPTER 3 3.1 OBJECTIVES OF THE STUDY
To analyze the inventory to perform production and sales activities smoothly.
To identify the existing inventory management and its effectiveness.
To study the management of inventories efficiently and effectively in order to
avoid excess investment.
To analysis the performance of inventory management.
3.2 NEED OF STUDY:
To find out the Inventory level of the company.
To increase sale of the product
To avoid excess Investment in Inventory.
3.3 RESEARCH METHODOLOGY
Research Design
The Descriptive type of research has been applied in the study. This research the
researcher has no control over the variables. Only reports what has happened or what is
happening. The research can only discover causes but cannot control the variables.
Data collection
Primary data
Primary data relating to the inventory management of Chettinad Cement, Karur have been
collected through personal interviews hold with the officials of the selected concern under
study.
Secondary data
The necessary data calculated from annual report, books, journals and websites.
Period of study
This study covers a period of five years from 2006 – 2007 to 2010 – 2011. The
accounting year commenced from April and ending with March of the next year.
Area of study
This study was conducted in Chettinad cement corporation limited, Puliyur, Karur
District.
3.4 TOOLS FOR ANALYSIS
The following tools have been applied in the present study.
They are listed below
Ration analysis (inventory) and
EOQ analysis
Ratio Analysis (Inventory)
The percentage of a mutual fund or other investment vehicle's holdings that have
been "turned over" or replaced with other holdings in a given year. The type of mutual fund,
its investment objective and or the portfolio manager's investing style will play an important
role in determining its turnover ratio.
Economic Order Quantity (EOQ)
Economic order quantity is that level of inventory that minimizes the total of
inventory holding cost and ordering cost. The framework used to determine this order
quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in
1913.The most economical quantity of a product that should be purchased at one time. The
EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to
the size of the order which gives maximum economy in punches of materials.
EOQ =2AO
C
Where
A = Annualusageinunit
O = Orderingcost
C = Carriyingcost
3.5 REVIEW OF LITERATURE
Bharathipathak 1991 the bulk of the banking business in the country is in the public sector
comprising the state bank of India and its seven associated banks and twenty nationalized
commercial banks till 1991, the Indian banking industry was operating in a highly regulated
and protected regime. But with the acceptance of Norseman committee recommendation,
competition has been injected into the banking industry in two forms.
The study has been found that HDFC Bank emerged as a leader in this financial
analysis of the year ended 2000-01. It closest competitor was ICICI Bank. Financial
performance of the other three, no doubt, lagged behind them, but it by no means, depressing.
These Bank obviously, have to focus more improving parameters like credit quality and cost
control for emerge as the top performance.
R. Hamsalakshmi-M.Manicham 2000 “The study, it has been found the liquidity position
and working capital positions were favorable and good during period of study. Regarding
turnover ratio, efficiency in management of fixed assets and total assets must be increased.
Regarding return on investment and return on equity was proved that the overall profitability
position of the software companies had been increasing at a moderate way.
DrR.Dharmaraj 2003 ”The study article “positing in Indian management industry ’’ have
concluded that for the last five year, there has been proliferation of international and domestic
providence of mutual funds. He says that this increased growth is due to the increasing cash
flows among innovative young companies through India.
Bharathipathak, Finance India Dec 2003
R. Hamsalakshmi-M.Manicham, Finance India Sep2 2009
DrR.Dharmaraj Indian journal of finance volume4 Allen and Carolinian (2003)
Dr Harish kumar2008 A capital adequacy ratio was constant over a period of time. During
the study period it was observed that the return on net worth had negative correlation with the
debt equity ratio. Inters income to working funds also had a negative association with interest
coverage ratio and the non performing to net advance was negatively correlated with interest
coverage ratio.
J R Raiyani2009 During the periods of high inflation depending on conventional accounting
wisdom. May results in firm’s financial information losing its meaning and creation of
unrealistic expectation among information users.
Dr.KavithaChavvali 2009 Inventory analysis of gold exchange trade funds. Mathew T.Jones
and Maurice ousted (2007) revised and evaluated pre-world war ii current date for countries
by treating gold follows on a continuous basis. The historical data of saving and investment
was taken over a time period of 1850- 1945.
N.Prasanna 2009 Stock performance Aitkin 1997 the external effect foreign direct
investment on export with example of Bangladesh where entry of a koala multinational in
garment exports led establishment of a member of domestic export firms creating the
country’s largest export industry.
Awedh2005 defend that inflator does not have really an effect on the profitability measured
by return on equity of foreign banks exerting in Lebanon. In the same way, the author steers
that the level of inflation affect more than the return on assets of Lebanese bank than foreign
banks in Lebanon.
Dr Harish kumarsingle,Theicfai journal of inventory management (vol vii Feb. 2008)
J R Raiyani, The infancy’s university journal of inventory research (vol viii, No 2 Feb. 2009)
Dr.R.B.Bhatasna, Indian journal of inventory (vol 5 No: 2 Feb 2011)
CHAPTER 4
4.1 RATIO ANALYSIS (INVENTORY)
4.1.1- Table shows level of Inventory
INFERENCE
The inventory level was found to be increased trend from 2006-2007 to 2010-2011.
The raw material was increasing from 2007 -2008 to 2010-2011
The inventory level was not increasing subsequently in 2010-2011
S.No Particulars 2006-07 2007-08 2008-09 2009-10 2010-11
1
Raw materials
Lime stone
(stacker 60 Per cent)
Iron ore
(stacker 25 Per cent)
Clay ash
(stacker 15 Per cent)
3330.80
1387.83
832.70
5169.86
2154.11
1292.47
8392.21
3496.76
2098.05
11109.76
4629.10
2777.44
11265.50
4693.96
2816.40
TOTAL(clinker) 5551.33 8616.44 13937.02 18516.26 18775.86
2 Work in process 5386.48 8451.74 13822.02 18351.46 18611.09
3 Finished goods 6251.55 9316.59 14522.32 19216.54 19416.11
Total 17189.36 26384.77 42331.36 56084.26 56803.06
Qty in thousand tones
4.1.1- Chart shows level of inventory
0
5000
10000
15000
20000
25000
2006-07 2007-08 2008-09 2009-10 2010-11
INVENTORY
YEAR
Raw materials
Work in process
Finished goods
INVENTORY LEVEL OF THE COMPANY(in thousand tons)
INVENTORY TURNOVER RARIO
. The inventory turnover ratio measures the number of times a company sells its
inventory during the year.
Inventoryturnoverratio =Costofsales
Averagestock
Costofsales = sales − Grossprofit
Averagestock =Openingstock + Closingstock
2
4.1.2 Table shows inventory turnover ratio
S.No Year Cost of goods sold
(`in lakhs) Average stock (in tones) Inventory turnover ratio
1 2006-07 2663028 487428 5.46 per cent
2 2007-08 2844494 503184 5.65 per cent
3 2008-09 3094850 819401.5 3.78 per cent
4 2009-10 4010580 945491.5 4.24 per cent
5 2010-11 4521886 822538.5 5.50 per cent
INFERENCE
The inventory turnover ratio was high in the year 2006-07 after that 2007-08 the inventory turnover ratio was decreased.
4.1.2- Chart shows inventory turnover ratio
5.4634284455.652989761
3.77696404
4.241793818
5.49747641
0
1
2
3
4
5
6
2006-07 2007-08 2008-09 2009-10 2010-11
INVENTORY
TURNOVER
RATIO
YEAR
INVENTORY CONVERSION PERIOD
The inventory conversion period is the time required to obtain materials for a product,
manufactured it, sell it.
Inventoryconversionperiod =No. ofdaysintheyear
Inventoryturnoverratio
4.1.3- Table shows inventory conversion period
S.No Year No. of days Inventory turnover ratio Inventory conversion
period (in days)
1 2006-07 365 5.46 per cent 66
2 2007-08 366 5.65 per cent 64
3 2008-09 365 3.78 per cent 96
4 2009-10 365 4.24 per cent 86
5 2010-11 365 5.50 per cent 65
INFERENCE
The inventory conversion period is normally indicates the wealth of the company. The
company wants to concentrates with its inventory conversion period.
4.1.3 - Chart shows inventory conversion period
66 64
96
86
65
0
20
40
60
80
100
120
2006-07 2007-08 2008-09 2009-10 2010-11
CONVERSION
PERIOD
YEAR
4.2 EOQ ANALYSIS
4.2.1 – Table shows EOQ analysis for the year 2006-2007
Item Annual requirement
O C P EOQ Total
investment with EOQ
Total investment
without EOQ
Saving inventory
cost
Iron Ore 31500 36 1.5 65 1230 81794 138615 56821
Lime
Stones 15000 40 1.25 144 980 142345 145225 2880
Clay Ash 14000 42 2 144 767 111982 135915 23933
Sulphur 13000 34.5 1.75 153 716 110801 133927 23136
Gypsum 13500 35 1.25 144 869 126223 130688 4465
Bauxite 11500 36.5 1.5 150 748 113322 116173 2851
INFERENCE
The company’s annual requirement for the year 2006-07 is 101000 tons of raw
materials. They using investment with EOQ spent ` 787168. When the same in without
investingEOQis882551. So the company saved ` 169432 in the year 2006-07.
4.2.1 – Chart shows EOQ analysis for the year 2006-2007
0
20000
40000
60000
80000
100000
120000
140000
160000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
81794
142345
111982 110801
126223
113322
138615
145225
135915 133927130688
116173
INVESTMENT
RAW MATERIALS
Total investment with EOQ
Total investment without EOQ
4.2.2 – Table shows EOQ analysis for the year 2007-2008
Item Annual requirement
O C P EOQ Total
investment with EOQ
Total investment
without EOQ
Saving inventory
cost
Iron Ore 33500 35 1.5 75 1250 95626 169675 74049
Lime Stones 13500 41 2 154 744 116064 140115 24051
Clay Ash 16500 55 1.55 154 1100 171050 171050 0
Sulphur 14000 35 1.5 163 808 132916 153304 20388
Gypsum 12500 36 2 154 671 104676 153304 20388
Bauxite 11000 37 2.5 160 571 92787 118752 25965
INFERENCE
The company’s annual requirement for the year 2007-08 is 103700 tons of raw
materials. They using investment with EOQ spent ` 590000. When the same in without
investing EOQ is ` 921215. So the company saved ` 195739 in the year 2007-08.
4.2.3 – Chart shows EOQ analysis for the year 2007-2008
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
95626
116064
171050
132916
104676
92787
169675
140115
171050
153304 153304
118752
Total investment with EOQ
Total investment without EOQ
4.2.3 – Table shows EOQ analysis for the year 2008-2009
Item Annual
requirement O C P EOQ Total
investment with EOQ
Total investment
without EOQ
Saving inventory
cost
Iron Ore 13500 34 1.5 65 1260 83789 153905 7046
Lime Stones 13500 36 1.5 167 805 135642 151515 15873
Clay Ash 15000 38 1.75 165 807 134567 166445 13878
Sulphur 14000 37 1.75 164 769 127462 154384 26922
Gypsum 15000 35 2.5 165 648 108540 166775 58235
Bauxite 11200 36.5 1.75 170 684 117476 128191 10715
INFERENCE
The company’s annual requirement for the year 2008-09 is 98500 tons of raw materials. They
using investment with EOQ spent 68646. When the same in without investing EOQ is
800543. So the company saved 114076 in the year 2008-09.
4.2.3 – Chart shows EOQ analysis for the year 2008-2009
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
83789
135642 134567127462
108540117476
153905 151515
166445
154384
166775
128191
INVESTMENT
RAW MATERIALTotal investment with EOQ
Total investment without EOQ
4.2.4 – Table shows EOQ analysis for the year 2009-2010
Item Annual requirement O C P EOQ
Total investment with EOQ
Total investment
without EOQ
Saving inventory
cost
Iron Ore 34000 36 1.5 95 1271 123231 217605 94374
Lime Stones 12500 37 1.75 174 727 127770 146226 18456
Clay Ash 14000 40 1.5 175 864 152496 164575 12079
Sulphur 16000 38 1.75 174 834 146575 187161 40586
Gypsum 18000 36 2.75 175 686 121938 212190 90252
Bauxite 17000 37 1 180 1122 203082 205062 1980
INFERENCE
The company’s annual requirement for the year 2009-10 is 111500 tons of raw
materials. They using investment with EOQ spent `875092. When the same in without
investing EOQ is 1132819. So the company saved `2577276 in the year 2009-10.
4.2.4 – Chart shows EOQ analysis for the year 2009-2010
0
50000
100000
150000
200000
250000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
123231 127770
152496 146575
121938
203082
217605
146226
164575
187161
212190 205062
INVESTMENT
RAW MATERIAL
Total investment with EOQ
Total investment without EOQ
4.2.5 – Table shows EOQ analysis for the year 2010-2011
Item Annual requirement
O C P EOQ Total
investment with EOQ
Total investment
without EOQ
Saving inventory
cost
Iron Ore 38000 37 1.75 105 1268 135358 268736 133378
Lime Stones 13500 35 1.25 185 869 161852 167588 5736
Clay Ash 12000 38 3 195 551 109099 157770 48671
Sulphur 15000 40 3.25 185 608 114455 187225 72770
Gypsum 17000 40 1.25 194 1043 203646 221110 17464
Bauxite 18000 39 2.75 200 715 144965 242235 97270
INFERENCE
The company’s annual requirement for the year 2010-11 is 113500 tons of raw
materials. They using investment with EOQ spent 869375. When the same in without
investing EOQ is 1244664. So the company saved 375289 in the year 2010-11.
4.2.5 – Chart shows EOQ analysis for the year 2010-2011
135358
161852
109099 114455
203646
144965
268736
167588157770
187225
221110
242235
0
50000
100000
150000
200000
250000
300000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
INVESTMENT
RAW MATERIALTotal investment with EOQ
Total investment without EOQ
CHAPTER 5
5.1FINDINGS
In inventory level of the company shows the increase of the raw materials, work-in-
process and finished goods in the year 2006-2009 but not increasing marginally in the
year of 2010-2011
In inventory turnover ratio the ratios of the year has been founded as low in the years of
2008-09 and 2009-10. After those periods the inventory turnover ratio has slightly
increased in the year 2010-11. Even though that level is quite low when compare with
2007-08.
In inventory conversion period is funded as good level. Even though they wants to keep
the inventory conversion period as low.
The company annual requirements of raw materials was increasing in 2006-2007, 2008-
2009, 2009-2010, 2010-2011. Even though annual requirements is quiet low in 2007-
2008.
The inventory level is affected when unqualified employees in charge of inventory it
creates impact on production, investment and profit.
They have a problem in maintaining the accounts regarding inventory management and
10 percent Computer assessment of inventory items for sale is inaccurate.
5.2 SUGGESTION
Chettinad Cement Corporation Limited sells the 75percent of the cements produced,
remaining 25 percent of cement used for own purpose and for sales to others they should
allowed more days as credit to their agent.
Chettinad Corporation should take steps to increase the level raw materials. To ensure
availability of raw material thorough increase the investment with help of EOQ.
Appointment of good employees to take in charge of inventory and ensure proper training
to employees this helps to make the effective inventory.
They should follow proper accounting system for inventory management and computer
assessment of inventory item for sale.
5.3 CONCLUSION
Chettinad cement is one of the leading cement manufacturers in Tamilnadu. They
produce high quality cement. The study covers the inventory management for
effective inventory control. Which helps to control the excess investment on
inventory? I have used a technique Economic Order Quantity Analysis named as EOQ
Analysis for find out the rate with EOQ and without EOQ investment for purchasing
of good in the manufacturing the cement in Chettinad Cement Corporation Limited.
BIBLIOGRAPHY
BOOKS
Khan MY Jain P.K – Management Accounting : Text, problems and cases 4th
Edition – Tata McGraw Hill – 2007
Pandikumar – Management Accounting – Excel Books – 2007
Ramachandran N Kakani Kumar Ram – Financial Acccounting For
Management – Tata McGraw Hill – 2006
S.N Maheswari S.K Maheswari – Accounting for Management – Vikas
Publishing – 2006
WEBSITES
www.chettinad.com
www.reportjunction.com
ANNEXTURE (Rs. in Crores)
PROFIT AND LOSS A/C OF CHETTINAD CORPORATION LTD
Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 INCOME : Sales Turnover 1,720.31 1,522.68 1,321.48 1,107.20 840.47 584.17 Excise Duty 220.70 166.38 183.81 177.02 115.17 98.68 Net Sales 1,499.61 1,356.30 1,137.67 930.18 725.30 485.49 Other Income 101.53 13.94 6.14 5.80 50.40 45.03 Stock Adjustments -6.00 -9.94 25.09 14.94 -3.02 12.54 Total Income 1,595.14 1,360.30 1,168.90 950.92 772.68 543.06 EXPENDITURE : Raw Materials 209.71 172.17 158.90 157.66 110.26 83.79 Power & Fuel Cost 426.82 310.57 243.37 181.71 183.28 168.90 Employee Cost 80.00 64.54 37.70 41.32 28.74 19.16 Other Manufacturing Expenses
100.54 80.45 85.58 71.53 77.27 46.97
Selling and Administration Expenses
248.09 209.12 167.89 147.04 130.31 102.17
Miscellaneous Expenses 7.47 10.24 3.34 3.70 2.56 2.41 Less: Pre-operative Expenses Capitalized
0.00 0.00 0.00 0.00 0.00 0.00
Total Expenditure 1,072.63 847.09 696.78 602.96 532.42 423.40 Operating Profit 522.51 513.21 472.12 347.96 240.26 119.66 Interest 64.57 77.91 52.26 19.62 18.18 19.42 Gross Profit 457.94 435.30 419.86 328.34 222.08 100.24 Depreciation 362.87 308.08 429.00 81.50 53.17 36.09 Profit Before Tax 95.07 127.22 -9.14 246.84 168.91 64.15 Tax 19.50 30.80 51.25 92.62 58.32 0.98 Fringe Benefit tax 0.00 0.00 0.60 0.50 NA NA Deferred Tax 0.40 -0.21 -56.78 -10.05 -4.39 22.71 Reported Net Profit 75.17 96.63 -4.21 163.77 114.71 40.06 Extraordinary Items 43.03 0.00 0.00 0.00 0.00 0.02 Adjusted Net Profit 32.14 96.63 -4.21 163.77 114.71 40.04 Adjst. below Net Profit 0.00 11.91 1.39 0.00 0.00 0.00 P & L Balance brought forward
314.24 205.70 253.04 148.79 73.97 57.23
Statutory Appropriations
0.00 0.00 0.00 0.00 0.00 0.00
Appropriations 30.77 0.00 44.52 59.52 39.89 23.32 P & L Balance carried down
358.64 314.24 205.70 253.04 148.79 73.97
Dividend 19.10 0.00 29.50 29.50 22.13 14.75 Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00 Equity Dividend % 50.00 0.00 100.00 100.00 75.00 50.00 Earnings Per Share-Unit 18.85 32.76 0.00 53.81 37.61 12.88 Earnings Per 18.85 32.76 0.00 53.81 37.61 12.88
Share(Adj)-Unit Curr Book Value-Unit Curr 242.33 289.84 120.39 133.05 89.23 59.13
(Rs in crores)
BALANCE SHEET OF CHETTINAD CORPORATION LTD, KARUR
Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 SOURCES OF FUNDS : Share Capital 38.20 38.20 29.50 29.50 29.50 29.50 Reserves Total 887.51 825.52 325.65 362.99 233.74 144.92 Total Shareholders’ Funds 925.71 863.72 355.15 392.49 263.24 174.42 Secured Loans 406.28 343.89 282.00 37.61 9.03 24.04 Unsecured Loans 489.78 414.98 715.03 398.58 222.33 280.87 Total Debt 896.06 758.87 997.03 436.19 231.36 304.91 Total Liabilities 1,821.77 1,622.59 1,352.18 828.68 494.60 479.33 APPLICATION OF FUNDS Gross Block 2,836.59 2,315.69 1,660.39 913.20 824.24 765.58 Less : Accumulated Depreciation
1,462.81 1,167.89 850.98 420.77 339.27 286.10
Less: Impairment of Assets 0.00 0.00 0.00 0.00 NA NA Net Block 1,373.78 1,147.80 809.41 492.43 NA NA Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00 Capital Work in Progress 233.54 95.46 313.16 353.65 38.47 2.80 Investments 0.58 0.58 0.58 0.58 0.58 3.61 Current Assets, Loans & Advances
Inventories 231.62 224.09 214.61 166.17 78.27 100.17 Sundry Debtors 106.57 72.51 38.70 14.87 16.99 17.44 Cash and Bank 20.73 73.07 42.99 25.85 28.25 21.49 Loans and Advances 341.67 381.76 329.84 197.80 94.38 40.76 Total Current Assets 700.59 751.43 626.14 404.69 217.89 179.86 Less : Current Liabilities and Provisions
Current Liabilities 214.19 143.24 146.20 156.40 74.57 77.59 Provisions 264.82 222.13 243.39 201.97 98.39 30.09 Total Current Liabilities 479.01 365.37 389.59 358.37 172.96 107.68 Net Current Assets 221.58 386.06 236.55 46.32 44.93 72.18 Miscellaneous Expenses not written off
0.00 0.00 0.00 0.00 0.00 0.00
Deferred Tax Assets 2.05 1.41 0.84 0.73 1.40 2.99 Deferred Tax Liability 9.76 8.72 8.36 65.03 75.75 81.73 Net Deferred Tax -7.71 -7.31 -7.52 -64.30 -74.35 -78.74 Total Assets 1,821.77 1,622.59 1,352.18 828.68 494.60 479.33 Contingent Liabilities 43.38 12.95 29.68 16.13 32.60 11.06