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ABSTRACT

The project work entitled inventory management includes detail study

about inventory, its importance and effectively it should be managed for Smooth

operations of business. Inventories are assets of the firm and require investment and

hence involve the commitments of the firms resources.

Every firm is required to manage the inventories in such a way as to get

the best returns. The objective of inventory management is to determine the

optimum level of the inventory that is the level at which the interest of all the

departments are taken off. The inventory management seeks to maximize the wealth

of the share holders by minimizing the cost of procuring and maintaining.

The objective behind the inventory management is maintaining sufficient

stock of raw material ensuring continuous supply to production process for

uninterrupted production schedule and minimizing the total annual cost of

maintaining inventories.

Inventories are assets of the firm and hence involve the commitment of firms

resources; managers must ensure that the firm maintains inventories at the correct

level.

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CONTENTS PAGE NO.

CHAPTER 1: INTRODUCTION 4

CHAPTER 2: OBJECTIVES & METHODOLOGY

OF THE STUDY 6 to 7

SCOPE OF THE STUDY 7

NEED FOR THE STUDY 8

LIMITATIONS OF THE STUDY 9

LITERATURE REVIEW 11 to 21

CHAPTER 3: INDUSTRY & COMPANYPROFILE 23 to 55

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION 57 to 70

CHAPTER 5: SUMMARY 72 to 73FINDINGS 74

SUGGESTIONS 75

CONCLUSION 75

CHAPTER 6: BIBLIOGRAPHY 77

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Chapter-I INDRODUCTION

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Introduction of Inventory ManagementThe term inventory can be defined as tangible property held:

For sale in the ordinary course of business

In the process of production for such sale

For consumption in the production process or in the rendering of

services.

In manufacturing firms, items in inventory are called stocks. They are raw

materials, work-in-progress and finished goods and supplies. Inventory control

refers to those activities, which maintain stock at a desired level.

Need to hold Inventories

The question of managing inventories arises only when the company holds

inventories. Maintaining inventories involves tying up of the companys funds and

incurrence of storage and handling costs. If it is expensive to maintain inventories,

why do companies hold inventories? There are three general motives for holding

inventories.

Transaction Motive emphasizes the need to maintain inventories to

facilitate smooth production and sales operations.

Precautionary Motive necessitates holding of inventories to guard against

the risk of unpredictable changes in demand and supply forces and other

factors.

Speculative Motive influences the decision to increase or reduce inventory

levels to take advantage of price fluctuations.

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Chapter-II Objectives & Methodology of the Study

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OBJECTIVES OF THE STUDY

The present study has been taken up with the following objectives

To learn various inventory management procedures followed at Global

Business services of Dr. Reddys Laboratories ltd.

To understand relative advantage and disadvantage of various techniques.

To protect and minimize the inventory from theft, loss, damage and

unauthorized use.

To provide full range of reports that will satisfy informational requirements.

To review the ABC analysis and understand the impact of business dynamics

on inventory.

METHODOLOGY

For the preparation of project the collection of data is very essential & there are

two broad methods, which are followed in project. They are primary and secondary

data.

Primary Sources:

Direct and personnel & oral investigation.

The staff Finance, Production & Risk management.Secondary Sources:

Annual repots of the company

Other reports of the corporation

Textbooks

Internet

Magazines

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OBJECTIVES OF INVENTORY CONTROL :

The main objectives of inventory control are:

I. To maintain a large size of inventory for efficient and smooth production

and sales operation.

II. To maintain a minimum investment in inventories to maximize

profitability.

III. To ensure a continuous supply of raw materials to facilitate uninterrupted

production.

IV. To maintain sufficient stocks of raw materials in periods of short supply

and anticipate price change.

V. Maintain sufficient finished goods inventory for smooth sales operationand efficient customer service.

VI. Minimize the carrying cost and time.

VII. Control investment in inventories and keep it at an optimum level.

Scope of Inventory Management:

The area of the inventory management consists of the following phases:

Maintaining continuity of production or operation by ensuring thecontinuous supply of the standardized raw materials.

Providing the satisfactory service to customers. For ex. by ensuing the

continuous supply of quality products round the year.

Reducing the amount of the working capital tied up in inventories by

proper planning, and fixing up of maximum, minimum ad recorder

levels.Ensuring that the laid down procedures are follow in storage issue,

inspection etc. In respect of all items which comes into stores.

Conserving the material by eliminating the wastage in any form at any

stage of production, non-production operations.

To take the enough car to avail the concessions available in purchasing

the materials.

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Inventory control is the process of deciding what and how much of various

items are to be kept in stock. It also determines the time and quantity of various

items to be produced. The basic objective of the inventory control is to reduce the

investment in inventories and ensuring that production process does not suffer at the

same time.

NEED FOR THE STUDY

Materials are equivalent to cash and they make up an important part of the

total cost. It is essential that materials should be properly safeguarded and correctly

accounted. Proper control of material can make a substantial contribution to the

efficiently of a business. The success of a business concern largely depends upon

efficient purchasing, storage, consumption and accounting. Bulk Drugs is the backbone of Pharmaceutical industry and inventory plays a vital role in bulk drug

industry hence the study of Inventory Management in Bulk Activities of Dr. Reddys

has been selected for the project.

FRAME WORK OF THE STYDY

The frame work of the study is as follows The first chapter contains the introduction of inventory management,

objectives of the study, methodology and limitations of the study.

The second chapter consists of the profile of the pharmaceutical industry.

The Third Chapter contains of the profile of Dr.Reddys Laboratories Ltd.

The Fourth Chapter Consists of theoretical frame work of InventoryManagement.

The Fifth Chapter consist of data analysis and interpretation of inventory practices

The sixth chapter consist of summary, finding , suggestion and bibliography

LIMITATIONS

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Since the Study Covers Bulk activities Division of Dr.Reddys LaboratoriesLtd, It may not represent overall scenario of the bulk industry.

The Project deals with fewer areas of inventory.

The study is conduced within short period thus it may not be as detailed &fully fledged.

The collection of information is mainly through secondary data.

Data available during the work is insufficient. Data is not disclosed by thecompany because of various reasons.

Lack of additional information from the company due to confidential matters.

ORIGIN:

The exact date on which the allopathic systems of medicine make its entry

into the country is not available but it is generally estimated that it happened some

time during the early part of the 19 th century. The Britishers for their personal use

imported the medicines when they come to do business. This was the beginning of

the pharmaceutical industry in India. Later, when they ultimately took over the

country, the imports became a regular feature. These pharmaceutical products,

which were introduced in India to provide relief to Britishers, soon gained popularity

among the people in urban areas. For the first few decades after their introduction, pharmaceutical products were being imported into the country, mostly from

Germany and the United Kingdom.

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Indigenous production of these medicines, however, was started in

1901 with the establishment of the Bengal chemical and pharmaceutical works, due

o the pioneering efforts of Acharya P.C.Roy. The world of medical treatment was

witnessing some significant developments like Lours Pasteurs discovery of

pathogenic bacteria as the cause of infectious diseases while the Indian

Pharmaceutical Industry was in its early stages.

Scientists in India undertook research in tropical diseases like

malaria, typhoid and cholera. Between 1904 and 1907 four research institutes,

namely the Haffkine Institute and Pasteur Institute were established. Yet another

significant development of this period was the use of chemicals for treating various

diseases. Some very important drugs like aspirin and barbiturates were made

available during this period. The First World War gave a real stimulus to domestic

production of pharmaceuticals. There was a step rise in demand and a drastic cut in

imports. Consequently, the production of quinine salts registered a substantial

increase for the first time. Production of caffeine from tea waste and manufacture of

surgical dressings were also taken up during this period. However with the

resumption of imports after the war the industry was back to square one it received a

setback, as it was unable to compete with imported products.

The Bengal Chemical and Pharmaceutical works started production of

Titanus antitoxin, a basic drug in 1930. Indigenous production in 1939 was

sufficient to meet only about 13 percent of medical requirements. Thus a large part

of domestic demand for drugs was still met by imports.

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The Second World War was another landmark in the history of the Indian

Pharmaceutical industry. It provided a propitious atmosphere for further expansion

of production. By 1941 the industry took up the manufacture of new drugs like

lodochlorohydorxy Quinoline as well as a number of alkaloids like ephedrine and

codeine. Besides, the industry made a beginning in the production of

Chemotherapeutic Drugs like Arsenicals. Antileprotic Drugs and Colloidal

Preparations of Calcium, Silver, Manganese and Iodine. The production of

glandular products like liver extracts was also undertaken. The production of

several formulations based on imported bulk drugs also showed a significant

expansion during the period. Medicines, the industry could not make much headway,

in the absence of consistent governmental support to a nascent industry. The

estimated value of production of pharmaceuticals in 1947 was Rs.10 Cr.

THE PHARMACEUTICALS INDUSTRY CAN BE DIVIDED INTO TWO

SEGMENTS:

Bulk Drugs:

Which are the active ingredients with medicinal properties and are the basic raw

materials for making formulations?

Formulations: Which are specific dosage forms of a bulk drug or of a

combination of different bulk drugs and the final form in which the drugs are sold

i.e. syrups, injections, tablets and capsules? With the objective of controlling prices

of important drugs and making them available at reasonable rates to the consumer,

the Government introduced the Drug Price Control Order (DPCO) in 1970.

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It specifies the maximum selling price of bulk drugs and formulations

and the turnover ceiling for exemption from the DPCO. At present DPCO fixes and

monitors the prices of 74 bulk drugs, and all the formulations manufactured using

any of these bulk drugs thus covering 50 percent of the pharmaceuticals market.

DPCO has been amended with three revisions in 1979, 1987 and 1995. The numbers

of drugs under price control have been reduced with every revision.

Pharma Industry are immense flexibility in the industry to move from

one drug to another with ability to respond quickly to new demands and needs,

strong distribution networks with strong presence in the foreign markets (net

exporter of bulk drugs & formulations), advantage of low production and R&D costs

as compared to other nations and availability of high skills in process development,

low R&D expenditure by Indian manufacturers mainly due to relative small size and

resource base of individual units compared to major international Pharma companies

limiting R&D options, world class manufacturing plants approved by US-FDA, and

low profit margins as it is a highly fragmented industry with intensive competition.

POST-INDEPENDENCE ERA: Immediately after independence, the

government addressed itself to the task of achieving a high rate of economic

progress either special emphasis on speedy industrialization. When the government

of independent India embarked on planned economic expansion about four decades

ago, the development of the Indian Pharmaceutical Industry was not commensurate

with the size of the country and the growing needs of its population. Since, then

progress of the pharmaceutical industry in the country has been substantial and many

sided and can bet be describes as dramatic.

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RP = (MC+CC+PM+PC)*2+excise duty.

MC is the material cost, including cost of bulk drugs/recipients and process losses.

CC is the conversion cost.

PM is the cost of packing material including process losses.

PC is the packing charges.

DPCO applies only to allopathic drugs.

Investment policies

1. FDI up on to 100% is permitted the automatic route for manufacture of

drugs and pharmaceutical, provided the activity does not attract compulsory

licensing or involve use of recombinant DNA technology, and specific cell /

tissue targeted formulations.

2. FDI proposals for the manufacture of licensable drugs and pharmaceuticals

and bulk drugs produced by recombinant DNA technology, and specific cell /

tissue targeted formulations will require prior Government approval.

Industrial Licensing:

Industrial licensing for all bulk drugs cleared by Drug controller

General (India), all their intermediates and formulations has been abolished, subject

to stipulations laid down from time to time in the industrial policy except in the case

of

1. Bulk drugs produced by the use of recombinant DNA technology.

2. Bulk drugs requiring in-vivo use of nucleic acids as the active principles and

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3. Specific cell/tissue targeted formulations.

SWOT ANALYSIS

It is often said that the pharma sector has no cyclical factor attached to it.

Irrespective of whether the economy is in a downturn or in an upturn. The general

belief is that demand for drugs is likely to grow steadily over the long-term. True in

some sense. But are there risks? This article gives a perspective of the Indian pharma

industry by carrying out a SWOT analysis. The SWOT analysis of the industry

reveals the position of the Indian pharma industry in respect to its internal and

external environment.

STRENGTHS:

1. India with a population of over a billion is a largely untapped market. In fact

the penetration of modern medicine is less than 30 percent in India. To put

things in perspective, per capita expenditure on health care in India is $93,

while the same for countries like Brazil is $453 and Malaysia $189.

2. The growth of middle class in the country has resulted in fast changing

lifestyles in urban and to some extent rural centers. This opens a huge

market for lifestyles drugs which has a very low contribution in the Indian

market.

3. Indian manufactures are one of the lowest cost producers of drugs in the

world. With a scalable labour force. Indian manufactures can produce drugs

at 40 percent to 50 percent of the cost to rest of the world. In some cases,

this cost is low as 90 percent.

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4. Indian pharmaceuticals industry posses excellent chemistry and process

reengineering skills. This adds to the competitive advantage of the Indian

companies. The strength in chemistry skill helps Indian companies to

develop processes, which are cost effective.

WEAKNESS:

1. The Indian pharmaceutical companies are marred by the price regulation.

Over a period of time, this regulation has reduced the pricing ability of

companies. The NPPA (national pharma pricing authority), which is the

authority to decide the various pricing parameters, sets prices of different

drugs, which leads to lower profit ability for the companies. The companies

which are lowest cost producers are the advantage while who cannot

produce have either to stop production or bear losses.

2. Indian pharma sector has been marred by lack of product patent, which

prevents global companies to introduce new drugs in the country and

discourages innovation and drug discovery. But this has provided an upper

hand to the Indian pharma companies.

3. Indian pharma market is one of the least penetrated in the world. However

growth has been slow to come by. As a result Indian majors are relying onexports for growth. To put things into perspective, India accounts for almost

16 percent of the world population while the total size of industry is just 1

percent of the global pharma industry.

4. Due to very low barriers to entry, Indian pharma industry is highly

fragmented with about 300 large manufacturing units and about 18,000

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4. Being the lowest cost producer combined with FDA approved plants.

Indian companies can become a global outsourcing hub for pharmaceutical

products.

THREATS:

1. There are certain concerns over the patent regime regarding its current

structure. It might be possible that the new government may change certain

provisions of the patent Act formulated by the preceding government.

2. Threats from other low cost countries like china and Israel exist. However

on the quality front India is better placed relative to china. So,

differentiation in the contract manufacturing side may wane.

3. The short-term threat for the pharma industry is the uncertainty regarding

the implementation of VAT. Though this is likely to have a negative

impact in the short-term, the implications over the long-term are positive

for the industry.

PRESENT SCENARIO :

The pharmaceutical Industry is the largest industry after the software industry.

The pharmaceutical industry is said to be the second fastest growing industry and

perhaps the most challenging one of the Indian industrial scene today. The

pharmaceutical companies have out performed by substantial margin.The 58

industries index covered by CIME in terms of growth in sales profit after tax and

asset creation. It is characterized by:

1. Very intense competition with about 10,000 companies large, big, medium

and small lighting for their own place under the sun in $ 900 billion Market.

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2. The seemingly ever increasing in and almost never ending governmental

regulations and policy changes since the output of the industry is usually to

the basic health requirement and quality of life emphasis is placed on

controlling the quality at all stage of production, including a check on the

ingredient used.

Government intervention exists in the form of price control and compulsory

licensing etc.

3. Entry barriers due to initial setting up costs are extremely high.

4. Stiffing price controls, eroding profits and consequently a vanishing bottom

line.

5. Rigorous control on formulations and an absence of international patient

production resulting in too maze of product with little or no product

differentiation.

6. Increasing dominance of trade associations and then constants demand per

increasing trade margins.

7. In the pharmaceutical industry firms have to come up with new drugs and

newer ways of combating existing as well as newly identified diseases. This

makes the industry highly R&D expensive. As a comparison the R&D sales

ratio world wide 7.5% for the electronics industry, 11.8% for computers and

18% for pharmaceuticals.

8. The path of a drug evolution from molecule synthesis to find approval by the

FDA in an expensive affair costing a few hundred million dollars per a single

drug. The possibility of the molecule or drug getting rejected because of side

effects, unacceptable toxicity, exists at every stage of evolution. This implies

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a high degree of risk in pharmacy basic research. However, a margins

potential drug commands makes basic research a high risk and high gain

game. Block buster patented drugs are known to have brought in revenue of

more than dollar one a year enabling the others not so successful products

with in the company a piggy back side.

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Chapter-III INDUSTRY&COMPANY

PROFILE

PHARMACEUTICAL INDUSTRY:

From ancient times, two systems of medicine were practiced in India. Firstly

there was Ayurvedic medicine, which dates back to the Vedic period. Ayurvedic

medicine depends largely on the combination of various herbs minerals and metals

like gold, copper etc.

Secondly there was the Arabian system of medicine. An innumerable invasion

has brought the Arabian system in to India. In contrast two other systems of

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medicine, namely Allopathic and Homeopathy were in vagary in the western part of

the world.

Despite of being very advanced indigenous systems of medicines. Ayurvedic

medicine has not really become popular enough; probably because of very long

British rule and the consequent development of an educational system including

medical education based on typical British model. As Allopathic medicine started

taking routes in India all the research and development activities of the world over

filled its growth in India as well. Conversely, there was hardly any research and

development activity in the area of Ayurvedic medicine. Though the govt. has been

making some efforts to promote Ayurvedic medicine, its development seems to be

long way off. It is the still popular in rural areas, may be because modern medicine

cannot reach there. In urban areas it has yet to gain importance in so far ad the

prescription drug market is concerned. Allopathic doctors towards prescribing an

Ayurvedic medicines very loss indeed. Of late, however, the attitude of customers

towards Ayurvedic medicine seems to be increasingly favorable.

Some of the pharmaceutical companies are planning to diversify into

Ayurvedic drugs mainly to improve their profitability. Ayurvedic drugs are

exempted from price control.

BACK GROUND

Dr. Reddys Laboratories was founded by Dr. Anji Reddy, an entrepreneur

scientist in 1984. The DNA of the company is drawn from its founder and his vision

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to establish Indias first discovery led global pharmaceutical company. In fact, it is

the spirit of entrepreneurship that has shaped the company to become what is today.

The company is focused on creating and delivering innovative and quality products

to help people lead healthier lives.

Dr. Reddys is the research based company with vertically integrated

operations. The company develops manufactures and markets a wide range of

pharmaceutical ingredients, diagnostic, kits, critical are and biotechnology products.

The basic research program of Dr. Reddys focuses on cancer diabetes, bacterial

infections and pain.

The company has several distinctions to its credit. Being the first

pharmaceutical company from Asia Pacific (out side the Japan) to be listed on the

NewYork stock exchange in 2001 on April 11 th is only one among them. And

always, Dr.Reddys come up trumps not only having its stock oversubscribed but

also becoming the best performing IPO that year.

Dr. Anji Reddy is well known for his passion for research and drug discovery.

Dr.Reddys, s started its drug discovery program in 1993, and with in three years it

achieved its first break through be out licensing an ANTI-DIABETES molecule to

NOVO NORDISK in March 1997. With this very small but significant step, the

Indian industry went through a paradigm shift in its image from being known as just

COPY CATS to INNOVATORS. Through its success Dr.Reddys pioneered

drug discovery in India. There are several such infection points in the companys

evolution form a bulk drug (API) manufacturer into a vertically integrated global

pharmaceutical company today.

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Today, the company manufactures and markets API (Bulk activities), finished

dosages and biologics in over hundred countries world wide, in addition to having a

very promising drug discovery pipeline. When Dr.Reddys started its first big move

in 1986 form manufacturing and marketing bulk activities to the domestic (Indian)

market to manufacturing and exporting difficult-to-manufacture bulk activities such

as methyldopa to highly regulated overseas markets. It had to not only overcome

regulatory and legal hurdles but also battle deeply entrenched mindset issues of

Indian pharmacy being seen as producers of CHEAP and therefore LOW

QUALITY pharmaceuticals. Today, the Indian pharma industry, in stock contras, is

known globally for its proven high quality low cost advantage in delivering safe

and effective pharmaceuticals. This transition, a tough and often perilous one, was

made possible thanks to the pioneering efforts of companies such as Dr.Reddys

laboratories.

Today, Dr.Reddys continues its journey. Leveraging on its LOW COST,

HIGH INTELLECT advantage. Foraying into new markets and blew businesses

taking on new challenges and growing stronger and more capable. Each failure and

each successes renewing the sense of purpose and helping the company evolve.

With over 950 scientists working across the globe, around the clock, the

company continues its relentless march forward to discover and deliver a break

through medicine to address and unmet medical need and make a difference to the

people lives worldwide. And when it does that it would only be beginning and yet it

would be the most important step. As LAO TZU wrote a long time ago, EVEN A

1000 MILE JOURNEY STARTS WITH A SINGLE STEP.

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process and production of METHYLODOPY was the ultimate challenge.

Chemists at Dr.Reddys steam lined and simplified the unit processes for it. In spite

of the complicated nature of the process for it and with in a matter of 6 months the

company was ready to manufacture the drug.

VISION, MISSION AND VALUES:

Core Purpose

To help people lead healthier lives

Vision

To become a disvery led global pharmaceutical company

The company will achieve the vision by building

1. Work places that will attract, energize, help and retain finest talent available.

2. An organization culture that is relentlessly focused on the speedy translation

of scientific discoveries into innovative products that makes a significant

difference in people lives.

3. A global marketing organization that understands and response to needs of

customers.

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To become first Indian pharmaceutical company that successfully takes its

products form discovery to commercial launch globally.

Values

We strive for excellence in everything we think, say and do

Respect for the individual

Innovation & continuous learning

Collaboration & Teamwork

Harmony & social responsibility Quality

Quality

We are dedicated to achieve the highest level of quality in every thing we do

to delight internal & external customers every time.

Respect of Individual

We uphold the self esteem and dignity of each other by creating an open

culture conductive for expressing of view and ideas irrespective of hierarchy.

Innovation and Continuous Learning

We create an environment of innovation and learning that fosters, in each one

of us, as desire to excel and willingness of experiment.

Collaboration and Teamwork

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We seek opportunities to build relationship and leverage knowledge, expertise

and resources to create greater values across function, businesses and locations.

Harmony & Social Responsibility

We take at most care to protect our natural environment and serve the

community in which we live and work. Our business practices are guided by the

highest standards of truth, integrity and transparency

Dr. REDDYS CULTURE!

Customer Focused and Performance Driven where both external and

internal customers are accorded the highest priority and where everyone is

sensitive to commitments, time & cost and focuses on delivering innovative

affordable medicines globally.

Entrepreneurial and Innovative where genuine mistakes are tolerated,

intelligent risk-taking is encouraged and people feel a sense of empowerment.

Egalitarian and Trusting where rank and status consciousness is low;

leadership walks the talk, where credibility & trustworthiness are championed

and leaders provide access to people, resources and information.

Flexible and Adaptive where change is welcome and initiatives are

implemented with sincerity and commitment, diversity is understood and

accepted and mutual respect for diversity and various ethnic cultures coexist.

MILESTONES OF Dr. REDDYS

S.NO YEAR DESCRIPTION

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1. 2009

Dr.Reddys's crosses $ 150 million revenue mile stone in

Russua & CIS region

2. 2008

Acquire BASF's Pharmaceutical manufacturing contract

business and related facility at Shreveport, LOUISIANA

Acquires Dowpharama's small molecule business at its

Mirfied and Cambridge facilities, UK Dr. Reddys formally announces its US Specialty

Business, Promius Pharma, LLC.

3. 2007

Become No.1 pharmaceutical company in India in

turnover and profitability. Launches Reditux (Rituximab) -- the World's first

biosimilar of a monoclonal antibody. Blaglitazone (DRF 2593) enters Phase III of clinical

trials becoming India's most advanced NCE

4. 2006

Acquires betapharm- the fourth- largest generics

company in Germany for a total enterprise value of 480

million Euros.

5. 2005

Acquires Roches API business at the state-of the art

manufacturing site. In Mexico with a total investment of

USD 59

Announces the formation of pelican pharmacy Indias

First integrated Drug Development Company.

Announces Indias first major co-development and

commercialization deal for its molecule Balaglitazone

(DRF 2593), with Rheoscience.

Announces a unique partnership for the30

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commercialization of Andes with ICICI venture.

6. 2004

Acquires access to Drug Delivery Technology

platforms in the Dermatology segment through the

acquisition of Triteness.

7. 2003

Announces a 15-years exclusive product development

and marketing agreement for OTC drugs with Leaner

Health Products in the US

Launches Ibuprofen, first generic product to be

marketed under the Dr.Reddys label in the US.

8. 2002

Conducts its first overseas acquisition BMS

Laboratories Limited and Meridian Healthcare in UK

9. 2001

Become the first Asia pacific pharmaceutical company,

outside Japan, to list on the New York Stock Exchange.

Listed with the Symbol RDY on April 11, 2001.

Out license Drf 4158 to Novelties for up to US $55

million up front payment.

Launches its first generic product, ranitidine, in the US

market.

Become the first Indian pharmaceutical company to

obtain a 180-day exclusively marketing right for a

generic drug in the US market with the launch of

Fluoxetice 40 mg capsules on August 3, 2001.

10. 2000

Dr.Reddys Laboratories becomes Indias third largest

pharmaceutical company with the merger of Cheminor

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19. 1988

Acquires Benzes Laboratories Pvt. Limited to expand its

Bulk Actives business.

20. 1987

Obtains its first USFDA approval for Ibuprofen API

Starts its formulations operations

21. 1986

Dr.Reddys goes public

Dr.Reddys enters international markets with exports of

Methyldopa.

22. 1984

Dr. Anji Reddy establishes Dr.Reddys

Laboratories with an initial capital outlay of

Rs.25 lakhs.Dr. REDDYS BUSINESS

Dr. Reddys is a vertically integrated, global pharmaceutical company with

proven research capabilities and presents across the pharmaceutical value chain.

They manufacture active pharmaceutical ingredients and finished dosage forms and

market them globally, with a focus on United States, Europe, India and Russia. In

addition, the discovery arm of the company conducts basic research in the areas of

diabetics, cardiovascular, in Flomaton and bacterial infection.

BULK ACTIVITIES & INTERMEDIARIES

Dr.Reddys offers an unparalleled portfolio to its customers who include

innovators and generic formulators worldwide. The companies operations are fully

integrated through global supply chain practices response and services to customers

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Custom pharmaceutical services, a strategic Business Unit of Dr.Reddys

aspires to be the partner of choice for all the strategic sourcing needs of innovators

worldwide.

Dr.Reddys is the first company in India to fully develop in-house- from the

molecular biology stage to production a biogenetic, GRASTIM, in India. Grastim

(Generic name: filgrastim), the human Granulocyte Colony Stimulating Factor (Hg-

CSF), is a recombination protein used in chemotherapy- induced Neutrogena and in

bone marrow transplantation. Gratin has been well accepted by medical

professionals and enjoy a market share of almost 50% in India. They have also

launched Grastim in a few markets in Asia.

The recombinant proteins technology platform is Dr.Reddys core

competency. Dr.Reddys use technology and multiple expression systems (Ecoli,

yeast and mammalian cells) ensure high expression levels in yield apart form cost

and market leadership.

Dr. Reddys view biologics as business with tremendous upside potential. Dr.

Reddys commitment to the business is shown in the heavy investments they have

mad to develop the infrastructure and skill set. They have inaugurated a new R&D

facility in May 2004, which spans an area of 36,000 sq. feet. This multi-product

facility will cater to the highest developments standards (Camp, GLP and bio-safety

level 2a). They have significantly augmented our team to put more steam in our

development efforts.

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Dr. Reddys have a pipeline comprising several recombinant proteins in

Mammalian cell culture s well as E. Coil in various phases of development. The

portfolio consists of biogenetics and variants of current molecules

R&D Emerging Business

The research and development division, established in late 1980s is central to

the active pharmaceutical ingredients business. It contributes significantly to

Dr.Reddys business by creating intellectual property, providing research to reduce

the cost of production of their products and playing an active role in selection and

development of new products.

Strategic Business Units

Cheminor drug Ltd. Merged into Dr.Reddys laboratories in the year 2000-01,

restructured as a strategic business units.

Bulk

Branded formulations

Generics

R&D emerging business

Corporate center

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Awards and Recognition

Chemtech Cew Award 2000 Chemtech FoundationEntrepreneur of the year ERNST

& YOUNG2001 Healthcare & Life Sciences India

Best Employer Award 2002 Business TodayIndia Star 2002 Indian Institute of Packaging

World Star 2003 Award for Packaging ExcellenceMost Respected Company Award 2004 The Business WorldPHARMBIO Award 2004 Chemtech FoundationSodex Ho Pass for HR Excellence 2004 Asia Pacific CongressBest Employers in India 2004 HEWITT CNBC TV 18Indias Best Managed Company 2004 Business Today

Best Management Award 2005 Govt of A. P- labour departmentDH Avenue Award HR

Excellence2005 Center for Change Management

Pharma Excellence Award 2005 Leveraging Global OpportunityIBLA Indian Corporate Citizen of

the year 2005

Pharma Excellence Award 2006

Dun & Bradstreet American

Express Corporate Awards 20072007

Best Corporate Social

Responsibility Initiative 20072007 BSE & NASSCOM Foundation

Pharma Excellence Awards 2006-

072007

Category : The Lifetime

Achievement Award to Dr. K.

Anji Reddy, ChairmanPharma Excellence Awards 2006-

072007 The Indian Express

The Best Companies to Work for

in India Survey, 20072007

BT - Mercer - TNS Survey,

Rank 10Best Employers in India 2007

Award2007

Hewitt Associates & The

Economic TimesSouth Asian Federation of 2007 2nd Best Annual Report in the

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Accountants (SAFA) Award 2007 South Asian Region

Asia-Pacific HRM Congress 2007 2007Global HR Excellence Award for

Innovative HR Practices

Asia-Pacific HRM Congress 2007 2007

Recruitment and Staffing Best In

Class (RASBIC) Award - Best

Overall Recruiting and Staffing

Organization of the Year

Employer Branding Awards 2007 2007Excellence in Human Resources

Award - Talent ManagementBest Workplaces 2008 2008 The Econimoic TimesCorporate Citizen of the Year

2007-082008 The Economic Times

Global HR Excellence Awards

2008-092008 Asia Pacific HR Congress

HIGHLIGHTS

o Dr.Reddys is planning to provide a major thrust to its research &

development initiatives to benefit form opportunities in the biotechnology

sector.

o That the company is likely to discover a new molecule over next one-year

form its genomic initiative in the US.

o The company has formed a fully owned subsidiary called Aurigene

Discovery Technologies in India to focus on Proteomics ( specialized branch

genomics)

o Dr.Reddys is likely to invest Rs.25crores in this venture.

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The growth momentum was likely to be maintained through Dr.Reddys

moving up the value chain particularly in their US business with focus on branded

products.

Work Environment

Dr.Reddys work environment values creativity. They believe in teamwork,

delegation of responsibility, competitive challenges and growth. Dr.Reddys

work place strives to attract energies and retain the finest talent.

Continuously strive towards working with a multi faced and talented work

force that will Bering different perspectives to the table.

Provide an evenhanded opportunity foe individual development and

advancement based on merit.

Attract, develop and retain versatile achievers. Regardless of their nationalityand provide them with the resources to bring the best in them.

Build and organization that is continuously learning and changing to suit the

dynamic business environment.

CORPORATE GOVERNANCE

Dr.Reddys long standing commitment to high standards of corporate

governance and ethical business practices is a fundamental shared value off its board

of directors, management and employees. The companys philosophy of corporate

governance stems form its beliefs that timely disclosures, transparent accounting

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policies and a strong an independent board go a long way in preserving share holders

thrust wile maximizing long term share holder value.

Good corporate governance lows out of the commitment of the management

and the board of directors. When the commitment is backed by the fundamental

beliefs of maximizing value for stakeholders, transparent action in the business

values of corporate; and mutual trust amongst all constituents of the business, the

organization transforms itself into a higher plane of leadership.

The forward looking approach of Dr.Reddys has always helped it, in

achieving the desired results. This approach has transformed the companys culture

to one that is relentlessly focused on the speedy translation of scientific discoveries

into innovative products. Dr.Reddys commitment towards corporate governance

started well before law mandated such practices.

The company has identified and established its core purpose, mission and core

values for achieving corporate excellence. Dr. Reddys.

OTHER FACILITIES

Dr.REDDYS QUALITY POLICY

Customer Focus

We are committed delight customers by providing products and services

exceed expectations consistently in terms of quality, speed to market, delivery and

competitiveness.

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Execution Excellence

We will constantly improve systems, technologies, infrastructure, regulatory

compliance and technical support.

Competency Building

We will ensure high level of competency by attracting and retaining talented

personnel in all areas through continual education and development.

Beneficial Partnerships

We will develop and maintain mutually beneficial relationships with all

business associates and provide lasting value to all stakeholders.

Dr. REDDYS SHE

Safety Health Environment An integral part of Dr.Reddys business

As a responsible corporate citizen espoused to the cause of better quality life

Dr.Reddys accounts high priority to health, safety and environment. They are

committed to protecting the environment they operate in, and ensuring the health

and safety of their employees and stakeholders.

As evinced by the business council of sustainable development, approaching

environmental concerns form a business perspective would enable both industries

and government to orchestrate pragmatic policies towards their resolution. The

threat of global worming and reduction of carbon dioxide emission can be viewed as

a potential opportunity for energy conservation. The threat of stringent environment

standards can be seen as an apt occasion for harnessing Dr.Reddys resources and

managing our process in an optimal manner.

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Dr.Reddys see statutory compliance as a minimum requirement and not an

end in itself. They intend to drive improvement in all areas impacting SHE concerns

on an ongoing basis. Their actions in finding technological solutions, rigorously

tracking performance, continuous education and celebrations of successes are all

designed towards this end. In face SHE thinking has become part of the companys

fabric and has been incorporated into everything Dr.Reddys do right from brew

product development.

Dr.Reddys people now see SHE as an integral part of their job on an everyday

business, and the motto is REDUCE, RECOVER, RECYCLE, REUSE.

Dr.Reddys not only treat SHE as an important instrument of building trust between

their various stakeholders and them, Dr.Reddys actually consider being green as a

sustainable, long- term competitive edge for their business.

1.1 Inventory Management

The term inventory can be defined as tangible property held:

For sale in the ordinary course of business

In the process of production for such sale

For consumption in the production process or in the rendering of

services.

In manufacturing firms, items in inventory are called stocks. They are raw

materials, work-in-progress and finished goods and supplies. Inventory control

refers to those activities, which maintain stock at a desired level.

TYPES OF INVENTORIES:

Inventories play a major role in a business or company depending on nature of

the business. The inventories may be classified as under.

(i) Raw materials.

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The raw materials include the materials, which are used in the production

process, and every manufacturing firm has to carry certain stock of raw materials in

stores. These units of raw materials are operations. Inventory of raw materials are

held to ensure that the production process is not interrupted by storage of these

materials. Amount of raw materials to be kept by a firm depends upon number of

factors, including the speed with which raw materials can be ordered and received.

Its purpose is to uncouple the production function from the purchasing function i.e.

to make these two functions independent of each other sot that delay in procurement

of raw materials do not cause production delays and the firm can satisfy its need for

raw-materials out of the inventory lying in the stores.

(ii) Work in process / progress:

It refers to the raw materials engaged in various phases of

production process. The degree of completion may be varying for

different units some units may be 40% finished, or some other 90%

completed. The value of work in progress involves material costs, the

direct wages and expenses already incurred and the overheads if any. So,

work in progress inventory contains partially produced or completedgoods. The purpose of work-in-progress inventory is to uncouple the

various operations in the production process, so that machine failures and

stoppage in operations will not affected by one another.

(iii) Finished Goods:

In trading firm purchases are made where as in the manufacturing firm

produce or process the goods. However, it may be. These are goods that are either

being purchased by the firm or are being produced or processed in the firm. These

are just ready for sale to customers. Inventory of finished goods arise because of the

time involved in production process and to meet customers demand promptly. If the

firms do not maintain a sufficient finished goods inventory, they run the risk of

losing sales due to customer dissatisfaction. The purpose of finished goods inventory

is to uncouple the production and sale can be made directly out of inventory.

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Valuation of Inventory:

The methods of valuing inventory are combination of the actual cost and

replacement cost plans. The chief advantage of the cost or net realizable value rule

is that it is conservative. Hence the methods of valuation of inventory are quite

independent of systems of mincing.In balance sheet closing stock is shown under current assets and is also

credited to manufacturing or trading accounts. The inventories are valued on the

basis as follows.

(i) Cost of raw materials in stock may include freight charges and

carrying cost. But such cost should not exceed market price,

(ii) Work in -process is generally valued at cost, which includes cost of

materials, labor. And the proportionate factory overhead, as it is reasonable

according to degree of completion,

(iii) Cost of finished goods wound normally to be total or full cost it

includes prime cost plus appropriate amount of the overhead. Selling anddistribution cost is deducted on the other hand work in progress may be

valued at work in progress may be valued at work cost, marginal cost, prime

cost or, even at direct materials,

Valuation of Inventories at the Division

(As well as whole DRL)

Indian GAAP US GAAP

Inventories are valued at the lower of Cost of Net realizable values

Inventories are stated at lower of Cost or Market values.

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Issue materials and supplies for use upon presentation of

authorized requirement.

Record quantities received and issued on bin lards or stock

ledger cards consisting the perpetual inventory records.

Production departments :

Make out materials requirements note i.e., of requisite quantity and quality of

materials at the right moment so the all materials may be available without delay

on production.

Check and verify that the materials of requisite quantity and quality have been

received and charged to production.

Keep proper records of materials received and their progress through different

operations or progress.

Prepare materials return note for excess materials.

Prepare materials transfer note to cover any transfer of materials.

Inventory Control Department :

In many is a subdivision of the cost accounting department, although in many

concerns, it is a part of the stores keeping department.

It keeps perpetual inventory records.

Adjust the stock on receipt of the property authorized adjustment notes.

Prepare weekly or monthly, statements of receipts, issue, balance and averageconsumption of materials both in terms of quantity and value.

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Chapter-IV DATA ANALYSISDATA ANALYSIS

ANDAND

INTERPRETATIONINTERPRETATION

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ABC Analysis

ABC analysis is a technique of inventory controlling based on their value,significance and quantities. It is properly known as Always Better Control. It is

also known as Control Importance and Exception. It is based on the concept of

Selective Inventory Management.

It is based on proposition that

(ii) Managerial items and efforts are scare and limited

(iii) Some items of inventory are more important than others.

ABC Analysis classifies various inventory into three sets or groups of priority

and allocate managerial efforts in proportion of the priority the most important item

are classified into class-A, those of intermediate importance are classified as class-

B and remaining items are classified into class-C.

The Financial manager has to monitor the items belonging to monitor the

items belonging to different groups in that order of priority and depending upon the

consumptions.

The items with the highest value is given top priority and soon and are more

controlled then low value item. The re-rational limits are as follows:

Category % of items % of total materials

A 5-10 70-85B 10-20 10-20

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C 70-85 5-10

Procedure:

(i) Items with the highest value is given top priority and soon.

(ii) Thereafter cumulative totals of annual value of consumption are expressed

as percentage of total value of consumptions.

(iii) Then these percentage values are divided into three categories.

ABC analysis helps in allocating managerial efforts in proportion to

importance of various items of inventory.

INVENTORY TURNOVER RATIO

What it is:

This ratio how often a firms inventory turns over during the course of theyear. Because inventories are the least liquid form of asset, a high inventory turnover

ratio is generally positive. On the other hand, an unusually high ratio compared to

the average for the industry could mean a business is losing sales because of

inadequate stock on hand.

When to use it:

If a firms business has significant assets tied up in inventory, tracking its

turnover is critical to successful financial planning. If inventory is turning too

slowly. It could indicate that it may be hampering the firms cash flow. Because this

ratio judges annual inventory turns, it is usually conducted once a year.

The formula: Cost of goods sold

Average value of Inventory

Table:-5.1

INVENTORY TREND WITH RESPECT TO TURNOVER

YEAR MARERIAL

INVENTORY

PRODUCTION

INVENTORY

ENGINEERING

INVENTORY

TOTAL

INVENTORYTURNOVER

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2004-2005 53657482 127667802 3700516 185025800 972625415

2005-2006 59247801 148119504 4231986 211599291 1081139341

2006-2007 81485686 193879736 5619702 280985124 1976597554

2007-2008 84068811 210172029 6004915 300245755 1600863896

2008-2009 77460244 164828669 6016084 248304997 1580000000

Source:- Data is collected from annual reports of the company

TOTAL INVENOTY = MATERIAL INVENTORY + PRODUCTION INVENTORY+ENGINEERING INVENTORY

SHOWS THE VARIOUS LEVELS OF INVENTORIES

Table:-5.2

MATERIAL INVENTORY


YEAR MARERIALINVENTORY

2004-2005 53657482

2005-2006 59247801

2006-2007 81485686

2007-2008 84068811

2008-2009 77460244

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The above table 5.2 shows us the various levels of inventories which are used

in Dr.REDDYSS LAB (UNIT-V TH BLOCK) for the five year period.

SHOWS THE VARIOUS LEVELS OF MATERIAL INVENTORY

M A R E R IA L IN V E

5 3 6 5 7 45 9 2 4 7 8

8 1 4 8 5 6 8 4 0 6 8 87 7 4 6 0 2

0

1 0 0 0 0 0 0 0

2 0 0 0 0 0 0 0

3 0 0 0 0 0 0 0

4 0 0 0 0 0 0 0

5 0 0 0 0 0 0 0

6 0 0 0 0 0 0 0

7 0 0 0 0 0 0 0

8 0 0 0 0 0 0 0

9 0 0 0 0 0 0 0

2 0 0 4 - 2 0 0 52 0 0 5 - 2 0 0 62 0 0 6 - 2 0 0 72 0 0 7 - 2 0 0 82 0 0 8 - 2 0 0 9

M A R E R IAIN V E N TO

Chart-5.1

The above chart 5.1 shows us a clear picture of the various levels of material

inventories which are used in Dr.REDDYSS LAB (UNIT-V TH BLOCK) for the

five year period. Compared to 2004-2005, material inventory increased by year

when it comes to 2008-2009.

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Table:-5.4

ENGINEERING INVENTORY


SHOWS THE VARIOUS LEVELS OF ENGINEERING INVENTORY

ENGINEERING INVENTORY

37005164231986

56197026004915 6016084

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

ENGINEERING

INVENTORY

Graph-5.3

The above graph5.3 shows us a clear picture of the various levels of

Engineering inventories which are used in Dr.REDDYSS LAB (UNIT-IV TH

BLOCK) for the five year period. Compared to 2004-2005, engineering inventory

increased by year when it comes to 2008-2009.

YEAR ENGINEERING

INVENTORY

2004-2005 3700516

2005-2006 4231986

2006-2007 561970202007-2008 6004915

2008-2009 6016084

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Table:-5.5


YEAR TOTAL

INVENTORYAVERAGE

INVENTORY TURNOVER

INVENTORYTURNOVER

RATIO

2004-2005 185025800 185025800 972625415 6.32

2005-2006 211599291 198312546 1081139341 5.45

2006-2007 280985124 246292208 1976597554 8.03

2007-2008 300245755 290615400 1600863896 5.51

2008-2009 248304997 274275377 1580000000 5.76


PREVIOUS YEAR + PRESENT YEAR AVG. INVENTORY = -----------------------------------------------------

2

INVENTORY TURNOVER RATIO TURNOVER / AVG. INVENTORY

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SHOWS THE VARIOUS LEVELS OF TURNOVER INVENTORY RATIO

Graph-5.4

The above graph5.4 shows us a clear picture of the various levels of Inventoryturnover ratio in Dr.REDDYSS LAB (UNIT-IV TH BLOCK) for the five year

period. Compared to all years the inventory turnover ratio has increased as well asdecreased. This is due to various steps taken by the company.

TREND ANALYSIS:

The term trend is very commonly used in day to day operation. For example

we often talk of increasing the rising trend of share market, population, prices etc,

and trend also called secular or long term trends in the basic tendency of production,

sales, income, employment, etc, to grow or decline over a period of time .

FORMULA FOR CALCULATING TREND :

Y = a+bx

Ya = -----------

N

6.325.45

8.03

5.51 5.76

0

2

4

6

8

10

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009


INVENTORYTURNOVER RATIO

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XYb = -- ----------

X 2

Where,

X = years

Y= inventory

N = total no. of years

Table:-5.6

TREND ANALYSIS FOR INVENTORY

Table showing trend analysis for inventory

Year(X)

Inventory(Y)

X= (x-2007) X

2 XY TrendValue

2005 185025800 -2 4 -370051600 202191222

2006 211599291 -1 1 -211599291 223711708

2007 280985124 0 0 0 245232193

2008 300245755 1 1 300245755 266752679

2009 248304997 2 4 496609994 288273165

Y =1226160967 X = 0

X2 =10

XY=215204858


Equation Y = a + bx

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Ya = -----------

N

1226160967=--------------------

5

= 245232193.4

XYb = -- ----------

X 2

215204858= ----------------

10

= 21520485.8

Substitute these values into the equation Y = a + bx

= 245232193.4 + (21520485.8*3)

= 309793651

Table:-5.7

TABLE SHOWS THE ESTIMATED INVENTORY FOR THE COMING 5 YEARS

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Source:-Data iscollectedfromannualreportsof thecompany

The above table 5.7

shows a positive trendof the inventory for the coming five years.

SHOWS THE ESTIMATED INVENTORY FOR THE COMING 5 YEARS

Graph-5.5The above graph 5.5 shows a positive trend of the inventory for the coming five

years.

Table:-5.8

YEAR ESTIMATEDINVENTORY

2010 309793651

2011 331314137

2012 352834622

2013 374355108

2014 395875594

309793651331 314137352 834622

374 355108395 875594

0

50000000

100000000

150000000

200000000

250000000

300000000350000000

400000000

2010 2011 2012 2013 2014

ESTIMATED INVENTORY

ESTIMATEDINVENTORY

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= 1442245241+ ( 1734473725.5 *3)

= 1962587359

Table:-5.9

TABLE SHOWS THE ESTIMATED TURNOVER FOR THE COMING FIVE YEARS

YEAR ESTIMATED TURNOVER

2011 1962587359

2012 2136034731

2013 2309482104

2014 2482929476

2015 2656376849

Source:-Data is collected from annual reports of the company

The above table5.9 shows a positive trend of the turnover for the coming five

years.

SHOWS THE ESTIMATED TURNOVER FOR THE COMING FIVE YEARS

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Graph-5.6

The above graph5.6 shows a positive trend of the turnover for the coming five years .

19625873592136034731

23094821042482929476

2656376849

0

500000000

1000000000

1500000000

2000000000

2500000000

3000000000

2010 2011 2012 2013 2014

ESTIMATED TURNOVER

ESTIMATED

TURNOVER

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Chapter- v

FINDINGS ANDAND

SUGGESTION SUGGESTION

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The Project work was undertaken at Dr.Reddys Laboratories Ltd.,

Hyderabad. The company started functioning in 1984 mainly to enable a strong base

in the areas of Chornic, Acute and Management Speciality.

Dr.Reddys vision to become a discovery led global pharmaceutical

company. The company will achieve the vision by building.1) Work place that will attract, energize help and retain finest talent

available.

2) An organization culture that is reclentlenly focused on the speedily

translation of scientific, discoveries into innovative products that make

a significant difference in people lives.

3) A global marketing organization that understands and response to needsof customers.

Dr.Reddy Laboratories was founded by Dr Anji Reddy, an entrepreneur

scientist in 1984. The DNA of the company is drawn from its founder and his vision

to establish Indias first discovery led global pharmaceutical company. In fact, it is

the spirit of entrepreneurship that has shaped the company to become what is today.

The company is focused on creating and delivering innovative and quality products

to help people lead healthier lives.

Dr.Reddys Laboratories produce finished dosage form, active pharmaceutical

ingredients and critical care, diagnostics and biotechnology products. The basic

research program focuses on cancer, Diabetes, Bacterial infection and pain

Management.

DRL is the first Indian Company to out license an NCE molecule for clinical

trials. To strengthen their research arm, they have set up a research subsidiary,

Reddy US Therapeutics Inc., in Atlanta, USA.

The finished dosage have an enviable track record. Some of them such as

Nise, OMez, Enam, stamlo, stamlo Beta, Gaiety and ciprolet are among the top

brands in India, and many have become household names in near regulated countries

too. Indias pharmaceutical Industry presently as nearly 60,000 formulations and

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20,000 Manufacturers. The industry has a turn over of 145 billions with a growth

rate of 15%. The annual turnover of herbal medicine industry is about Rs.23 billion.

Indian pharmaceutical industry has emerged as a net foreign exchange earner.

The bulk industry in India was for many years. The monopoly of the

multinational corporation in India. It was in 1960s and 1970s that indigenous

facilities were set up in the public sector.

Indigenous production of these medicines however was started in 1901 with

the establishment of the Bengal chemical and pharmaceutical 1901 with the

establishment of the Bengal chemical and pharmaceutical work due to pioneering

efforts of Acharya P.C.ROY. The World of Medical treatment was witnessing some

significant developments like Lours Pasteurs discovery of pathogenic bacteria as

the cause of infectious diseases while the Indian pharmaceutical industry was in its

early stages.

Almost every business must stock goods to ensure efficient and smooth

running of its operation Decisions regarding how much and when to order are

typical of every inventory problem. The required demand may be satisfied bystocking once for the year or by stocking separately for every month. The two cases

correspond to either overstocking or under stocking. As overstocking requires

higher invested capital per unit time but with less frequent occurrences of shortages

and placement of orders under stocking on the other hand, decreases the invested

capital per unit time but increase the frequency of ordering as well as the risk of

running out of stock. The two extreme situations are costly. Decisions regarding thequality ordered of an appropriate cost function that balances the total costs resulting

from overstocking an under stocking.

FINDINGS

Inventory kept in the factory is based on the sales figures.

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Raw material inventory turnover ratio reveals a good raw material inventory

management.

The company has a good finished goods turnover ratio it is good for the

company.

The trend value for inventory shows the amount spend for inventory for the

next five years

The trend value for turnover shows the amount spend for inventory f or the

next five years.

The company has a computerized inventory system

The company implementing SAP system in analyzing the financial statements .

SUGGESTIONS

1. Finding of item that reached the reorder level and raises the procurement of

indent is done by the stores clerk but this can be done by the system itself by

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setting the appropriate system software programmed. It will reduce the work

load.

2. Simple modification procedure may exist to correct the occurrence in the

existing system.

3. Conversion period of raw materials to finished goods in varying from time to

time. This variation can be reduced by better coordination of the activities of

all departments concerned.

4. The ABC analysis used in monitoring and control of inventories is not revised

and reviewed periodically. Therefore, there is a scope for revision of the

method.

5. Proper planning in advance is suggested for frequency of movement of

commonly used inventories.

Conclusion

Dr.Reddys Laboratories produce finished dosage form, active pharmaceutical

ingredients and critical care, diagnostics and biotechnology products. The basic

research program focuses on cancer, Diabetes, Bacterial infection and pain

Management.

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BIBLIOGRAPHY

BIBLIOGRAPHY

Referred following standard texts and websites:

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