A

PROJECT REPORT

ON

“INVENTORY CONTROL: A CASE STUDY WITH REFERENCE TO

UDAIPUR BEVERAGE LTD. JABALPUR (M.P)”

COCA COLA

Submitted By

REENI DAS

Under the guidance of

PROF. T SRINIVAS

Submitted To

“SAVITRIBAI PHULE PUNE UNIVERSITY”

In partial fulfillment of the requirement for the award of the degree of Master of Business Administration (MBA)

Through

ASM’s

Institutes of Business Management & Research (I.B.M.R),

Chinchwad, Pune. 411019.

2015-2017

DECLARATION

I REENI DAS bearing hereby declare that the project entitled “INVENTORY

CONTROL: A CASE STUDY WITH REFERENCE TO UDAIPUR BEVERAGE LTD.

COCA-COLA JABALPUR” has been prepared by me towards the partial fulfillment of the

requirements for the Master of Business Administration (MBA) program under the guidance

of “Mr. S.K Thakur”

I also declare that this project report is my original work and has not previously

formed the basis for the award of any degree, diploma, associate ship, fellowship or other

similar titles of any other university.

Date: SIGNATURE

Place: Pune REENI DAS

ACKNOWLEDGEMANT

I would like to take this opportunity to thank all the people who have extended their

support and guidance for making this project, an enriching and memorable experience for me.

I would like to express my sincere gratitude towards my Company guide Mr. S.K

THAKUR for giving proper direction and helping at every stage of my project. His timely co-

operation and valuable suggestions helped me to understand the subject well and undertake the

proposed study in fulfilling manner.

I thank our Director, Dr. ASHA PASHPANDAY MA’AM for giving me such a

wonderful opportunity.

I am deeply indebted to my project guide PROF. T SRINIVAS SIR, for directing

me, providing clarity, information and guidelines. His suggestions have always valued to

each stage of these project.

Lastly I would like to thank executives working in the various Department of the

organization for their timely help and support in completing the project. Last but not the least;

I would like to take this opportunity to thank all those who contributed directly and indirectly

through suggestions, thoughts and their presence during the completion of the project.

INDEX

SR. NO. CONTENTS PAGE NO.

1 EXECUTIVE SUMMARY

2 ORGANISATION PROFILE

3 OUTLINE OF PROBLEM

4 RESEARCH METHODOLOGY &DATA ANALYSIS

6 KEY LEARNING

7 CONTRIBUTION TO THE ORGANISATION

8 REFERENCE & WEB SITE DETAIL

9 ACTIVITY CHART

EXECUTIVE SUMMARY

The project titled Study on Inventory Control was carried out in bottling plant named

UDAIPUR BEVERAGE LIMITED COCA-COLA JABALPUR. The project was about how

to control the inventories effectively and efficiently within the organization. Inventory is the

raw materials, work-in-process products and finished goods that are considered to be the

portion of a business's assets that are ready or will be ready for sale. The turnover of

inventory represents one of the primary sources of revenue generation. About 70 percent part

of working capital is invested in inventories. It is necessary for every management to give

proper attention to inventory management. A proper planning of purchasing, handling,

Storing and accounting should form a part of inventory management.

This research was to know about the inventory management and its effective control

through various techniques in Udaipur Beverage Limited Coca Cola. Inventory control

techniques represent the operational aspect of inventory management and help realize the

objectives of inventory management and control. Several techniques of inventory control are

in use and it depends on the convenience of the firm to adopt any of the techniques.

Techniques are EOQ, ABC Analysis, VED, FSN, HML, and INVENTORY TURNOVER

RATIO.

Inventory control is primarily about specifying the size and placement of stocked goods.

Inventory control is required at different location within a facility or within multiple locations

of supply network to protect the regular and planned course of production against the random

disturbance of running out of material or goods. Data was interpreted using ABC Analysis

and Inventory Turnover Ratio and it was interpreted that the “C” items should be purchased

in less quantity as they are moderately important.

The study may be concluded that the existing system of inventory management is very

much satisfactory and needs improvement in all dimensions. From the study it may be

concluded that the inventory management system of the company is good because they

follow the scientific calculations. From this study it can concluded that the inventory

management and other analysis will be helpful in reducing the administration costs and result

in better planning and improvement in turnover. Managing A, B and C from different

individual postings are helpful to manage and handed effectively and efficiently.

INTRODUCTION

TYPE PUBLIC (NYSE:KO)INDUSTRY BEVERAGES

FOUNDED May 8 1886, 130 Years Ago.

HEADQUATERS ATLANTA, GEORGIA, U.S.AAREA SERVED Worldwide Except Cuba & Korea.

CHAIRMAN MUHTAR KENTREVENUE US$ 44.294 billion (2015)

OPERATING INCOME US$ 8.728 billion (2015)NET INCOME US$ 7.351 billion (2015)

TOATL ASSETS US$ 90.093 billion (2015)TOTAL EQUITY US$ 25.554 billion (2015)

Employees 123200 (2016)

The Coca-Cola Company is the world’s number one maker of soft drinks, selling 1.3 billion beverage servings every day. Coca-Cola’s red and white trademark is probably the best-known brand symbol in the world. Headquartered since its founding in Atlanta, Coca-Cola makes four of the top five soft drinks in the world, Coca-Cola at number one and Diet Coke, Fanta and Sprite at numbers three through five. The company also operates one of the world’s most pervasive distribution systems, offering its nearly 400 beverage products in more than 200 countries worldwide. Nearly 70 percent of sales are generated outside North America with revenues breaking down as follows:

COUNTRIES REVENUE GENERATED (%)North America 30Europe, Eurasia & The Middle East 31Asia 24Latin America (including Mexico) 10Africa 4

The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand name. The most common of these is Diet Coke, with others including Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla, and special versions with lemon, lime, or coffee. In 2013, Coke products could be found in over 200 countries worldwide, with consumers downing more than 1.8 billion company beverage servings each day.

Based on Interbrand's best global brand study of 2015, Coca-Cola was the world's third most valuable brand.

HISTORY

Mission & Vision of Coca Cola:

Mission: - To be the best Sales & Distribution Company for Consumer products in India

connecting people ant the products of their Choice.

Vision :- Enriching lives across the country by building a Consumer- Driven, Consumer

Focuses’, Eco Friendly, Profitable, Sustainable and Socially Business in India.

Confederate Colonel John Pemberton who was wounded in the American Civil War,

became addicted to morphine, and began a quest to find a substitute for the dangerous opiate.

The prototype Coca-Cola recipe was formulated at Pemberton's Eagle Drug and Chemical

House, a drugstore in Columbus, Georgia, originally as a coca wine. He may have been

inspired by the formidable success of Vin Marini, a French coca wine.

Charley Pemberton's record of control over the "Coca-Cola" name was the underlying

factor that allowed for him to participate as a major shareholder in the March 1888 Coca-

Cola Company incorporation filing made in his father's place. Charley's exclusive control

over the "Coca Cola" name became a continual thorn in as a Candler's side. Candler's oldest

son, Charles Howard Candler, authored a book in 1950 published by Emory University. In

this definitive biography about his father, Candler specifically states: “on April 14, 1888, the

young druggist [As a Griggs Candler] purchased a one-third interest in the formula of an

almost completely unknown proprietary elixir known as Coca-Cola."

The deal was actually between John Pemberton's son Charley and Walker, Candler

& Co. – with John Pemberton acting as cosigner for his son. For $50 down and $500 in 30

days, Walker, Candler & Co. obtained all of the one-third interest in the Coca-Cola Company

that Charley held, all while Charley still held on to the name. After the April 14 deal, on

April 17, 1888, one-half of the Walker/Dozier interest shares were acquired by Candler for an

additional $750.

21st century:

2005- On July 5, it was revealed that Coca-Cola would resume operations in Iraq for the first

time since the Arab League boycotted the company in 1968.

2007- In April, in Canada, the name "Coca-Cola Classic" was changed back to "Coca-Cola".

The word "Classic" was removed because "New Coke" was no longer in production,

eliminating the need to differentiate between the two. The formula remained unchanged. In

January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16-US-fluid-

ounce (470 ml) bottles sold in parts of the southeastern United States. The change is part of a

larger strategy to rejuvenate the product's image. The word "Classic" was removed from all

Coca-Cola products by 2011.

2009- In November, due to a dispute over wholesale prices of Coca-Cola products, Costco

stopped restocking its shelves with Coke and Diet Coke for two months; a separate pouring

rights deal in 2013 saw Coke products removed from Costco food courts in favor of Pepsi.

Some Costco locations additionally sell imported Coca-Cola from Mexico with cane sugar

instead of corn syrup from separate distributors. Coca-Cola introduced the 7.5-ounce mini-

can in 2009, and on September 22, 2011, the company announced price reductions, asking

retailers to sell eight-packs for $2.99. That same day, Coca-Cola announced the 12.5-ounce

bottle, to sell for 89 cents. A 16-ounce bottle has sold well at 99 cents since being re-

introduced, but the price was going up to $1.19.

2012- Coca-Cola resumed business in Myanmar after 60 years of absence due to U.S.-

imposed investment sanctions against the country. Coca-Cola's bottling plant will be located

in Yangon and is part of the company's five-year plan and $200 million investment in

Myanmar. Coca-Cola with its partners is to invest USD 5 billion in its operations in India by

2020. In 2013, it was announced that Coca-Cola Life would be introduced in Argentina that

would contain stevia and sugar.

2014- In Augustthe Company announced it was forming a long-term partnership with

Monster Beverage, with the two forging a strategic marketing and distribution alliance, and

product line swap. As part of the deal Coca-Cola was to acquire a 16.7% stake in Monster for

$2.15 billion, with an option to increase it to 25%.

GEOGRAPHIC SPREAD:

Since it announced its intention to begin distribution in Burma in June 2012, Coca-

Cola has been officially available in every country in the world except Cuba and North

Korea. However, it is reported to be available in both countries as a grey import.

Coca-Cola has been a point of legal discussion in the Middle East. In the early 20th

century, a fatwa was created in Egypt to discuss the question of "whether Muslims were

permitted to drink Coca-Cola and Pepsi cola." The fatwa states: "According to the Muslim

Hanefite, Shafi'ite, etc., the rule in Islamic law of forbidding or allowing foods and beverages

is based on the presumption that such things are permitted unless it can be shown that they

are forbidden on the basis of the Qur'an." The Muslim jurists stated that, unless the Qur’an

specifically prohibits the consumption of a particular product, it is permissible to consume.

Another clause was discussed, whereby the same rules apply if a person is unaware of the

condition or ingredients of the item in question.

LOGO DESIGN:

The Coca-Cola logo was created by John Pemberton's bookkeeper, Frank Mason

Robinson, in 1885. Robinson came up with the name and chose the logo's distinctive cursive

script. The writing style used, known as Spenserian script, was developed in the mid-19th

century and was the dominant form of formal handwriting in the United States during that

period.

Robinson also played a significant role in early Coca-Cola advertising. His

promotional suggestions to Pemberton included giving away thousands of free drink coupons

and plastering the city of Atlanta with publicity banners and streetcar signs.

COCA COLA IN INDIA

Coca-Cola came to India in the year 1956. Since India had not any foreign exchange

act, Coca-Cola made huge money operating under 100% foreign equity. Indian foreign

exchange act was implemented in the year 1974 during Indira Gandhi time. The foreign

exchange act stated that foreign companies selling consumer goods must invest 40% of its

equity stake in India in its Indian associates. Coca-Cola agreed with investing 40% foreign

equity but stated that they would still hold full power in technical and administrative units

with no local participation allowed.

This demand was against the foreign exchange act. The government instructed Coca-

Cola to either write up a new plan or to leave the country. In 1976 Indira Gandhi called for

elections and all of the other political parties formed one party in her opposition. They called

themselves the Janta Party (Public Party). The Janta Party came into the power in 1977 and

stressed that Coca-Cola should either accept the foreign exchange act or leave the country.

The Coca-Cola Company (TCCC) is the world’s largest beverage company, refreshing

consumers with more than 500 sparkling and still beverage brands. Globally, TCCC is the

No. 1 provider of sparkling beverages, ready to drink coffees, juices and juice drinks. While

we are simply viewed as ‘Coca-Cola’, globally, the Coca-Cola System operates through

multiple local channels; the ‘Coca-Cola System’ is not a single entity from a legal or

managerial perspective. TCCC re-entered the Indian markets post the economic liberalization

of 1991 and established Coca-Cola India Private Limited (CCIPL) as its wholly-owned

subsidiary in 1992.

COMPETITORS OF COCA-COLA

Pepsi, the flagship product of PepsiCo, The Coca-Cola Company's main rival in the

soft drink industry, is usually second to Coke in sales, and outsells Coca-Cola in some

markets. RC Cola, now owned by the Dr Pepper Snapple Group, the third largest soft drink

manufacturer, is also widely available.

Around the world, many local brands compete with Coke. In South and Central

America Kola Real, known as Big Cola in Mexico, is a growing competitor to Coca-Cola. On

the French island of Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a

growing competitor to Coca-Cola. In the French region of Brittany, Breizh Cola is available.

In Peru, Inca Kola outsells Coca-Cola, which led The Coca-Cola Company to purchase the

brand in 1999. In Sweden, Julmust outsells Coca-Cola during the Christmas season. In

Scotland, the locally produced Irn-Bru was more popular than Coca-Cola until 2005, when

Coca-Cola and Diet Coke began to outpace its sales. In the former East Germany, Vita Cola,

invented during Communist rule, is gaining popularity.

In India, Coca-Cola ranked third behind the leader, Pepsi-Cola, and local drink Thums

Up. The Coca-Cola Company purchased Thums Up in 1993. As of 2004, Coca-Cola held a

60.9% market-share in India. Tropicola, a domestic drink, is served in Cuba instead of Coca-

Cola, due to a United States embargo. French brand Mecca Cola and British brand Qibla Cola

are competitors to Coca-Cola in the Middle East.

In Turkey, Cola Turkey, in Iran and the Middle East, Zamzam Cola and Paris Cola, in

some parts of China, China Cola, in Slovenia, Cockta and the inexpensive Mercator Cola,

sold only in the country's biggest supermarket chain, Mercator, are some of the brand's

competitors. Classiko Cola, made by Tiko Group, the largest manufacturing company in

Madagascar, is a serious competitor to Coca-Cola in many regions. Laranjada is the top-

selling soft drink on Madeira.

INTRODUCTION TO JABALPUR UNIT

UNIT DESCRIPTION

BUSINESS TYPE : Importer / Manufacturer / Supplier

YEAR ESTABLISHED : 2005

PRODUCTS MANUFACTURING : Aerated soft drinks

PRODUCTS SUPPLYING : Beverages.

DIRECTOR’S NAME : MR. VIKAS MITTAL.

NUMBER OF EMPLOYEES : 150

UBL (Udaipur Beverages Ltd), Jabalpur was established in the year 2005.The plant is

located approximately 15 km from Jabalpur City. The main business of the company is to

produce and distribute products of the Coca-Cola Company. The brands being produced are

200 ml & 300 ml Fanta Orange, Thums Up, Coke, Sprite, Limca, Maaza and Kinley Soda

Returnable Glass Bottles. 600 ml, 1250 ml & 2000 ml PET of Fanta Orange, Thums Up,

Coke, Sprite, Limca. Kinley Soda in 600 ml PET and TFA Maaza in 100 ml pocket pouch.

The distribution includes the products produced at UBL, Jabalpur and outsourced products,

which are primarily, packaged drinking water (Kinley Bottled Water), Non-Carbonated

Beverages (Maaza mango).

The plant has 4 manufacturing line located in an area of 15 acres. 1st line for CSD-

RGB manufacturing of 400 BPM and 2nd 180 BPM (for 600 ml & 1250 ml) & 150 BPM for

2000 ml CSD-PET line , 3rd Maaza line with the capacity of 350 BPM of 200 and 250 ml and

4th line of TFA Maaza with the capacity of 250 pouches per minute. There are 15 sales

territory of UBL, Jabalpur & surrounding areas Chindwara, Balaghat, Mandla, Sidhi, Rewa,

Panna, Chhattarpur, Tikamgarh, and Satna, Katni.

The company is headed by Executive Director who in turn leads a team of

Departmental Heads i.e. Plant Manager, Quality Assurance Manager, Sales Manager, Finance

and HR Manager & Production & Maintenance Manager.

AREA COVERED

Total site area 14 Acre

Built-up area 05 Acre

Paved area 03 Acre

The plant located 15 km from Jabalpur City. Plant has one CSD RGB line of 400

BPM and can produce 1000 c/s per hour and one PET line of 180 BPM can produce 450, 900

and 1200 c/s per hour of 600 ml, 1250 ml and 2000 ml respectively and one RGB Maaza

Line of 350 BPM producing 875 c/s per hour and one TFA Maaza line can produce 15000

pouches of 100 ml per hour.

Plant produces 7 flavors for Coca Cola India i.e. Coke, Fanta, Thums Up, Sprite,

Limca, Kinley Soda and Maaza. The director looks after all functional departments i.e. sales,

production, finance and accounts, purchase, and administration. Every department head

report directly to the director and are responsible of their working. The plant engineer is the

head of production department and looks after bottling process inspection, storage of raw

material, maintenance etc.

The products manufactured by Udaipur Beverages Limited are as follows:

Coca Cola.

Fanta.

Thums up.

Limca.

Sprite.

Kinley Soda.

ORGANIZATIONAL STRUCTURE

DIRECTORS

SWOT ANALYSIS

DIRECTORS

H.RPRODUCTION

I.TSALESFINANCE

Mr. R.P Nair

Finance Manager

Mr.V.N Rai

Production Manager

Mr. Deepak

General Manager

Ms. Neera Sharma

HR Manager

Mr. Vijay Dasai

I.T Manager

PRESIDENT OF COCO-COLA

SWOT stands for Strengths Weakness Opportunities Threats. I have here SWOT analysis of Coca Cola, which would be highly beneficial for you to know about one of the Leading Beverage Manufacturer in World.

STRENGTHS The Coca Cola sells beverages in around 200 countries. Coca Cola have number of variants. It has brand awareness in the world. Coca Cola Logo is very famous among the people. Strong marketing and advertising. People like the taste and quality of Coca Cola around the world. Strong Financial reserve and returns.

WEAKNESSES Consumers are not being able to differentiate among few brands such as Coca Cola

Zero and Diet. It high relies on Coca Cola drink only. Most of the beverages supply is restricted to few countries. Lack of innovation.

OPPORTUNITIES Innovation Overtake competitors Launch healthy drinks Increase mineral water sales. Increase Awareness programs Launch other coca cola variants in the untapped countries.

THREATS Intense competition from Pepsi. New entrants are gaining market share. Decrease in Coca Cola brand value in last few years. It has some negative health effect. Ongoing recession Economy instability in third world countries. Political instability in few countries.

REVIEW OF LITERATURE

INVENTORY CONTROL

Inventory is a list for goods and materials, or those goods and materials themselves, held

available in stock by a business. It is also used for a list of the contents of a household and for

a list for testamentary purpose of the possessions of someone who has died. In accounting

inventory is considered an asset

TYPES OF INVENTORIES

Inventories play a major role in a business or depending on nature of the businesses. The

inventories may be classified as under.

1. Raw material.

2. Work in progress.

3. Packaging material.

4. Finished Goods.

RAW MATERIALS:-

Raw materials are those input that are converted into finished product through the

manufacturing process. Raw materials inventories are those units which have been purchased

and stored for future productions. Materials and components scheduled for use in making a

product. These are the basic inputs, which are converted into finished products through

manufacturing process. Raw material inventories are those units, which have been purchased

and stored for future production.

WORK IN PROGRESS:-

These inventories are semi manufactured products. They represent products that

need more work before they become finished products for sales. Materials and components

that have begun their transformation to finished goods. Materials issued to the stop floor,

which have not yet become finished products they are value added materials to the extent of

labor cost incurred.

PACKAGING MATERIAL:-

Packaging material include those items which are used for packaging of Coca cola,

Sprit, Limca, Fanta etc products.

FINISHED GOODS:-

Finished goods inventories are those completely manufactured products which are

ready for sale. Stock of raw materials and work in progress facilitate production. While stock

of finished goods is required for smooth marketing operation. Thus inventories serve as a link

between the production and consumption of goods.

The level of four kinds of inventories for a firm depends on the nature of its

business. A manufacturing firm will have substantially high level of all kinds of inventories

while a retail or wholesale firm will have a very high and no raw material and work in

progress inventories. Within manufacturing firm there will be differences. Large heavy

engineering companies produce long production cycle products, therefore they carry large

inventories. On the other hand inventories of a consumer product company will not be large

because of short production cycle and fast turn over.

Inventory generally refers to the material in stock. It is also called the idle resource of a

company. Inventories represent those items which are either stocked for sale or they are in the

process of manufacturing or they are in the form of materials which are yet to be utilized.

Inventory is a detailed list of those movable items which are necessary to manufacture a

product and to maintain the equipment and machinery in good working order.

If a manager effectively controls these three types of inventory, capital can be released that

may be tied up in unnecessary inventory, production control can be improved and can protect

against obsolescence, deterioration and/or theft.

The reasons for inventory control are:

(i) Helps balance the stock as to value, size, color, style, and price line in proportion to demand or sales trends.

(ii) Help plan the winners as well as move slow sellers.

(iii) Helps secure the best rate of stock turnover for each item.

(iv)Helps reduce expenses.

(v) Helps maintain a business reputation for always having new, fresh merchandise in wanted sizes and colors.

Inventory management involves a retailer seeking to acquire and maintain a proper

merchandise assortment while ordering, shipping, handling, and related costs are kept in

check. It also involves systems and processes that identify inventory requirements, set targets,

provide replenishment techniques, report actual and projected inventory status and handle all

functions related to the tracking and management of material. This would include the

monitoring of material moved into and out of stockroom locations and the reconciling of the

inventory balances. It also may include ABC analysis, lot tracking, cycle counting support,

etc. Management of the inventories, with the primary objective of determining/controlling

stock levels within the physical distribution system, functions to balance the need for product

availability against the need for minimizing stock holding and handling costs.

Provides Prompts and Proper service to

all Concern Department and

Units.

Control of inventory, which typically represents 45% to 90% of all expenses for business, is

needed to ensure that the business has the right goods on hand to avoid stock-outs, to prevent

shrinkage (spoilage/theft), and to provide proper accounting. Many businesses have too much

of their limited resource, capital, tied up in their major asset, inventory. Worse, they may

have their capital tied up in the wrong kind of inventory. Inventory may be old, worn out,

shopworn, obsolete, or the wrong sizes or colors, or there may be an imbalance among

different product lines that reduces the customer appeal of the total operation.

Valuation of inventory is normally stated at original cost, market value, or current

replacement costs, whichever is lowest. This practice is used because it minimizes the

possibility of overstating assets.

Objectives:

INVENTORY CONTROL

Focuses on Location, Storage, Recording and Accounting of

Inventory.

Avoids Over – Stocking or Under – Stocking of Raw

Material.

Helps to Supply the Inventory to different

Departments and Units.

Helps to Maintain Inventories at Lowest

Cost.

Keeps a record of Inventory Issued to

Concerned Department.

Bifurcate High Value and Low Value Stock

of Goods.

The basic managerial objective of inventory control are two-fold; first the avoidance over-

investment or under-investment in inventories; and second, to provide the right quantity of

standard raw material to the production department at the right time. In brief the objectives of

inventory control may be summarized as follows:

A. Operating Objectives:

Ensuring Availability of Materials: There should be a continuous

availability of all types of raw material in the factory so that the production

may not be help up wants of any material. A minimum quantity of each

material should be held in store to permit production to move on schedule.

Avoidance of Abnormal Wastage: There should be minimum possible

wastage of materials while these are being stored in the go down or used in the

factory by the workers. Wastage should be allowed up to a certain level known

as normal wastage. To avoid any abnormal wastage, strict control over the

inventory should be exercised. Leakage, theft, embezzlements of raw material

and spoilage of material due to rust, bust should be avoided.

Promotion of Manufacturing Efficiency: If the right type of raw materials is

available to the manufacturing departments at the right time, their

manufacturing efficiency is also increased. Their motivation level rises and

morale is improved.

Avoidance of Out of Stock Danger: Information about availability of

materials should be made continuously available to the management so that

they can do planning for procurement of raw material. It maintains the

inventories at the optimum level keeping in view the operational requirements.

It also avoids the out of stock danger.

Better Service to Customers: Sufficient stock of finished goods must be

maintained to match reasonable demand of the customers for prompt

execution of their orders.

Highlighting slow moving and obsolete items of materials.

Designing poorer organization for inventory management: Clear cut

accountability should be fixed at various levels of organization.

B. Financial Objective:

Economy in purchasing: A proper inventory control brings certain

advantages and economies in purchasing also. Every attempt has to make to

effect economy in purchasing through quantity and taking advantage to

favorable markets.

Reasonable Price: While purchasing materials it is to be seen that right

quality of material is purchased at reasonably low price. Quality is not to be

sacrificed at the cost of lower price. The material purchased should be of the

quality alone which is needed.

Optimum Investing and Efficient Use of Capital: The basic aim of

inventory control from the financial point of view is the optimum level of

investment in inventories. There should be no excessive investment in stock

etc. Investment in Inventories must not tie up funds that could be used in other

activities. The determination of maximum and minimum level of stock attempt

in this direction.

Advantages of Inventory Control:

Scientific inventory control provides the following benefits:

1. It improves the liquidity position of the firm by reducing unnecessary tying up of capital in

excess inventories.

2. It ensures smooth production operations by maintaining reasonable stocks of materials.

3. It facilitates regular and timely supply to customers through adequate stocks of finished

products.

4. It protects the firm against variations in raw materials delivery time.

5. It facilitates production scheduling, avoids shortage of materials and duplicates ordering.

6. It helps to minimize loss by obsolescence, deterioration, damage, etc.

7. It enables the firms to take advantage of price fluctuations through economic lot buying

when prices are low.

Costs Associated With Inventory

Production Cost.

Capital Cost.

Ordering Cost.

Carrying Cost.

Shortage Cost.

Reasons For Holding Inventory:

To stabilize production.

To take advantage of price discounts.

To meet the demand during the replenishment period.

To prevent loss of orders.

To keep pace with changing market condition.

Motives of Holding Inventories.

The Transaction Motive Which Facilitates continuous production and timely

execution of sales orders.

The Precautionary Motive which necessities the holding of inventories for meeting

the unpredictable changes in demand and supplies of materials.

The Speculative Motive which includes keeping inventories for taking advantage of

price fluctuations, saving in re-ordering costs and quantity discounts etc.

Principles Of Inventory Control:

Inventory is only created by spending money for material and the labor and overhead

to process the material.

Inventory is reduced through sales and scrapping.

Accurate sales & production schedule forecasts are essential for efficient purchasing

handing & investment in inventory.

Management policies which are designed to effectively balance size and variety of

inventory with cost of carrying that inventory are the greatest factor in determining

inventory investment.

INVENTORY CONTROL – TERMINOLOGY

Demand:

It is the number of items per unit time. The demand may be either deterministic

or probabilistic in nature.

Order cycle:

The time period between two successive orders is called order cycle.

Lead time:

The length of time between placing an order and receipts of items is called lead

time.

Safety stock:

It is also called buffer stock or minimum stock. It is the stock or inventory

needed to account for delays in material supply and to account for sudden increase in

demand due to rush order.

Inventory turnover:

If the company maintains inventories equal to 3 months consumption. It means

the inventory turnover is 4 times a year i.e. the entire inventory is used up and

replaced 4 times a year.

Benefits of Inventory Control

The benefits of inventory control are:

Improvement in customer relationship because of the timely delivery of goods and

services.

Smooth and uninterrupted production and hence no stock out.

Efficient utilization of working capital.

Economy in purchasing.

Eliminating the possibility of duplicate ordering.

TECHNIQUES OF INVENTORY CONTROL

ECONOMIC ORDER QUANTITY

A decision about how much to order has great significance in Inventory management. The

quantity to be purchased should neither be small nor big because costs of buying and carrying

materials are very high. Economic order quantity is the size of the lot to be purchased which

is economically viable. This is the quantity of materials which can be purchased at minimum

costs. Generally economic order quantity is the point at which inventory carrying costs are

equal to order costs. In determining economic order quantity it is assumed that cost of

managing inventory is made up solely of two parts i.e. ordering cost and carrying cost.

One of the most important problems faced by the purchasing department is how much to

order at a time. Purchasing in large quantities involve lesser purchasing cost. But cost of

carrying them tends to be higher. Likewise if purchases are made in smaller quantities,

holding costs are lower while purchasing costs tend to be higher.

Hence, the most economic buying quantity or the optimum quantity should be determined by

the purchase department by considering the factors such as cost of ordering, holding or

carrying. This can be calculated by the following formula:

Q = √2AS/I

Where Q stands for quantity per order;

A stands for annual requirements of an item in terms of rupees;

S stands for cost of placement of an order in rupees; and

I stand for inventory carrying cost per unit per year in rupees.

Economic Order Quantity Assumes:

Demand rate is constant, uniform, recurring and known. Lead time is constant and known in advance. Price per unit of product is constant; no discounts are given for large orders. Inventory holding cost is based on average inventory. Ordering or setup costs are constant. All demands will be satisfied; no stock outs are allowed.

Economic Order Quantity

Annual Total Cost

Costs Annual Inventory Carrying Cost

Annual Ordering Cost

Q* Economic Order Quantity

Order Quantity

SAFETY STOCK

The safety stock is defined as “the additional stock of material to be maintained in order to meet the unanticipated increase in demand arising out of uncontrollable factors“.

Safety stock is comprised of the goods needed to be kept on the hand to satisfy consumer demand. Because demand is constantly in flux, optimizing the safety Stock levels is a challenge. However, demand fluctuation do not wholly dictate a company’s ability to keep the right supply on hand most of the time. Companies can use statical calculations to determine probabilities in demand.

Safety Stock = (Maximum Lead Time – Normal Lead Time) * Demand.

ORDERING COSTS

Ordering costs have to do with placing orders, receiving and storage. Transportation and invoice processing are also included. Information technology has proven itself useful in reducing these costs in many Industries. If the business is in manufacturing, then to production setup costs are considered instead.

COMMON INVENTORY VALUATION METHODS

The methods a company uses to value the costs of inventory have a direct effect on the business balance sheets, income statements and cash flows. Three methods are widely used to value such costs. They are First-in, First-Out (FIFO), Last-In First-Out (LIFO) and average cost. Inventory can be calculated based on the lesser of cost or market value. It can be applied to each item, each category or on a total basis.

ABC ANALYSIS

The inventory of an organization generally consists of thousands of items with varying prices, usage rate and lead time. It is neither desirable nor possible to pay equal attention of all items.

ABC (ALWAYS BETTER CONTROL) analysis is a basic analytical tool which enables management to concentrate its efforts where results will be greater. The concept applied to inventory is called as ABC analysis.

Statistics reveal that just a few items account for bulk of the annual consumption of the material. These are few items are called A class items which hold the key business. The other items known as B & C which are numerous in number but their contribution is less significant. ABC analysis thus tends to segregate the items into three categories A, B & C on the basis of their values. The categorization is made to pay right attention and control demanded by items.

This method is also known as ‘stock control according to value method’, ‘selective value approach’ and ‘proportional parts value approach’.

If this method is applied with care, it ensures considerable reduction in the storage expenses and it is also greatly helpful in preserving costly items.

FEATURES OF ABC ANALYSIS

A Class (High Value) B Class (Moderate Value) C Class (Low Value)

1. Tight control on stock levels.

2. Low safety stock.3. Ordered frequently.4. Individual posting in

stores.5. Weekly control

reports.6. Continuous effort to

reduce lead time.

1. Moderate control.

2. Medium.3. Less frequently.4. Individual.

5. Monthly Control.

6. Moderate efforts.

1. Less control.

2. Large.3. Bulk ordering.4. Collective posting.

5. Quarterly control.

6. Minimum efforts.

A Items B Items C Items0

5

10

15

20

25

30

35

40

45

50

Series 1

Series 1

ADVANTAGES OF INVENTORY

This approach helps the manager to exercise selective control & focus his attention only on a few items.

By exercising strict control on a class items the materials manager is able to show the results within a short period of time.

It results in reducer clerical costs, saves time and effort and results in better planning and control and increased inventory turnover.

ABC analysis thus tries to focus and direct the efforts based on the merits of the items and thus becomes an effective management control tool.

Assumptions of ABC Analysis:

Demand is known with certainty.

Demand is relatively constant over time.

No shortages are allowed.

Lead time for the receipt of orders is constant.

The order quantity is received at once.

VED ANALYSIS

Like ABC Analysis for classification of inventories there is an inventory management technique called VED. In VED analysis inventory items are classified depending upon their criticality states that whether the item of inventory is vital, or essential or desirable for the retail store. This classification of dividing inventory is known as VED analysis where V stands for Vital, E stands for Essential and D stands for Desirable items.

FSN ANALYSIS

This classification works like:

F = Fast Moving.

S = Slow Moving.

N = Non- Moving.

FSN analysis is based on the assumption that all items of inventory are not required all the time in stores. Some items are required on regular basis and some once in a while. Therefore fast moving items must be kept nearer to the point of issue and similarly Non-Moving items can be kept in a remote place as they are required occasionally.

Therefore for the purpose of controlling items under FSN analysis F type items need to be reviewed on regular basis while S type items may be examined further and their disposal can be considered.

HML ANALYSIS

This classification works like: H = High Cost Items.

M = Medium Cost Items.

L = Low Cost Items.

Likewise ABC Analysis, items are classified on the basis of cost of the items. The point of difference between these two techniques is that under HML analysis for the purpose of classifying inventories into various categories only cost of the items is considered while their annual consumption vale is totally ignored.

SL. NO Unit Price Category

1.

2.

3.

2000 and above.

Rs 1000 – Rs 2000.

Less than Rs 1000.

High.

Medium.

Low.

INVENTORY TURNOVER RATIO:

These are calculated to minimize the inventory by the use of the following formula:

Inventory turnover ratio= cost of goods consumed/sold during the period/average inventory held during the period

OR

INVENTORY TURNOVER RATIO = COST OF GOOD SOLD

AVERAGE INVENTORY

Where average stock = Opening Stock + Closing Stock

2

Where COGS = Net Sales – Gross Profit

The ratio indicates how quickly the inventory is used for production. Higher the ratio, shorter will be the duration of inventory at the factory. It is the index of efficiency of material management.

The comparison of various inventory turnover ratios at different items with those of previous years may reveal the following four types of inventories:

(a) Slow moving Inventories:

These inventories have a very low turnover ratio. Management should take all possible steps to keep such inventories at the lowest levels.

(b) Dormant Inventories:

These inventories have no demand. The finance manager has to take a decision whether such inventories should be retained or scrapped based upon the current market price, conditions etc.

(c) Obsolete Inventories:

These inventories are no longer in demand due to their becoming out of demand. Such inventories should be immediately scrapped.

(d) Fast moving inventories:

These inventories are in hot demand. Proper and special care should be taken in respect of these inventories so that the manufacturing process does not suffer due to shortage of such inventories.

OUTLINE OF THE PROBLEM

To identify optimum level of inventory which minimizes the cost?

To identify the safety stock level for various components.

To classify the various components based on its value and movements.

To identify inventory requirement of the company for the next year.

RESEARCH METHODOLOGY

Research Methodology is a strategy that guides a researcher in providing answers to

the research questions and for this research, survey is done. The system of collecting data for

research projects is known as research methodology. The data may be collected for either

theoretical or practical research for example management research may be strategically

conceptualized along with operational planning methods and change management.

Some important factors in research methodology include validity of research data,

Ethics and the reliability of measures most of your work is finished by the time you finish the

analysis of your data Research can be defined as the search for knowledge, or as any

systematic investigation, with an open mind, to establish novel facts, usually using a

scientific method. The primary purpose for basic research is discovering, interpreting and the

development of methods and systems for the advancement of human knowledge on a wide

variety of scientific matters of our world and the universe. Research is an academic activity

and as such the term should be used in a technical sense. According to Clifford Woody-

“Research comprises, defining and redefining problems, formulating hypothesis, collecting

organizing and evaluating data, making deductions and reaching conclusion to determine

whether they fit the formulating hypothesis.”

DATA COLLECTION

Data was gathered from various departments and also from the Auditor Report,

Annual Report etc. also by discussion and interaction with employees and various executives

of the relevant departments and by observation. The bulk of the relevant information was

gathered by going through the files of the works, which contained various aspects.

DATA COLLECTION METHOD

The source of data includes secondary data sources:

Secondary Sources: Secondary Data is the data that already exists and in ready to use format

and gathered by somebody else. This data can be in the form of articles in magazines,

journals, government reports or any other historical data. It might even be the different

articles in newspaper and on the internet blogs.

Secondary Data that would be used by researcher in the research process as supportive

documents are from the various newspaper articles, magazines related to specific industry,

books in the specific field of advertising and various different internet sites.

The information is collected through secondary sources during the project. That information

was utilized for calculating performance evaluation and based on that, interpretations were

made.

Sources of secondary data:

Most of the calculations are made on the financial statements of the company provided statements.

Referring standard texts and referred books collected some of the information regarding theoretical aspects.

Method to assess the performance of the company method of Observation of the work in finance department in followed.

DATA INTERPRETATION & ANALYSIS

DATA ANALYSIS AND INTERPRETATION

After the data was collected, it was analyzed to get a meaningful detail. Then,

according to the analysis, interpretations and evaluations were made that what are the strong

and weak points of the collected data or the details gathered or current system of information

of the human resources.

ABC ANALYSIS

An analysis of a range of items that have different levels of significance and should be

handled or controlled differently. This method is a means of Categorizing Inventory items

according to the potential amount to be controlled. In order to exercise effective control over

materials, A.B.C. (Always Better Control) method is of immense use. Under this method

materials are classified into three categories in accordance with their respective values. It is

also known as Selective Inventory Control Method (SIM).

‘A’ items are very important for an organization. Because of the high value of these ‘A’

Items. Group ‘A’ constitutes costly items which may be only 10 to 20% of the total items but

account for about 50% of the total value of the stores.

B’ Items are important but less than ‘A’ Item. A greater degree of control is exercised to

preserve these items. Group ‘B’ consists of items which constitutes 20 to 30% of the store

items and represent about 30% of the total value of stores.

‘C’ Item is marginally important. ‘A reasonable degree of care must be taken in order to

control these items. In the last category i.e. group ‘C’ about 70 to 80% of the items are

covered costing about 20% of the total value.

This method is also known as ‘stock control according to value method’, ‘selective value

approach’ and ‘proportional parts value approach’.

ABC ANALYSIS OF RAW MATERIAL (Per UNIT Cost)

ITEMS UNITS 2015-2016 2014-2015

Concentrate LTR. 13.600 12.627

Concentrate (Maaza) LTR. 9.599 8.753

Co2 KGS 16.08 15.015

Sugar KGS 32.60 33.00

Sugar (Maaza) KGS 32.02 32.68

Mango Puree Alphonso KGS 91.4 90.43

Mango Puree Totapuri KGS 50.16 43.64

Preform PCS. 3.53 3.74

Crown Cork GROSS 40.63 38.55

Crown Cork (Maaza) GROSS 41.78 40.27

Closure PCS. 0.65 0.61

A Items B Items C Items

Mango Puree

Alphonso

Mango Puree

Totapuri

Crown Cork (Maaza)

Crown Cork

Sugar

Sugar (Maaza)

Co2

Concentrate

Concentrate (Maaza)

Preform.

Closures.

ABC ANAYSIS OF FINISHED GOODS (Per UNIT Cost)

ITEMS UNITS 2015-2016 2014-2015

Corrugated Box PCS. 15.60 15.67

Corrugated Box (Maaza) PCS. 10.90 10.89

Corrugated Tray PCS. 2.42 2.27

Hanger Maaza PCS. 3.50 3.50

Label KGS 0.38 0.35

Labeling Glue KGS 0.44 0.449

Pocket Maaza PCS. 0.719 0.751

Shrink Film PCS. 14.40 13.29

Stretch Film PCS. 16.40 15.69

S-Straw Maaza PCS. 0.080 0.091

Tape PCS. 20.15 19.92

Tape Maaza PCS. 25.73 25.50

A Items B Items C Items

Tape (Maaza).

Tape

Stretch Film

Corrugated Box

Shrink Film

Corrugated Box

(Maaza).

Corrugated Tray

Hanger Maaza.

Label

Labeling Glue

Pocket Maaza.

S-Straw Maaza.

INTERPRETATION: ABC analysis is the method of categories the inventory according to

the potential amount to be controlled. In this A items are very important and have more cost

per unit, B are important but less A items, and C items are least important.

As per ABC analysis A items should be 10-20% of total inventory, So considering

above table the items that comes under A category is more and it is more expensive which

results in increase in cost of production. The ABC analysis of raw material is appropriate and

there is no need of any improvement. And for the ABC analysis of finished goods the A items

are more so organization should have tight inventory control, more secured storage areas

and better sales forecasts. Reorders should be frequent, with weekly or even daily reorder.

Avoiding stock-outs on A-items must be a priority.

INVENTORY TURNOVER RATIO

DEFINITION OF INVENTORY TURNOVER RATIO

Inventory turnover ratio determines the number of times the inventory is purchased and sold

during the entire fiscal year. This ratio is important to both the company and the investors as

it clearly reflects the company’s effectiveness in converting the inventory purchases to final

sales.

There are two variations to the formula to calculate inventory turnover ratio. The most

commonly used formula is dividing the sales by inventory. The other formula divides the

Cost of Goods Sold (COGS) by average inventory. The latter takes into the account the

fluctuations in inventory levels throughout the year. The second variation is better as both

COGS and inventory are recorded at cost whereas sale in the first formula is recorded at

market value.

HOW TO ANALYZE AND IMPROVE INVENTORY TURNOVER RATIO

Inventory turnover ratio, a measure of financial ratio analysis helps to understand how

effectively inventory management is carried out by the company. Generally, companies

prefer a higher inventory turnover ratio as compared to industry standards. The article

highlights interpretation of the ratio apart from discussing the need and ways to improve this

ratio.

NECESSITIES TO IMPROVE INVENTORY TURNOVER RATIO

Generally, companies prefer higher inventory turnover ratios. The need for improving the

ratio arises when a stock turnover ratio is lower than industry standards. A lower ratio

indicates that the company does more stocking than is required. Generally, if the product sale

is faster, inventory operation is more efficient. This is because the inventory churning would

be faster and thereby inventory turnover ratio would be better. This means the business needs

less blockage of funds/investment in inventory for on-going operations of business. So, it is

best to have a proper plan for improving inventory turnover ratio either by concentrating on

better sales or by lowering the blockage of funds on a stock.

I N TERPRETATION OF INVENTORY TURNOVER RATIO

The inventory turnover ratio is very easy to calculate but little tricky to interpret. Firstly, the

ratio for any company should be analyzed by keeping the industry standards in mind.

Secondly, different cost flow assumptions like FIFO and LIFO result in different inventory

turnover ratios in varying scenarios. Even inventory methods like just-in-time influence the

ratio in different ways. Generally, a low inventory turnover ratio will signal bad sales or

surplus inventory, which can be interpreted as poor liquidity, overstocking and even,

obsolescence. A high inventory turnover ratio, on the other hand, will indicate good sales or

buy in small amounts. It also implies better liquidity, but can also signal inadequate inventory

at times.

IMPROVEMENT IN INVENTORY TURNOVER RATIO

Once you have analyzed the inventory turnover ratio, keeping in mind all the necessary facts,

and have come to a conclusion that the ratio is low; it is time to work on improving the

turnover ratio.

There are several ways in which the inventory turnover ratio can be improved:

Better Forecasting: The Company needs to pay more attention to the forecasting techniques.

If you can forecast the demands of the customer correctly, you need to stock only those items.

This will reduce your inventory levels, which in turn will increase the inventory turnover

ratio.

Improve Sales: Another way to improve your inventory turnover ratio is to increase sales.

The company needs to formulate better marketing strategies to create more demand in the

industry and thus, give a push to its sales. These could focus on advertisements or have

promotional events and offers.

Reduce the Price: If you cannot increase the demand / sales by marketing, apply the

discount strategy or reduce the price to an attractive level so as to increase the sales. For

items having the lower sale, you can cut short on margin with a permanent low price to clear

the inventory faster.

Better Inventory Price: Contact your vendors to reduce the price they quote you for the

inventory items. This way you can reduce the inventory cost.

Focus on Top Selling Products: Apply the Pareto’s ‘80:20’ principle and invest only in the

products that get you the maximum profit. Eliminate products that are creating losses for you

and reducing the bottom line. Effectively, eliminating the specific inventories having lower

turnover ratio will improve the overall inventory turnover for the company as a whole.

Better Order Management: Focus more on obtaining advance orders. This will help to

eliminate unnecessary inventory and improve your inventory turnover ratio.

Eliminate Safety Stock and Old Inventory: Generally, companies keep excess product to

meet unseen demands. This leads to excess inventory. If you are focusing on better

forecasting techniques, there is no need for investing in safety stock. Further, cut your losses

and dispose of the old inventory. Invest the same money in faster-moving products.

Reduce Purchase Quantity: It is best to devise a strategy of optimum purchase. Instead of

ordering higher quantity, it is better to buy lower quantity and replenish the stock once the

product’s major quantity is sold. Purchase needs to be in line with demand.

UDAIPUR BEVERAGE LIMITED DELHI

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDING 31ST MARCH 2016

PARTICULARS NOTE NO.AS AT 31ST

MARCH 2016AS AT 31ST

MARCH 2015 1. Revenue from Operation 2.15 1118003694 8626223752. Other Income 2.16 17178557.58 140730153. Total Revenue (1+2) 1135182252 8766953904. Expenses:- -Cost of Material Consumed 2.17 679859782.6 522759736-Purchase Of Stock-in-Trade 157774190 92130062-Changes in Inventories of Finished Goods & Stock-in-Trade 2.18 -34708413 -22253761-Employee Benefit Expenses 2.19 31556655.21 25757087-Repair & Maintenance 2.2 29926567.5 22602272-Finance Cost 2.21 21560727.12 22842781-Depreciation and Amortization Expenses 132172397.2 124675131-Other Expenses 2.22 87846904.07 70456804

Total Expenses 1105988811 8589701125. Profit before Exceptional and Extraordinary Items & Tax (3+4) 29193441.25 177252786. Exceptional Items * *7. Profit before Extraordinary Items & Tax (5+6) 29193441.25 177252788. Extraordinary Items 2.23 246287 8529599. Profit before Tax (7+8) 28947154.25 1687231910. Tax Expenses 4482342125 34713310041) Current Tax 6000000 380000011. Profit/(Loss) for the period from continuing operations (9+10) 22947154.25 1307231912. Profit/(Loss) from discontinuing operations * *13. Tax expenses of discontinuing operations * *14. Profit/(Loss) from discontinuing operation (after tax) (12+13) * *15. Profit/(Loss) for the Period 22947154.25 1307231916. Earning per Equity Share: a) Basic 6.154 3.506b) Diluted 6.154 3.506

M/s UDAIPUR BEVERAGE LIMITED

BALANCE SHEET AS ON 31ST MARCH, 2016

      (All Figures in Rs.)

PATICULARSNOTE NO.

AS AT 31ST MARCH 2016

AS AT 31ST MARCH 2015

       

1. EQUITY AND LIABILITIES      1) Shareholder's Fund      a) Share Capital 2.1 45370000 45370000b) Reserve & Surplus 2.2 161350580.1 1384034262) Non-current Liabilities      a) Long-term Borrowings 2.3 569816905.6 4682332483) Current Liabilities      a) Short-term Borrowings 2.4 - 30855090b)Trade Payables 2.5 230992143.7 246229020c) Other Current Liabilities 2.6 98368179.75 115832309d) Short-term Provisions 2.7 12870000 6870000

TOTAL   1118767809 1051793093

2. ASSETS      1) Non-current Assets      a) Fixed Assets 2.8    i) Tangible Assets   627433775 632424940ii) Intangible Assets   175486 333973iii) Capital Work-in-Progress   - 973274b) Non-current Investment 2.9 92150075 586500752) Current Assets      a) Inventories 2.1 166218988.4 134210367b) Trade Receivables 2.11 1737754.51 1553146c) Cash and Cash Equivalents 2.12 195946083.1 196096033d) Short-term Loans and Advances 2.13 21929355.48 20542419e) Other Current Assets 2.14 13176291.63 7008866

TOTAL   1118767809 1051793093       

TURNOVER RATIO

2014-2015

       Opening Stock 21047974.53 Sales 862622374.83

Purchase 92130062.40 Closing Stock

43301735.96

Raw Material Consumed 497817704.68    

Packing Material Consumed

24942031.23    

Works Expenses 64933539.02    

Gross Profit 205052798.93    

       

  905924110.79   905924110.79

G.P. Ratio 205052798.93 = 23.77%

862622374.83

Detail of Work Expenses

   Building 1925165.84

Electricals 985504.41

Boiler 8913040.79

Forklift 2144627.50

Inkjet Coder 1544545.08

Plant & Machinery 5821742.79

Chemical Consumed 8073560.10

Stores & Spares Consumed 5217443.01

Workers Expenses 3494695.00

Electricity, Power& Fuel 26840214.50

Total -: 64960539.02

2015-2016

       Opening Stock 43301735.96 Sales 1118003694.32

Purchase 157774190.03 Closing Stock

78010148.96

Raw Material Consumed

636058793.56    

Packing Material Consumed

43800989.00    

Works Expenses 82491088.77    

Gross Profit 232587045.96    

       

  1196013843.28   1196013843.28

G.P. Ratio 232587045.96 = 20.80%

1118003694.32

Detail of Work Expenses   

Building 2828075.95

Electricals 1443876.47

Boiler 10658886.60

Forklift 3159698.50

Inkjet Coder 1869847.22

Plant & Machinery 8077605.46

Chemical Consumed 11917840.63

Stores & Spares Consumed 7263428.94

Workers Expenses 4371520.00

Electricity, Power& Fuel 30900309.00

Total -: 82491088.77

COST OF GOODS SOLD

YEAR 2014-2015 2015-2016

Net sales 862622375 1118003694.32

Gross profit 205052798.93 232587045.96

COGS 657569576.07 885416648.36

AVERAGE INVENTORY

INVENTORY/STOCK TURNOVER RATIO

YEAR 2014-2015 2015-2016

Opening Stock 21047975 43301736

Closing Stock 43301736 78010148.96

Average Stock 32174855.5 60655942.5

Category 1 Category 20

5

10

15

20

25Series 1

Series 1

INTERPRETATION: Inventory Turnover Ratio is ratio that measures the rate of incoming and outgoing of inventory and new inventory has to be restocked. There may be so many reasons for less Inventory Turnover Ratio; some are due to Sales, Demand of Product, Faulty Monitoring of Inventory, and Obsolete, etc. Above graph shows the Inventory turnover ratio in FY 2014-2015 is 20.43 times which is greater than the inventory turnover ratio of current FY 2015-2016 that is 14.58 times. Is shows that there may be above reasons for the low Inventory turnover ratio.

KEY LEARNINGS

2014-2015 2015-2016

20.4373 times 14.5873 times

At the beginning I did not have any experience of working within a private organization.

Although as I completed my internship now, I can understand better

Functioning of an organization.

How to manage so many employees.

How to manage all the tasks together.

Learned to do entries.

Learned time management.

How to analyze and interpret data.

Experienced the industry working atmosphere.

CONTRIBUTION TO THE ORGANIZATION

To make all the entries in JAGUAR Software of all the incoming and outgoing of

goods in store.

Did manual entries in register of Maaza Unit and UBL Unit.

Managed store in the presence of store manager.

Did entries of data of Sales, Purchases, Sales Manufacturing, Excise Duty, VAT

(Value Added Tax) in TALLY software.

Journal Entry for Excise Duty

Sugar Dr

Excise Duty Credit Recoverable on Input Dr

To Party Name Cr

Journal Entry for VAT

Corrugated Tray Dr

Excise Duty Credit Recoverable on Input Dr

VAT Credit Recoverable on Input Dr

To Party Name Cr

Did Some entries that are made on Journal, Purchases, Receipt,

Checked and Balanced the Statement of SBI passbook and Cash book of company.

Made the systematic report of the complete inventory.

CONCLUSION:

A better inventory management will surely be helpful in solving the problems the

company is facing with respect to inventory and will pave way for reducing the huge

investment or blocking of money in inventory. From the analysis we can conclude that the

Company can follow the Economic Order Quantity (EOQ) for optimum purchase and it can

maintain safety stock for its components in order to avoid stock-out conditions & help in

continuous production flow. This would reduce the cost and enhance the profit. Also there

should be tight control exercised on stock levels based on ABC analysis & maintain high

percentage in fast moving items in inventories as per on FSN analysis for efficient running of

the inventory. Since the inventory Turnover ratio shows the increasing trend, there will be

more demand for the products in the future periods. If they could properly implement and

follow the norms and techniques of inventory management, they can enhance the profit with

minimum cost.

It is evident that the companies cannot afford to ignore the inventory turnover ratio.

While analyzing this ratio, it is imperative that you keep a lot of factors in mind. A lower

inventory turnover ratio certainly needs to be improved. However, an excessively high

turnover ratio is also not a healthy sign for the company.

SUGGESTIONS

Consider Inventory Optimization tools.

Employ Solution that use real time analytics under one platform.

Don’t treat all SUK’s the same.

Keep an eye on Suppliers.

Trace essential attributes.

Leverage mobile devices.

Be smart about your Slow – Moving and Obsolete items.

Don’t neglect Slotting.

Perform continuous and appropriate periodic review of Inventory. It shouldn’t be a

one-time activity.

The company is required to maintain safety stock for its components in order to avoid

stock-out conditions & help in continuous production flow.

The management should adopt new technologies like EOQ, ABC Analysis.

REFERENCE

www.coca-colaindia.com

www.superbrand.com

www.coca-cola.com

www.thecoca-colacompany.com

www.wikipedia.org

Report//inventory-management/inventory_management.htm

https://www.efinancemanagement.com/working-capital-financing/types-of-inventory-

control

http://wwwhttp://www.ccdconsultants.com/documentation/financial-ratios/inventory-

turnover-ratio-interpretation.html

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/

inventory-turnover-4803

http://www.accountingformanagement.org/inventory-turnover-ratio/

http://smallbusiness.chron.com/improve-inventory-turnover-20522.html

http://yourbusiness.azcentral.com/improve-inventory-turnover-

1404.html.academia.edu/1238114/inventory_control

ACTIVITY CHART

WEEKS DISCRIPTION

1st Week Visited the Organization and presented the permission letter which I got from the college & discussed about my project

topic.

2nd Week Did the survey of the factory with the help of the Store Manager & saw the complete production process of UBL Unit

and MAAZA Unit. Also worked is the store.

3rd Week Got the Organization profile for the study. Shifted to Finance department for major work and got the Bills to make entries.

4th Week Doing the Financial work of the organization and side by side Collected the information regarding the project.

5th Week Collected the previous year data Balance Sheet, Profit & Loss A/c Inventory data etc.

6th Week Analysis and Data Interpretation.

7th Week Prepared the project report with the help of Deputy Finance Manager of the Organization.

8th Week Submitted the project in the organization and got the Certificate of Internship project.