By Abhash Ranjan

PRESENTATION AGENDA

•ABOUT USHA MARTIN•PRESENCE•BUSINESS SEGMENT•DESIGN OF STUDY•INVENTORY MANAGEMENT•ABC ANALYSIS•INTERPRETATION•CONCLUSION•SUGGESTION

ABOUT USHA MARTIN

USHA MARTIN is a unique Rs. 3,600-crore global 17 companies engaged in mining, manufacture, distribution and service centres related to the steel industry across 4 continents, 14 countries and 24 global locations. From coal-iron ore mining, captive utility and auxiliary facilities at one end, to the manufacture of speciality steel, wires, wire ropes, and other value-added products and end-use application solutions at the other. UML is also engaged in the economic empowerment of communities.

VISION OF USHA MARTIN

To retain market leadership in India and be globally competitive through customer orientation, excellence in quality, innovation and technology.

HISTORY OF USHA MARTIN1960: The Company was incorporated as Usha Martin Black (Wire Ropes) Limited having its wire rope plant at Ranchi. The name was changed to Usha Martin Black Ltd. in 1979 and further changed to Usha Martin Industries Ltd.(UMIL) in 1983.

1965:UMIL promoted Usha Ismal Ltd. (UIL) in collaboration with CCL Systems Ltd of UK for the manufacture of fittings and accessories, equipment for pre-stressed concrete system, wire ropes and wire ropes splicing equipment at Ranchi. UIL merged with UMIL in 1990 and became a division of the company

1971:UMIL promoted Usha Alloy Steels Limited (UASL) for the manufacture of billets at Jamshedpur. UASL merged with UMIL in 1988.

1975:UASL acquired an ongoing rolling mill at Agra.

WIRE AND WIRE ROPE DIVISION

The Usha Martin Ltd. is produce 100,000 MT / annum manufacturing facilities at Ranchi (Eastern India) is amongst the top four wire rope producers in the world. Since its inception, the division has continuously developed and expanded its range of product offerings and is considered a pioneer in certain classes of products in India. Steel wire ropes manufactured by the division find wide applications in oil exploration, mining, elevators, Crane, fishing, construction, load transportation and general engineering sectors.

MACHINERY DIVISIONThis is located at Bangalore was set up in 1974 to manufacture Wire Drawing and allied machines. Over the years, the division has added a wide range of Wire, Wire Rope and Cable machinery to its product range and is now the leader in this field in India. The division started with technical collaboration with M/s Marshall Richards Barcro of UK and subsequently has collaborated with internationally reputed firms like De-Angeli Industries SPA, Italy, Stolberger Maschinenfabrik, Germany, Hi-Draw Machinery Ltd, UK and Redaelli Techna Meccanica, Italy. A faciltity in ranchi has also been created for manufacturing machines required for Wire Drawing and Stranding Applications.

PRESENCE

•Headquartered in Kolkata, India;•Iron ore mine (Barajamda) and captive coal mines (Daltonganj) in the state of Jharkhand, India;•Steel manufacturing facilities located in Jamshedpur and Agra;•Wire and wire rope manufacturing facilities located in Ranchi (Jharkhand) and Hoshiarpur (Punjab) in India, Bangkok (Thailand), Dubai (the UAE) and Nottinghamshire (the UK);•High–value wire and conveyor cord manufacturing facilities at Ranchi;•Machinery manufacturing and engineering application centers in Ranchi and Bangalore;•Manufacturing units for bright bars in Ranchi and Sriperumbudur (Tamil Nadu); Rigging shops in the Netherlands and the UK.•Telecommunication cables manufacture at Silvassa (India).•Wide global network of marketing and distribution warehouses in Singapore,

CORPORATE SOCIAL RESPONSIBILITY

Usha Martin has strongly believed in its social responsibility being an important part of business philosophy. The company has promoted Krishi Gram Vikas Kendra (KGVK), as its’ social arms to take appropriate initiative in various areas which affect health, social life and economic well being of people for a period of over 35 years. Presently, KGVK reaches out to about one lack household of tribal people and weaker sections of society in over 700 villages across 6 districts in the State of Jharkhand.

USHA MARTIN AN INTEGRATED COMPANY:

Usha Martin is integrated from iron ore and coal mines at one end to wire ropes at the other, connected through intermediate captive power generation and the manufacture of steel and wires.This is one of the most extensively integrated business models within the wire ropes industry the world over. With new cost optimisation projects being implemented by the beginning of 2012-13, the deeper integration will strengthen the Company’s cost–advantage and reduce its already low dependence on external raw material sources. Moreover, the Company will be better equipped to manage industry cycles effectively.

PRODUCTS: The Company’s product basket comprises wires, strands, wire ropes, cords, slings, wire rods, straight bars, construction and structural steel, bright bars, conveyor cords, specialty wires and telecommunication cables.

WORLD’S LARGEST ARCH BRIDGE IN DUBAI

INCHEON BRIDGE NEW SONGDO CITY, KOREA

HOWRAH BRIDGE

SOURCE OF THE RAW MATERIAL

Steel Wire Rod (90% to 96%) : UASD, Jamshedpur Steel Wire Rod (4% to 10%) : Other Sources (Imported or Local) Fiber Core : M/S Chhota Nagapur Wire Rope, Ranchi. Other Raw MaterialZinc : M/S Hindustan Zinc Lead, Jute & Lubricants : Imported or Local

BOARD OF DIRECTORS:

•The Board of Directors of the Company comprises of One Non-Executive Chairman •Seven Independent Non-Executive Directors, •One Non-Executive Director and•Four Executive Directors.

BUSINESS SEGMENT:

•STEEL AND MINING BUSINESS•WIRE ROPES AND SPECIALITY PRODUCTS BUSINESS•CABLE BUSINESS

MAJOR OVERSEAS UNITS:

•Usha Martin Singapore Pte Limited [UMSPL]•Usha Martin Americas Inc. [UMAI]•Brunton Wolf Wire Ropes FZCo [BWWR]•Usha Siam Steel Industries Public Company Limited[USSIL]•Usha Martin International Limited [UMIL]

INVENTORY MANAGEMENT AN INTRODUCTION :

Inventory management is an important part of the working capital management of any organisation. Practical decisions have to be made as to how inventory is going to be managed– Which management system should be used, how much inventory should be kept and so on.

DESIGN OF STUDY

TYPES OF INVENTORY MANAGEMENT SYSTEMS

•(JIT)

•(EOQ)

•(SS)

• (LIFO) AND (FIFO)

•ABC METHOD

THE REASONS FOR INVENTORY CONTROL

• Helps balance the stock as to value, size, color, style, and price line in proportion to demand or sales trends. • Help plan the winners as well as move slow sellers.• Helps secure the best rate of stock turnover for each item. • Helps reduce expenses and markdowns. • Helps maintain a business reputation for always having new, fresh merchandise in wanted sizes and colors.

TYPE OF INVENTORIES

•Raw materials Inventory•Work-in-Process Inventory•Finished Goods Inventory•Stores and Spares

RawMaterials

Work in Progress

Finished Goods

Usha Martin Limited has classified its inventories into 3 categories namely,

(1) Stores and Spare

(2) Production and

(3) Packing   

INVENTORY MANAGEMENT AT USHA MARTIN LTD.

GRAPHICAL REPRESENTATION OF ABC METHOD

The items of all inventories are arranged in descending order according to their book value. Then the summation of consecutive items from the top is done which adds up to 70% of total inventory costs. 

USHA MARTIN USES ABC ANALYSIS SYSTEM FOR INVENTORY MANAGEMENT:

ABC Analysis is generated according to the book value of the items stores is custodian every items. Breakup of ABC: - A=70%, B=20%, C=10%

Category A - Items whose book value constitutes up to 70% of the total value of the material.

Category B- 20%.

Category C- Remaining 10%.

CATEGORY % OF TOTAL VALUE % OF TOTAL QUANTITY

A 70 - 80 5 - 10

B 20 – 25 20 – 30

C 5 – 10 60 - 70

‘A’ ITEMS ‘B’ ITEMS ‘C’ ITEMS

High consumption valueHigh controlNo safety stockMinimization of waste materialFrequent orderingWeekly control statement

Moderate valueModerate controlLow safety stockControl over waste

Ordering 3 times in a monthMonthly control

Low consumption valueLow controlHigh safety stockAnnual review of waste

Bulk ordering once in a monthQuarterly control Report

ITEMS PRICE PER UNIT RS.

NO. OF UNITS (TON)

TOTAL COST RS.

Iron 4.30 6886739 296129777

Copper 140.0 83241 11793740

Coke 17.31 24566 42523746

Lubricants 20.81 28394 5908798

Zinc 312.5 82940 25918750

Aluminums 3.08 243456 7498442

Lead 480.29 98682 74395777

Plastic 2.80 428260 1199128

TOTAL 7876278 465368158

(Rs. In Thousand)

INTERPRITATION

STEPS - I CALCULATION OF TOTAL COST OF INVENTORY

ITEMS TOTAL COST IN DECLINE ORDER Rs.

CUMULATIVE TOTAL COST Rs.

Iron 296129777 296129777

Lead 47395777 343525554

Coke 42523746 386049300

Zinc 25918750 411968050

Copper 11793740 423761790

Aluminums 7498442 431260232

Lubricants 5908798 437169030

Plastic 1199128 438368158

STEPS - II

CALCULATION OF CUMULATIVE COST

Iron Lead Coke Zinc Copper Aluminums Lubricants Plastic 0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

TOTAL COST IN DECLINE ORDER Rs.

TOTAL COST IN DECLINE ORDER Rs.

Iron Lead Coke Zinc Copper Aluminums Lubricants Plastic 0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

400000000

450000000

500000000

TOTAL COST IN DECLINE ORDER Rs. CUMULATIVE TOTAL COST Rs.

CUMULATIVE TOTAL COST Rs.

Classifying the group as A, B, and C based on total cost.

A = 70% of total cost = 0.70 × 438368158 = 306857710

B = 20% of total cost = 0.20 × 438368158 = 87673631

C = 105 of total cost = 0.10 × 438368158 = 43836815

STEPS III

UML has achieved phenomenal success with proper utilization of Inventory Management. Inventory management is so critical for planning or forecasting for the future needs and for developing strategic plans to handle the market situations. It needs a top down approach to structure an effective way of tackling inventory managing problems. If UML is to achieve incremental growth and maximize its market capitalization, it has to give more emphasis on effective inventory control and use available resources optimally. UML has to keep itself abreast of new trends in inventory management and lean manufacturing such as JIT.

CONCLUSION

•I suggested for ABC analysis and ABC analysis gives more appropriate results and conclusion.

•I suggested little changes in the inventory management systems.

SUGGESTION