Ali Finalproject
-
Upload
vamsi-sakhamuri -
Category
Documents
-
view
221 -
download
0
Transcript of Ali Finalproject
-
8/18/2019 Ali Finalproject
1/88
MBA PROGRAMME
INTRODUCTION
The Inventory Concept
The dictionary meaning of the word inventory is “Stock of goods”. The term
‘Inventory’ refers to the commodities supplied to an undertaking for the purpose of
consumption in the process of manufacture or of rendering service or for
transformation into products.
To the finance executive ‘Inventory’ can !e taken as the value of raw
materials consuma!les spares work in progress and finished goods in which the
company’s working capital funds have !een invested.
MEANING:
“Inventory can !e defined as stock of materials of any king stored for future use
mainly for production processes”.
“Inventory is !asically the money !locked !y an organi"ation to secure future and
present throughput for the organi"ation”
Classification of InventoriesThe Inventories in an Industrial concern is generally classified as following#
• Raw material Inventory This is used in manufacturing. $hen the demandarises they are drawn from stores and processed or use value is added during
the process and finally finished product comes out.• !emi finishe" #oo"s $hen the material !eing processed it may have to wait
!etween two processes such material are known as semi finished goods or
semi finished material or $ork in process inventory.• Components The parts used in assem!ly of product are known as
components. $hen these components are purchased from outside it is known
as !ought out components or !ought out material.• !pare parts Inventory $hen manufacturing or servicing facility !reakdown
it is to !e repaired. In such case the defective or worn%out parts of the machine
are to !e replaced !y new one. These new parts of the machine are known as
spares or spare parts.
HND COLLEGE 1
-
8/18/2019 Ali Finalproject
2/88
MBA PROGRAMME
• O$solete Inventory $hen any facility !ecomes unservicea!le and it is to !ereplaced !y a new one after replacing the old machine&facility is to disposed.
Such machines which have !ecome useless are termed as o!solete inventory.•
%aste& !crap an" re'ects This type of inventory occurs in manufacturingfirms or in service organi"ations. $hile processing material chips are produced
and it is of no use for the organi"ation and it is to !e disposed. Similarly
defective components which cannot !e reprocessed 're(ects) and materials
which cannot !e used in any way in the organi"ation 'waste) all these are to !e
disposed. They may not !e having any use value for the organi"ation !ut they
may !e reprocessed !y some other organi"ations to produce a useful product.
Motives for hol"in# Inventories*conomists have esta!lished three motives for holding inventories. +
() Transaction motive)*) +reca,tionary motive)-) !pec,lative motive)
Transaction motive. ,irms may re-uire holding certain amount of finished products
perpetually in stock for display or demonstration purpose. They may also holdinventories to meet a sudden demand thus reducing the delivery tags.
+reca,tionary motive . ,irms may hold inventories for fear of stock outs and losingits goodwill. Some of the precautionary motives give rise to ‘safety stock’ to deal with
uncertainty in supply and demand.
!pec,lative motive . firm may also hold !oth raw materials and finished productswhen it expects a price in future there!y reali"ing a stock profit. Inventories held for
speculative motive are termed as profit%making inventory.The three motives
preca,tionary motive re-uires much attention. /esides accumulation of inventorydue to the three motives mentioned a!ove inventories also get accumulated !ecause
of inefficient management of working capital. This type of inventory is called fla$$yinventory)
In addition there may !e a contract,al reason for holding some inventories.
HND COLLEGE 2
-
8/18/2019 Ali Finalproject
3/88
MBA PROGRAMME
Contract,al Re/,irements + 0ccasionally it may !e necessary to carry a certainlevel of inventory to meet a contractual agreement. Some manufacturers re-uire
dealers to maintain a specified level of inventory in order to !e the sole representative
in a particular territory.
Inventory Mana#ement
Inventories represent a su!stantial amount of firm’s current assets. 1roper
management of Inventory is necessary so that this investment does not !ecome too
large as it would result in !locking capital which could !e used in productive aspect
in some where else.
Inventory 2anagement covers efficient management of inventories in all its
aspects including Inventory planning and programming 1urchasing Inventory
3ontrol receiving ware 4ousing and Store keeping Inventories handling and
5isposal of scrap. In this context of Inventory 2anagement the firm is faced with the
pro!lem of meeting two conflicting needs.
To maintain a large si"e of inventory for efficient and smooth production and
sales operations.
To maintain a minimum investment in inventories to maximi"e profita!ility.
The aim of Inventory management thus is to avoid excessive and inade-uate
levels of inventories and to maintain sufficient inventory for the smooth
production and sales operations.
n effective inventory mana#ement should
6. *nsure continuous supply of materials to facilitate uninterrupted production.
7. 2aintain sufficient stocks of raw materials in periods of short supply and
anticipate price changes.
8. 2aintain sufficient finished goods inventory for smooth sales operations and
efficient customer services.
9. 2inimi"e the earnings cost and time.
:. 3ontrol investment in inventories and keep it at an optimum level.
HND COLLEGE 3
-
8/18/2019 Ali Finalproject
4/88
MBA PROGRAMME
O01ECTI2E! O3 IN2ENTOR4 MANAGEMENT
The o!(ectives of the inventory management are discussed under two heads#
•
0perating o!(ectives.• ,inancial o!(ectives.
O+ERATING O01ECTI2E!
The 0perating o!(ectives of Inventory management is further divided as follows %
• Availa$ility of materials
The first and the foremost of inventory management is make all types of
materials availa!le at all times they needed !y the production departments. So that
the production may not !e held up for want of materials. It is therefore advisa!le to
maintain the minimum -uantity of all types of materials to move on production
schedule
• Minimi5in# the wasta#e
Inventory management has to minimi"e the wastage at all levels that is during
its storage in the godowns or at work in the factory. ;ormal wastage in other words
uncontrolla!le wastage should only !e permitted. ny a!normal !ut controlla!le
wastage should strictly !e controlled. $astage of materials !y leakage theft and
spoilage due to rust dust or dirt should !e avoided.
• +romotion of man,fact,rin# efficiency
The manufacturing efficiency of the enterprise increases if right types of raw
material are made availa!le to production department at the right time. It reduces
wastage < cost of production < improves the moral of workers.
HND COLLEGE 4
-
8/18/2019 Ali Finalproject
5/88
MBA PROGRAMME
0etter service to c,stomers
In order to meet to the demand of the customers it is the responsi!ility of
inventory management to produce sufficient stock of finished goods to execute the
orders received from customers.
Optim,m level of inventories
1roper control of inventories helps management to procure materials in right
time in order to run the plant efficiently. 2aintaining the optimum level of inventorieskeeping in view the operational re-uirements avoids the out of stock danger.
3INANCIA6 O01ECTI2E!
The 0perating o!(ectives of Inventory management is further divided as
follows +
• Economy in p,rchasin#
1roper inventory management system !rings certain advantages and economiesin purchasing the raw materials. 2anagement makes every attempt to purchase raw
materials in !ulk -uantity and to take advantage of favora!le market conditions.
• Optim,m investment an" efficient ,se of capitalThe primary o!(ective of inventory management from financial point of view
is to have an optimum level of investment in inventories. Inventory management has
to setup minimum and maximum levels of inventories to avoid deficiency or surplus
stocks.
• Reasona$le pricesInventory management has to ensure the supply of raw materials at a
reasona!le low price !ut without sacrificing the -uality. It helps to reduction of
cost of production and improvement in the -uality of finished goods in order to
maximi"e the profits of the organi"ation.
HND COLLEGE 5
-
8/18/2019 Ali Finalproject
6/88
-
8/18/2019 Ali Finalproject
7/88
MBA PROGRAMME
positive feature of a perpetual system is that inventory level is continuously
monitored so management always knows the inventory status. This is advantageous
for critical parts or raw materials and supplies. 4owever it can !e costly.
The perpetual inventory system consists of#
6. /in 3ards.
7. Stores ledger.
8. 3ontinuous Stock taking.
0in car"s + /in cards are printed cards used for accounting the stock of material instores. ,or every item of materials separate !in cards are kept.The details regarding
the material such as the name of the material the part num!er the date of receipt and
issue the reference num!er the name of the supplier the -uantity received and issued
the value of the material the rate the !alance -uantity etc. are recorded in the !in
cards.
!tores le"#er + =ike !in cards a stores ledger is maintained to record all the receiptsand issues in respect of materials with the difference that along with the -uantities the
values are entered in the receipt issue and !alance columns.
Contin,o,s stoc7 ta7in# + The perpetual inventory system is not complete without asystematic procedure for physical verification of the stores. The !in cards and the
stores ledger record the !alances !ut their correctness can !e verified !y means of
physical verification only.
1,st In Time Inventory !ystem
;ow%a%days organi"ations are !ecoming more and more interested in getting
potential gains from making smaller and more fre-uent purchase orders. In other
words they are !ecoming interested in (ust%in%time purchasing system.
In >ust%In%Time system the materials arrive exactly when they are needed in the
production process. Inventory remaining in warehouse collects dust and cost instead
of revenue. >ust%In%Time system avoids this cost.
HND COLLEGE 7
-
8/18/2019 Ali Finalproject
8/88
-
8/18/2019 Ali Finalproject
9/88
-
8/18/2019 Ali Finalproject
10/88
MBA PROGRAMME
Economic or"er /,antity
firm should not place either too large or too small orders. 0n the !asis of a
trade%off !etween !enefits derived from the availa!ility of inventory and the cost of
carrying that level of inventory the appropriate or optimum level of the order to !e
placed should !e determined. The optimum level of inventory is popularly referred to
as the economic order -uantity '*0@). It is also known as economic lot si"e.
The economic order -uantity may !e defined as that level of inventory order
that minimi"es the total cost associated with inventory management. i.e it refers to the
level of inventory at which the total cost of inventory comprising
ac-uisition&ordering&set%up costs and carrying cost is minimal.
EO; > ?*AO@C
A Total annual re-uirement
0 A 0rdering cost per order
3 A 3onvey in cost per unit
A0C analysis
Bsually a firm has to maintain several types of inventories. It is not desira!le to
keep same degree of control on all the items. The firm should pay maximum attention
to those items whose value is highest. The firm should therefore classify inventories to
identify which items should receive the most effort in controlling. This classification
is done !y the /3 analysis.
The /3 analysis techni-ue is !ased is !ased on the assumption that a firm
should not exercise the same degree of control on all items of inventory. It should
rather keep a more rigorous control on items that are 'i) the most costly and&or 'ii) the
slowest%turning while items that are less expensive should !e given less control effort.
0n the !asis of the cost involved the various inventory items are categori"ed
into three classes#
HND COLLEGE 10
-
8/18/2019 Ali Finalproject
11/88
MBA PROGRAMME
i) AB cate#ory)ii) 0B cate#ory)
iii) CB cate#ory)
• 3ategory ‘ A’ items # 2ore costly and valua!le consumptionitems are classified as items. /ut the
category items are very less in volume
'generally 7CD) when compared to the
total volume of inventory.
• 3ategory ‘ 0 ’ items# The items having average consumption
?alue items are classified as / items.
/ut the category items are very avg in
?olume 'generally 8CD) when compared
to the total volume of inventory.
• 3ategory ‘ C’ items# The items having less consumption
?alue items are classified as 3 items. /ut
the 3 category items are very high in
volume 'generally :CD) when compared
to the total volume of inventory.
HND COLLEGE 11
-
8/18/2019 Ali Finalproject
12/88
MBA PROGRAMME
2ED Classification
?*5 + ?ital *ssential and 5esira!le classification is applica!le largely to spare parts. Stocking of spare parts is !ased on strategies different from those of raw
materials !ecause of there consumption pattern is different. 4ere the spare parts are
classified in to three categories.
• ?ital % The spares the stock out of which even for a
Short time will stop the production.
• *ssential % The spares the a!sence of which cannot !e
Tolerated for more than a few hours or a day.
• 5esira!le % The desira!le spares are those spares which are
needed !ut this a!sence for even a week or so will not stop
the production.
8M6 Classifications
The 4igh medium and =ow '42=) classification follows the same procedure
as is adopted in /3 classification. 0nly difference is that in 42= the classification
unit value is the criterion and not the annual consumption value. The items of
inventory should !e listed in the descending order of unit value and it is up to the
management to fix limits for three categories. ,or examples the management may
decide that all units with unit value of Es. 7CCC and a!ove will !e ‘4’ items Es. 6CCC
to 7CCC ‘2’ items and less than Es. 6CCC ‘=’ items.
The 42= analysis is useful for keeping control over consumption at
departmental levels for deciding the fre-uency of physical verification and for
controlling purchases.
HND COLLEGE 12
-
8/18/2019 Ali Finalproject
13/88
MBA PROGRAMME
!DE Classification
The S5* analysis is !ased upon the availa!ility of items and is very useful in
the context of scarcity of supply. In this analysis ‘S’ refers to ‘scarce’ items generally
imported and those which are in short supply. ‘5’ refers to difficult items which are
availa!le indigenously !ut are difficult items to procure. Items which have to come
from distant places or for which relia!le suppliers are difficult to come !y fall into ‘5’
category. ‘*’ refers to items which are easy to ac-uire and which are availa!le in the
local markets.
The S5* classification !ased on pro!lems faced in procurement is vital to the
lead time analysis and in deciding on purchasing strategies.
3!N Analysis
,S; stands for fast moving slow moving and non%moving. 4ere classification
is !ased on the pattern of issues from stores and is useful in controlling o!solescence.
To carry out an ,S; analysis the date of receipt or the last date of issue
whichever is later is taken to determine the num!er of months which have lapsed
since the last transaction. The items are usually grouped in periods of 67 months.
,S; analysis is helpful in identifying active items which need to !e reviewed
regularly and surplus items which have to !e examined further. ;on%moving itemsmay !e examined further and their disposal can !e considered.
HND COLLEGE 13
-
8/18/2019 Ali Finalproject
14/88
MBA PROGRAMME
!O! Classification
Eaw materials especially agricultural inputs are generally classified !y the
seasonal off%seasonal systems since the prices during the season would generally !e
lower.
The seasonal items which are availa!le only for a limited period should !e
procured and stocked for meeting the needs of the full year. The prices of the seasonal
items which are availa!le throughout the year are generally less during the harvest
season. The -uantity re-uired of such items should therefore !e determined after
comparing the cost savings on account of lower prices if purchased during season
with the higher cost of carrying inventories if purchased throughout the year.
/uying and stocking strategy for seasonal items depend on a large num!er of
factors and more and more sophistication is taken place in this sphere and operational
techni-ues are used to o!tain optimum results.
-
8/18/2019 Ali Finalproject
15/88
MBA PROGRAMME
procedures of inventory control which may not applica!le to ordinary items as they
re-uire special procedures.
MNG Analysis
The grouping of inventory items in this analysis takes place as#
• M Movin# items + The items which are consumed from time to time arenormally referred to as moving items.
• N Non movin# items + These items which are not and consumed in last oneyear are covered under this group.
• G Ghost items + This group refers to such items which neither have !eenreceived nor issued during the year. The !alance of such items shown in stock
registers of the organi"ation will !e nil !oth at the !eginning and at the end of
the previous financial year.
A"vanta#es of Inventory Mana#ement
The advantages gained !y the firm !y managing the inventory effectively are
• Introduction of a proper inventory management system helps in keeping the
investment in the inventories as low as feasi!le.
• *nsures availa!ility of material !y providing ade-uate protection against
uncertainties of supplies and consumption of materials.
• llows full advantage of economics of !ulk purchases and transportation.
• =eads to reduction in inventory levels.
• Eeleases more of capital for other operations.
• de-uate customer service.
• dvantage of price discounts !y !ulk pricing.
• 1roviding flexi!ility to allows change in production lines due to changes in
demands on any other reason.
• *ven out the work loads on the soaps in the face fluctuations demands.
HND COLLEGE 15
-
8/18/2019 Ali Finalproject
16/88
MBA PROGRAMME
Ca,ses of poor Inventory Mana#ementThere are certain instances which leads to poor inventory management.
They are#
6. 0ver !uying without regard to the forecast or proper estimate of demand to
take advantage of favora!le market.
7. 0ver production or production of goods much !efore the customer re-uires
them.
8. 0ver stocking may also result from the desire to provide !etter service to the
customers. /ulk production or purchase to cut down production costs also will
result in large inventories.
9. 3ancellation of orders and minimum -uantity stipulations !y the suppliers may
also give rise to large inventories.
2ario,s stoc7 levels in Inventory Mana#ement
The levels of inventory in any organi"ation depend upon several factors
including social political economic ethic fiscal governmental policies at the glo!al
and national levels which determine the demand and supply parameters of an item. t
the unit level cost criticality availa!ility service level stock out lead time powers
of delegation consumption pattern etc. affect the levels.
The various stock levels fixed for effective management of inventories are %
• 2inimum level.
• 2aximum level.
• 0rdering or Eeordering level.
• 5anger level.
These levels serve as indices for initiating action on time so that the -uantity of
each item of material i.e. the inventory holding is controlled or managed. Stock levels
HND COLLEGE 16
-
8/18/2019 Ali Finalproject
17/88
MBA PROGRAMME
are not fixed on a permanent !asis !ut are lia!le to revision in accordance with the
changes in the factors determining the levels.
Minim,m level + It indicates the lowest figure of inventory !alance which must !emaintained in hand at all times so that there is no stoppage of production due to non%
availa!ility of inventory.
The main considerations for the fixation of minimum level of inventory are as
follows#
6. Information a!out maximum consumption and maximum delivery period in
respect of each item to determine its reorder level.
7. verage rate of consumption for each inventory item.8. verage delivery period for each item. This period can !e calculated !y
averaging the maximum and minimum period.
The formula used for its calculation is as follows#
Minim,m level of Inventory > Reor"er level . 9Avera#e rateofcons,mption Avera#e time of
Inventory "elivery )
Ma im,m 6evel . It indicates the maximum figure of inventory -uantity held instock at any time.
The important considerations which should govern the fixation of maximum
level for various inventory items are as follows#
6. The fixation of maximum level of an inventory item re-uires information a!out
its reorder level. The reorder level itself depends upon its maximum rate of
consumption and maximum delivery period. It in fact is the product of
maximum consumption of inventory item and its maximum delivery period.7. Jnowledge a!out minimum consumption and minimum delivery period for
each inventory item should also !e known.
HND COLLEGE 17
-
8/18/2019 Ali Finalproject
18/88
MBA PROGRAMME
8. The determination of maximum level also re-uires the figure of economic
order -uantity.
9. vaila!ility of funds storage space nature of items and their price per unit are
also important for the fixation of maximum level.:. In the case of imported materials due to their irregular supply the maximum
level should !e high.
The formula used for its calculation is as follows#
Ma im,m level of Inventory > Reor"er level Reor"er /,antity
9Minim,m cons,mption
Minim,m reor"er perio"
Reor"er level + This level lies !etween minimum and maximum levels in such a waythat !efore the material ordered is received into the stores there is sufficient -uantity
on hand to cover !oth normal and a!normal consumption situations. In other words it
is the level at which fresh order should !e placed for replenishment stock. The reorder
level must !e sufficient to cover the maximum possi!le consumption of stock duringlead time 'reorder period).
It is set after consideration of the following factors.
6.Eate of consumption.
7.2inimum level.
8.=ead time i.e. delivery time.9.?ariation in lead time.
formula used for its calculation is as follows
#
HND COLLEGE 18
Reor"er level > Ma im,m reor"er perio" Ma im,m Usa#e)
-
8/18/2019 Ali Finalproject
19/88
MBA PROGRAMME
Dan#er level + It is the level at which normal issues of the raw material inventory arestopped and emergency issues are only made.
Dan#er level > Av# cons,mption 6ea"time for emer#ency p,rchases
O$'ectives of Inventory 2al,ation
The o!(ectives of inventory valuation are discussed here !elow as follows
• Determination of Income The valuation of inventory is necessary for determining the true income earned !y !usiness during a period.
• Determination of 3inancial position % The inventory at the end of period is to
!e shown as a current asset in the !alance sheet of the !usiness. In case of theinventory is not properly valued the !alance sheet will not disclose the correct
financial position of the !usiness.
Metho"s of Inventory 2al,ationSince Inventory is the single largest asset in the !alance sheet of most
organi"ations the valuation of inventory !ecomes of utmost importance and crucial to
the financial executives.
Metho"s of 2al,ation of Inventories
The different methods used for valuation of inventories may !e enumerated as
follows +
Metho"s $ase" on Act,al cost
• =ast%in%,irst%out method.• 4ighest%in%,irst%out method.• Specific identification price.• /ase stock price.• d(usted selling price.
Metho"s $ase" on Avera#e cost• Simple average price.
• $eighted average price.
Metho"s $ase" on Act,al cost
HND COLLEGE 19
-
8/18/2019 Ali Finalproject
20/88
MBA PROGRAMME
The methods of actual cost are as follows %
• 3irst in 3irst o,t Metho" + The ,irst%in%,irst%out 2ethod of pricing materialsis !ased on the assumption that the materials which are purchases first are
issued first. The flow of cost of materials should also !e in the same order.
• 6ast in 3irst o,t Metho" + This method is (ust reverse of ,I,0. It operates onthe assumption that the latest received materials are issued first for production
and those received first issued last. The price of the last lot of materials received
is used for all the issues until all units from this lot have !een issued after which
the price of the previous lot received !ecomes the issue price.• 8i#hest in 3irst o,t metho" + Bnder this method the highest priced
materials are treated as !eing issued first. The closing inventory is kept at the
lowest possi!le price. It is undervalued in times of rising prices and thus secret
reserves are created.• !pecific i"entification price + The specific identification method may !e used
for inventories of items that are not ordinarily inter%changea!le or for goods
manufactured for a specific purpose. This method is !est suited for (o! order
industries which carry out individual (o!s or contracts against specific orders.• 0ase stoc7 price + The !ase stock formula proceeds on the assumption that a
minimum -uantity of inventory '!ase stock) must !e held at all times in order to
carry on !usiness. Inventories up to this -uantity are stated at the cost at which
the cost at which the !ase stock was ac-uired.
• A"',ste" !ellin# price + Bnder this method which is adopted !y retailersinventory is estimated at selling price and to value it at cost the estimated gross
profit is deducted there from. The alternative approach is to deduct current sales
from the total goods availa!le for sale at retail price. This gives the value of
Inventory.
Metho"s $ase" on Avera#e costThe methods of average cost are as follows %
HND COLLEGE 20
-
8/18/2019 Ali Finalproject
21/88
MBA PROGRAMME
• !imple avera#e price + Simple average price is the average of the priceswithout any regard to -uantities. Simple average price is calculated !y adding
up different prices and then dividing !y the num!er of different prices.
• %ei#hte" avera#e price metho" + $eighted average price is calculated !ydividing the total cost of material in stock !y the total -uantity of material in
hand. Bnder this method prices are averaged after weighting 'i.e. multiplying)
!y their -uantities. The average price at any time is simply the !alance value
figure divided !y the !alance units figure.
O01ECTI2E! O3 T8E !TUD4
HND COLLEGE 21
-
8/18/2019 Ali Finalproject
22/88
-
8/18/2019 Ali Finalproject
23/88
MBA PROGRAMME
• To gain the customer satisfaction through short time delivery.• To maintain sufficient inventory in the company for the smooth production and
sales operations.•
,or running the !usiness operations of the company in smooth and efficient
manner.
!CO+E O3 T8E !TUD4
This study on Inventory 2anagement has a wider scope as it assists the firms in
5efining the policies of inventory control programs to stock levels5etermining the most appropriate organi"ation structure.
HND COLLEGE 23
-
8/18/2019 Ali Finalproject
24/88
MBA PROGRAMME
5etermining the economic order -uantities stock outs safety stock
and lead time.In minimi"ing handling and storing cost.
IM+ORTANCE O3 T8E !TUD4
The study is significant to the following groups.
• To the or#ani5ation #/y this study the organi"ation can get
!enefits !y adopting various methods
HND COLLEGE 24
-
8/18/2019 Ali Finalproject
25/88
MBA PROGRAMME
and techni-ues to various pro!lems
that they are facing in inventory
2anagement.
• To the Government # The government can adopt special policies and strategies for the further
development of such organi"ations
• To me # This study is useful to me too inetting first hand experience of an
Industrial concern.
MET8ODO6OG4 O3 T8E !TUD4
The following is the methodology of the study. The collection of data is done in
two principle sources. They are as follows#
HND COLLEGE 25
-
8/18/2019 Ali Finalproject
26/88
MBA PROGRAMME
• 1rimary data.• Secondary data.
+RIMAR4 DATAThe primary data needed for the study is gathered through interview with
concerned officers and staff either individually or collectively. Some of the
information has !een verified or supplemented with personal o!servation conduct.
!ECONDAR4 DATA
The secondary data needed for the study was collected from pu!lished sources
such as pamphlets of annual reports returns and internal records reference from text
!ook and (ournals of financial management.
The collected information is mainly through secondary data
6IMITATION! O3 T8E !TUD4
s the details of inventory are maintained confidentially the pro(ect deals with
fewer areas of inventory.
HND COLLEGE 26
-
8/18/2019 Ali Finalproject
27/88
MBA PROGRAMME
s the time spent on pro(ect is only 9:days it is not possi!le to go in to detail
study of item wise.
The study is restricted to six depts. 0nly remaining depts. are not considered
The pro(ect covers the area of stores and spares under inventory management
system of the company. It does not deal with other inventories like raw
materials finished goods and work in progress.
INDU!TR4 +RO3I6ECotton
3otton is a soft staple fi!er that grows around the seeds of the cotton plant. It
is a natural fi!er harvested from the cotton plant. The fi!er most often is spun into
HND COLLEGE 27
-
8/18/2019 Ali Finalproject
28/88
MBA PROGRAMME
yarn or thread and used to make a soft !reatha!le textile which is the most widely
used natural%fi!er cloth in clothing today.
+rocessin# of Cotton in In"ia
In India the raw cotton also called as Japas is processed in a multi%stage
process descri!ed as !elow. The 1roducts of processing are
I. Garn.
II. 3ottonseed 0il.
III. 3ottonseed 2eal.
I) +ro",ction of 4arn
FA+A! TO 6INT # Japas 'also known as raw cotton or seed cotton) isunginned cotton or the white fi!rous su!stance covering the seed that is o!tained from
the cotton plant. The first step in the process is the cotton is vacuumed into tu!es that
carry it to a dryer to reduce moisture and improve the fi!er -uality. Then it runs
through cleaning e-uipment to remove leaf trash sticks and other foreign matter. In
ginning a roller gin is used to gra! the fi!er. The raw fi!er now called lint.
6INT TO 0A6E# The lint makes its way through another series of pipes to a press where it is compressed into bales 'lint packaged for market). fter !aling the
cotton lint is hauled to either storage yards textile mills or shipped to foreign
countries.
NOTE# The cotton seed is delivered to a seed storage area from where it is loaded intotrucks and transported to a cottonseed oil mill.
0A6E TO 6A+# 4ere the !ales are !roken down and a worker feeds the cotton into amachine called a K!reakerK which gets rid of some of the dirt. ,rom here the cotton
goes to a KscutcherK. '0perated !y a worker also called a scutcher). This machine
cleans the cotton of any remaining dirt and separates the fi!ers. The cotton emerges inthe form of thin K!lanketK called the KlapK.
HND COLLEGE 28
-
8/18/2019 Ali Finalproject
29/88
MBA PROGRAMME
6A+ TO CARDING# 3arding is the process of pulling the fi!ers into parallelalignment to form a thin we!. 4igh speed electronic e-uipment with wire toothed
rollers performs this task. The we! of fi!ers is eventually condensed into a
continuous untwisted rope%like strand called a sliver.
!I62ER TO RO2ING # The silver is then sent to com!ing machine. 4ere the fi!ersshorter than half%inch and impurities are removed from the cotton. The sliver is drawn
out to a thinner strand and given a slight twist to improve strength and then wound on
!o!!ins. These 1rocesses is called Eoving.
RO2ING TO 4ARN 'S1I;;I; )# Spinning is the last process in yarnmanufacturing. Spinning draws out the short fi!res from the mass of cotton and twists
them together into a long. Spinning machines have a metal spike called a spindle
which the thread winds around.
II) +ro",ction of Cotton !ee" Oil
1rocessing of cottonseed in modern mills involves a num!er of steps. They are as
follows#
• The first step is its entry into the shaker room where through a num!er of
screens and air e-uipment twigs leaves and other trash are removed.
• The cleaned seed is then sent to gin stands where the linters are removed from
the seed 'delinted). The linters of the highest grade referred to as first%cut
linters are used in manufacturing non%chemical products such as medical
supplies twine and candle wicks.
The second%cut linters removed in further delinting steps are
incorporated in chemical products found in various foods toiletries film and
paper.
• The delinted seeds now go to the huller. The huller removes the tough seed
coat with a series of knives and shakers. The knives cut the hulls 'tough outer
shell of the seed) to loosen them from the kernels 'the inside meat of the seedrich in oil) and shakers separate the hulls and kernels.
HND COLLEGE 29
-
8/18/2019 Ali Finalproject
30/88
MBA PROGRAMME
• The kernels are now ready for oil extraction. They pass through flaking rollers
made of heavy cast iron spinning at high speeds. This presses the meats into
thin flakes. These flakes then travel to a cooker where they are cooked at 6LC
degrees , to reduce their moisture levels. The prepared meats are conveyed tothe extractor and washed with hexane 'organic solvent that dissolves out the
oil) removing up to MND of the oil.
• 3rude cottonseed oil re-uires further processing !efore it may !e used for food.
The first step in this process is refining. $ith the scientific use of heat sodium
hydroxide and a centrifuge 'e-uipment used to separate su!stances through
spinning action) the dark colored crude oil is transformed into a transparent
yellow oil. This clear oil may then !e !leached with special !leaching clay to
produce transparent am!er colored oil.
The refined cotton seed oil has several advantages other than edi!le oils. It
contains mere advantage over other edi!le oils. It contains a large percentage of 1oly
Bnsaturated ,atty cids '1B, ) which maintain cholesterol in the !lood at a healthy
level.
The -uality of cotton oil depends on the weather prevailing during the time that
cotton stands in the fields after coming to maturity. 4ence -uality of oil varies from
place to place and season to season. The -uality of oil is high in dry seasons and low
when the seed is exposed to wet weather in the fields or handled or stored with high
moisture. ,urther cotton seed cooking oil has a long span of life due to the presence of
vitamin *.
III) +ro",ction of Cottonsee" Meal@Ca7e@Fapas7halli
• Japaskhalli 'cottonseed extraction&meal) is a !yproduct of the cottonseed
industry.
• 3ottonseed is a !y%product of the cotton plant which is primarily grown for its
fi!er. lthough cotton has !een grown for its fi!er for several thousand years
the use of cottonseed on a commercial scale is of relatively recent origin.
HND COLLEGE 30
-
8/18/2019 Ali Finalproject
31/88
MBA PROGRAMME
• 3ottonseed was a raw agricultural product which was once largely wasted.
;ow it is !eing converted into food for peopleO feed for livestockO fertili"er and
mulch for plantsO fi!er for furniture paddingO and cellulose for a wide range of
products from explosives to computer chip !oards.
The figure showing the products o!tained from processing the raw cotton#
5iagram 7.6
Source# The 3otton 3orporation of India =td.
3otton ?arieties in India
• /engal 5eshi mainly produced in the states of 1un(a! 4aryana and Ea(asthan.
• >ayadhar mainly produced in the state of Jarnataka.
• /unny 'or) /rahma is mainly produced in the states of 2aharashtra 2adhya
1radesh ndhra 1radesh and Jarnataka.
• Suvin is another variety produced in the state of Tamil ;adu.
• 4%9 'or) 2*346 is mainly produced in the states of 2aharashtra 2adhya
1radesh and ndhra 1radesh.
Role of Cotton In",stry in In"ian Economy
0ver the years country has achieved significant -uantitative increase in cotton
production. Till 6MLCs country used to import massive -uantities of cotton in the
range of N.CC to M.CC lakh !ales per annum. 4owever after overnment launched
special schemes like intensive cotton production programmes through successive five%
HND COLLEGE 31
-
8/18/2019 Ali Finalproject
32/88
MBA PROGRAMME
year plans that cotton production received the necessary impetus through increase in
area and sowing of 4y!rid varieties around mid LCs.
Since then country has !ecome self%sufficient in cotton production !arring few
years in the late MCs and early 7Cs when large -uantities of cotton had to !e imported
due to lower crop production and increasing cotton re-uirements of the domestic
textile industry.
Cotton pro",ction Areas in In"ia
India is an important grower of cotton on a glo!al scale. It ranks third in glo!al
cotton production after the Bnited States and 3hinaO with M.:C million hectares grown
each year India accounts for approximately 76D of the worldPs total cotton area and
68D of glo!al cotton production. The 3otton producing areas in India are spread
throughout the country. /ut the ma(or cotton producing states which account for more
than M:D of the area under and output are#
6. 1un(a!.
7. 4aryana.
8. Ea(asthan.
9. 2aharastra.
:. u(arat.
Q. 2adhya 1radesh.
L. ndhra 1radesh.
N. Tamil ;adu.
M. Jarnataka.The nine cotton producing States in India average yields are highest in 1un(a!
where most of the cotton area is irrigated.
/ut the yields of cotton in India are low with an average yield of :C8 kg&ha
compared to the world average of L89 kg&ha. The pro!lem is also compounded !y
higher production costs and poor -uality in terms of varietals purity and trash content.
HND COLLEGE 32
-
8/18/2019 Ali Finalproject
33/88
MBA PROGRAMME
4owever the 3otton plays an important role in the ;ational economy providing
large employment in the farm marketing and processing sectors. 3otton textiles along
with other textiles also contri!ute a!out 6&8rd of the Indian exports.
Contri$,tion of Cotton in",stry for Te tile In",stry
3otton is the most important raw material for IndiaPs Es. 6 :C CCCcrores textile
industry which accounts for nearly 7CD of the total national industrial production.
The cotton Industry is the !ack!one of our textile industry accounting for LCD
of total fi!er consumption in textile sector. It also accounts for more than 8CD of
exports making it IndiaPs largest net foreign exchange industry. India earns foreign
exchange to the tune of R6C%67 !illion annually from exports of cotton yarn thread
fa!rics apparel and made%ups.
The cotton Industry provides employment to over 6: million people. nd the
area under cotton cultivation in India 'M.: million ha) is the highest in the world i.e.
7:D of the world area.
!teps ta7en $y the Cotton +ro",cers in In"ia ;ow%a%days the Indian 3otton producers are continuously working to up%grade
the -uality and increase the cotton production to cope up with the increased glo!al
demand for cotton textiles and to meet the needs of the 8M million spindles capacity of
the domestic textile industry which presently consumes a!out 67%69 million !ales
annually.
In India cotton yields increased significantly in the 6MNC’s and through the first
half of 6MNC’s !ut since 6MMQ there is no increase in yield. In the past the increase in
cost of production of cotton was partially offset !y increase in yield !ut now with
stagnant yield the cost of production is raising. /esides low yield Indian cotton also
suffers from inconsistent -uality in terms of length micronaire and strength.
HND COLLEGE 33
-
8/18/2019 Ali Finalproject
34/88
MBA PROGRAMME
+olicy of Government of In"ia towar"s Cotton In",stry
The 3otton production policies in India historically have !een oriented toward
promoting and supporting the textile industry.
The overnment of India announces a minimum support price for each variety
of seed cotton 'kapas) !ased on recommendations from the 3ommission for
gricultural 3osts and 1rices. The overnment of India is also providing su!sidies to
the production inputs of the cotton in the areas of fertili"er power etc
Mar7ets for In"ian Cotton
The three ma(or groups in the cotton market are
• 1rivate traders
• State%level cooperatives
• The 3otton 3orporation of India =imited.
0f these three groups private traders handle more than LC percent of cottonseed and
lint followed !y cooperatives and the 33I.
The 3otton 3orporation of India =td. for the year 7C66%67 had purchased QC.8C
lakh -uintals of kapas e-uivalent to 66.LL lakh !ales valuing Es.676N.LC crores in
ndhra 1radesh 2aharashtra 2adhya 1radesh 0rissa and Jarnataka. /eside these
the 3orporation had also carried out commercial operations and purchased 7.L6 lakh
!ales valuing Es.7N:.N7 crores in the year 7C66%67 as compared to around 6.CC lakh
!ales valuing Es.6CN.N6 crores during the previous year 'i.e. for the year 7C6C%66).
E ports of Cotton
The main market for Indian cotton export is 3hina. The other markets also
include Taiwan Thailand and Turkey. In >uly 7CC6 the union government removed all
cur!s on cotton exports. s a result of these now the exporters are not re-uired to
HND COLLEGE 34
-
8/18/2019 Ali Finalproject
35/88
MBA PROGRAMME
o!tain any certificate from the Textile 3ommissioner on the registration allocation
-uality and -uantity of export.
India exported around 7: per cent cotton during 7C67%68 and it is estimated
nearly Q7 per cent exported to 3hina.
5uring the year 7C67%68 the prices of Indian cotton in early part of the season
!eing lower than the international prices had !een attractive to foreign !uyers and
there was good demand for Indian cotton especially S%Q 4%9 and /unny which had
resulted in sustained cotton exports which are estimated at ::.CC lakh !ales
The 3otton dvisory /oard 6N%7C percent increase in cotton exports to Q: lakh
!ales for 0ct 7C6C% Sep 7C66 as against its ug 7CCM of :N lakh !ales.
Imports of Cotton
5espite good domestic crops India is importing cotton !ecause of -uality
pro!lems or low world prices particularly for processing into exporta!le products like
yarns and fa!rics.
India imported (ust L 76 CCC lakh !ales of cotton in 7CC:%CQ. The imports rose
to 67 6L CCC lakh !ales in 7CC:%CQ 9L CC CCC lakh !ales in 7CCQ%CL and the
anticipated imports for the year 7CCL%CN are : :C CCC lakh !ales.
,or the year 7CCL%CN the cotton imports into the country had once again
remained limited mainly to *xtra =ong staple cottons like as previous year which
were in short supply at around Q lakh !ales inclusive of import of around 7 lakh !ales
of long staple varieties contracted !y mills during pril%2ay 7CCM.7C66%67 the import
of long staple !ales are 8.: lakhs.
Role of Cotton see" oil in In"ian Economy
The glo!al production of cottonseed oil in the recent years has !een at around
9%9.: million tons. round 7 lakh tons are traded glo!ally every year.
HND COLLEGE 35
-
8/18/2019 Ali Finalproject
36/88
MBA PROGRAMME
The ma(or seed producers vi". 3hina India Bnited States and 1akistan are
the ma(or producers of oil. Bnited States 'QCCCC tons) is the ma(or exporter of
cottonseed oil while 3anada is the ma(or importer.
3ottonseed is a traditional oilseed of India. In India the average production of
cotton oil is around 9 lakh tons a year. It is estimated that if scientific processing is
carried out the oil production can !e increased !y another 9 lakh tons.
In India the oil recovery from cottonseed is around 66D. u(arat is the ma(or
consumer of cottonseed oil in the country. It is also used for the manufacture of
vanaspati. The price of cottonseed oil is generally dependent on the price !ehavior of
other domestically produced oils more particularly groundnut oil.
India used to import around 8CCCC tons of crude cottonseed oil !efore palm
and soyoil !ecame the only imports of the country. 3urrently the country does not
import cottonseed oil.
Role of cottonsee" meal in In"ian Economy
India produces around 7 million tons of cottonseed meal a year. 4owever inIndia mainly undecorticated meal is largely produced. Several associations are
promoting the production of decorticated cake in India and the production of this is
expected to increase in the country.
India used to !e a ma(or exporter of cottonseed extraction around two decades
ago. 4owever the demand for other oil meals like soymeal has lowered the cottonseed
demand glo!ally. In addition the low availa!ility of decorticated meal in India hasalso !een a ma(or reason for the fall in exports.
The ma(or importers of Indian cottonseed meal 'undecorticated) used to !e
Thailand. India in 7CC8%C9 exported only :C tons of decorticated cottonseed meal. In
7CC9%C: too there have !een no significant exports. India does not import cottonseed
meal.
HND COLLEGE 36
-
8/18/2019 Ali Finalproject
37/88
MBA PROGRAMME
The Or#ani5ations "ealin# with the promotion of Cotton In",stry in In"ia
The organi"ations that try to promote the -uantity and -uality of 3otton in India are
I. The 3otton corporation of India =td.II. 3otton dvisory !oardsIII. 3otton ssociation of India.I?. 3entral Institute of 3otton Eesearch.
I) The Cotton Corporation of In"ia 6imite"
The 3otton 3orporation of India =td. was esta!lished on 86st >uly 6MLC as a
overnment 3ompany registered under the 3ompanies ct 6M:Q. In the initial period
of setting up as an gency in 1u!lic Sector 3orporation was charged with the
responsi!ility of e-uita!le distri!ution of cotton among the different constituents of
the industry and to serve as a vehicle for the canalisation of imports of cotton.
$ith the changing cotton scenario the role and functions of the 3orporation
were also reviewed and revised from time to time. s per the 1olicy directives from
the 2inistry of Textiles overnment of India in 6MN: the 3orporation is nominated
as the ;odal gency of overnment of India for undertaking 1rice Support
0perations whenever the prices of kapas 'seed cotton) touch the support level.
The 3otton 3orporation of India =td. 0perations covers all the cotton growing
states in the country comprising of#
• 1un(a! 4aryana and Ea(asthan in ;orthern Hone.
• u(arat 2aharashtra and 2adhya 1radesh in 3entral Hone.
• ndhra 1radesh Jarnataka < Tamil ;adu in Southern Hone.
II) Cotton A"visory 0oar"
The 3otton dvisory /oard is a representative !ody of overnment& rowers&
Industries& Traders. It advises the overnment generally on matters pertaining to
production consumption and marketing of cotton and also provides a forum for
liaison among the cotton textile mill industry the cotton growers the cotton trade and
HND COLLEGE 37
-
8/18/2019 Ali Finalproject
38/88
MBA PROGRAMME
the overnment. It functions under the 3hairmanship of Textile 3ommissioner with
5eputy Textile 3ommissioner as a 2em!er Secretary.
III) The Cotton Association of In"ia
The 3otton ssociation of India also called as the *ast India 3otton
ssociation '*I3 ) was declared as the statutory !ody !y the /om!ay 3otton
3ontract ct on 7Nth 5ecem!er 6M77. Its purpose is to
• 1rovide and maintain suita!le !uildings or rooms or a 3otton
*xchange in the city of /om!ay or elsewhere in India.
• 1rovide forms of contracts and regulate the marketing etc. of the
contracts.
• ,ix and adopt standards or classifications of cotton.
• d(ust !y ar!itration or otherwise controversies !etween
1ersons engaged in the cotton trade.
• c-uire preserve or disseminate useful information connected with the cotton
interests.
I2) Central Instit,te of Cotton Research
$ith a view to develop a 3entre of excellence for carrying out long term
research on fundamental pro!lems limiting cotton production the Indian 3ouncil of
gricultural Eesearch has esta!lished the 3entral Institute for 3otton Eesearch at
;agpur in pril 6MLQ. 3I3E was simultaneously esta!lished at 3oim!atore to cater to
the needs of southern cotton "one. 3I3E was esta!lished at Sirsa in the year 6MN: to
cater to the needs of northern irrigated cotton "one. ll the three research farms are
well e-uipped with tractors and other farm implements and efforts are underway to
initiate further developmental work in all the farms.
The ?ision of the 3I3E is to improve production and -uality of Indian 3otton
with reduced cost to make cotton production cost effective and competitive in the
national and glo!al market. The 2ission of 3I3E is to develop economically via!le
HND COLLEGE 38
-
8/18/2019 Ali Finalproject
39/88
MBA PROGRAMME
and eco%friendly production and protection technologies for enhancing -uality cotton
production !y 7%8D every year on a sustaina!le !asis for the next twelve years 'till
7C7C).
The C,rrent !cenario of Cotton In",stry 9* (* (-
The cotton production in the country has !een increasing continuously since
last three years and the same has further gone up !y around 66D during cotton season
7C66%67 at a record level of 7LC lakh !ales as against 799 lakh !ales during 7C6C%
66. u(arat has turned into a largest cotton producing State with a record production%
level of M8 lakh !ales constituting around 89D of the country’s total production.
The area under cotton cultivation during 7C67%68 has also gone up !y around
QD at M6.:N lakh hectares as against NQ.LL lakh hectares during 7C66%67.
$ith wide usage of hy!rid seeds throughout the country as well as changed
mindset of cotton farmers for adoption of !etter and improved farm practices the
average productivity of cotton has crossed :C8 kgs per hectare as against 9LN kgs
during the previous year. The prices of Indian cotton in early part of the season !eing
lower than the international prices had !een attractive to foreign !uyers and there was
good demand for Indian cotton.
5ue to expectation of !umper crop the mill demand in the !eginning of the
season was su!dued which put pressure on the cotton prices right from the !eginning
of the season and has resulted into fall in cotton prices !etween 0cto!er 7C6C <
>anuary 7C66. 3otton prices reached its peak level !y end%2arch 7C66 and there was
some correction in cotton prices in pril and 2ay 7C66. 4owever on the whole
cotton prices remained !etter !y almost Es.8CCC per -uintal in almost all varieties as
compared to previous year.
3,t,re of Cotton In",stry in In"ia
HND COLLEGE 39
-
8/18/2019 Ali Finalproject
40/88
MBA PROGRAMME
3onsidering the continual capital investments in the textile industry the ovt.
of India may extend the Technology Bpgradation ,und Scheme 'TB,S) !y the end of
the 66th ,ive Gear 1lan 'till 7C67%7C68) in order to support the industry. Indian textile
industry is massively investing to meet the targeted output of RN:!n !y the end of 7C66 aiming exports of R:C!n. There is huge development foreseen in Indian textile
exports from the R6L!n attained in 7CCQ%CL to R:C!n !y 7C67%68. The estimation for
the exports in the current financial year is a!out R6M!n. There is su!stantial potential
in Indian exports of technical textiles and home%textiles as most *uropean companies
want to set up facilities near%!y the emerging markets such as 3hina and India.
The glo!al demand for apparel and woven textiles is likely to grow !y 7: percent !y year 7C66 to over 8:mn tons and sia will !e responsi!le for N: percent
output of this growth. The woven products output will also rise in 3entral and
Southern merican countries however at a reasona!le speed. 0n the other hand in
ma(or developed countries the output of woven products will remain sta!le. $eaving
process is conducted to make fa!rics for a !road range of clothing assortment
including shirts (eans sportswear skirts dresses protective clothing etc. and also
used in non%apparel uses like technical automotive medical etc
It is !een forecasted that the woven textile and apparel markets will sustain
their growth from current till 7C66.
The imports of apparel and textiles will rise from developed economies like the
BS and the western countries of *urope and >apan along with some newly emerged
economies such as South Jorea and Taiwan. 3ertainly import growth has !eenwitnessed vertical rise in the previous year.
pparel is the most preferred and important of all the other applications.
$oven fa!rics are widely used in apparel assortments including innerwear outerwear
nightwear and underwear as well as in speciali"ed apparels like protective clothing
HND COLLEGE 40
-
8/18/2019 Ali Finalproject
41/88
MBA PROGRAMME
and sportswear. 4ome textile also contri!utes considera!ly in woven fa!ric in
products assortments like curtains furnishing fa!rics carpets ta!le cloths etc.
Special kind of woven fa!rics are utili"ed in medical as well as industrial
applications. The medical applications include adhesives dressing !andages plasters
etc.
$here as industrial applications includesO
eotextile % interior upholstery trim air!ags and seat !elts and lyre fa!rics.
Sailcloth % tent and fa!rics used architectures transportation and taraulins.
nd many more applications
The Indian Industry foresees huge demand for industrial woven products for
medical and automotive applications. 5emand for woven fa!rics is anticipated to !e
rise vertically in the sector of home textiles.
;on woven sector has great future in terms of glo!al demand thus ma(or
facilities of cotton yarn are currently concentrating (ust on home textiles. It is
mandatory that the peak management of the cotton yarn manufacturers analy"e the
future prospect and growing graph of demand for non woven products.
Concl,sion:
HND COLLEGE 41
-
8/18/2019 Ali Finalproject
42/88
MBA PROGRAMME
nticipating massive growth in medical and automo!ile sectors these sectors
assures su!stantial demand for non woven facilities in India. l!eit home textiles also
will lure higher demand there are specific demands for home textile facilities also.The
Lth ,ive Gear 1lan has huge consideration on agricultural growth that also includescotton textileindustry resulting a prosperous future forecast for the textile industry in
India. Indian cotton yarn manufacturers should rush forward for (oint ventures and
integrated plans for esta!lishing processing and weaving facilities in home textiles and
technical textiles in order to meet export target of R:C!n and a total textile production
of RN:!n !y 7CCM%7C6C.
3,t,re Challen#es for the In"ian Cotton In",stry The challenges that are going to face !y the cotton producers in India for the
season 7C66%67 are#
• R,pee appreciation
The increase in the value of the rupee gives only smaller import orders to the
cotton producers.
• Cheaper Imports
The appreciated rupee value makes the cotton imports cheaper when compared
to past. So this aspect is also re-uired to consider !y the cotton producers.
• 6ow /,ality
The @uality of cotton is also far from satisfactory considering the presence of a
large num!er of contaminants. So the cotton producers are also re-uired to take care inthis aspect.
COM+AN4 +RO3I6EHND COLLEGE 42
-
8/18/2019 Ali Finalproject
43/88
MBA PROGRAMME
A$o,t the !ri Dhana 6a7shmi Cottons H Rice Mills +vt) 6t"):
SEI 54 ; = JS42I roup with its diverse interests in core areas is surging
ahead with drive and determination with all the companies super!ly integrated in one single
campus the group harnesses an entrepreneurial spirit state%of%art technology and financial
strengths to emerge as an industrial force to reckon with.
SEI 54 ; = JS42I group is driven !y a passion !e the !est in the all areas it
operates. /acked !y a high density of advance technology sophisticated manufacturing
facilities it’s only natural that the group is leaf fogging for an outstanding future. The total
group turnover is around 8CC crores per annum.
A$o,t the company:
The founder of SEI 54 ; = JS42I group who as drawn its future planned
growth. 2an whose spirit of 5ynamism has helped the group to achieve manifold growth.
Today SEI 54 ; = JS42I is multi%activity group with an Es.8CC crores turnover
comprising Q divisions with diverse interest in
3ottonEice0ilSpinning1ower < textile
A TRADITION O3 ENTER+RI!E:
s per !ack as 6M:Q Sri Sadineni 3howadaraiah left in pursuit of a dream. $ith (ust
two !ags of grain he ventured to cultivate 6CC acres of land. nd with the tell%tale spirit
gleaming in his eyes. This man had set the !all of a 67C crore conglomerate rolling. 4is value
+ oriented strategy and adventurous spirit !ore fruit consistently.
4is farmland grew and from a model farmer he evolved into a dynamitic entrepreneur.
4e proved that success start with a proactive attitude. vigorous confidence that one can
effectively integrate ideas with enterprise.
Sadineni’s first trip to EBSSI gave him the power of conviction to stride !oldly into
the industrial environment. nd validity into the future.
The 0irth of a Dream:
HND COLLEGE 43
-
8/18/2019 Ali Finalproject
44/88
MBA PROGRAMME
SEI S 5I;*;I 340$ 5 E I 4 set up a cotton ginning mill in 6MLL. Theoperation grew rapidly to lay solid foundations for giant surging ahead in diverse
environments. To the group the future is rich in possi!ilities.
future where the !est of minds and men will work. nd will have the most resource
to drawn upon. It’s vision of the future where change will !e em!raced as the very !asis of
opportunity and *ndeavour.
The managing 5irectors of SEI 54 ; = JS42I 30TT0; < EI3* 2I==*S '1)
=T5. Eelentless pursuit of perfection is the hall mark of this young and dynamic /.Tech.
Textiles graduate. 4is rich and professionals experience in the spinning line ena!led SEI
54 ; = JS42I’s Spinning 5ivision to scale new heights.
4is enterprising "eal and cautious planning have !een the pivotal points in driving the
group towards trail!la"ing progress. 2r.E 4 ? E 0 is committed to la!our welfare and
his visionary leadership has earned him a wealth of respect among the la!our of SEI
54 ; = JS42I. n astute professional !y ha!it he is forever aiming higher.
4e is widely acknowledged as the man has fostered a ‘can do’ culture which starts attop and filters down to every employee at SEI 54 ; =JS42I. 4e is powered !y (ust one
!elief
!,ccess is a matter of e cellence& an" not chanceJ)
Social service has always !een a matter of prime concern to him. $hich is why he
perennially strives to provide the !est education and undertake multi%pronged schemes
towards the !etterments of the community.
$hile nurturing a corporate culture that encourages individual growth he is
committed to a vision that encompasses every!ody’s up liftmen.
Cotton Division:
The 30TT0; I;;I; < 1E*SSI; B;IT was started in 6ML8. The division
maintains :9 ins and 6 4ydraulic press with a turnover of Es.9Ccrores. The company firmly
HND COLLEGE 44
-
8/18/2019 Ali Finalproject
45/88
MBA PROGRAMME
!elieves that unmatched plus an in%depth knowledge of various cotton growing areas alone
can put it on the path to speedy growth.
This division also processes India’s !est long staple cotton 534%87 at 5harwad
/ranch Jarnataka. The division is poised to excel and is confidently geared to post an
impressive growth rate. This 5ivision has stayed !ig thinking !ig and keeping an eye on the
details that sustain -uality.
Man,fact,re of cotton I)E) 0y Ginnin# H +ressin# Activities:
• =I3*;S*5 # =icensed under Industries '5
-
8/18/2019 Ali Finalproject
46/88
MBA PROGRAMME
These awards recogni"e SEI 54 ; =JS42I’s pursuit of excellence which is
achieved through enhanced productivity -uality up gradation and a shared of commitment.
Indeed this outstanding recognition sets an example to all the other oil and extraction
industries in the country.
0il 5ivision consists of cotton seed processing plant *xpeller '0il 2ills) Eefinery
and solvent *xtraction 1lant.
=I3*;3I*5 # Eegistered with 5 T5 ;ew 5elhi.1rocessing # 2anufacturing of dou!le refined oil.Installed 3apacity # 9C 2/ *di!le oil per day of 79 hours of working.Eaw material # 3otton Seed Sun flower seed Soya !een seed rice !ran other
seeds.,inished products # 3otton linters *di!le refined oil hulls extraction.
!pinnin# Division:
The SEI 54 ; =JS42I S1I;;I; 2I==S 5I?ISI0; has !een a trend setter
ever since it’s commissioning. *sta!lished in 6MM6 the plant started commercial production
of world class yarn to the re-uirement of glo!al markets as well as indigenous markets.
3onceived in a sprawling area in the midst of rich cotton hori"on. $e are having a
capacity of QC CCC spindles. The impressive performance reflects SEI 54 ; =JS42I’s
commitment to continue machine moderni"ation.
The division through a concerted *ndeavour assures exemplary -uality !y
undertaking rigid -uality control measures which start right at the stage of procuring raw
material ingredients down to the last level.
It is the dedicated -uality consciousness that as covered the way for a phenomenal
demand for SEI 54 ; =JS42I products.
ll this translate into utmost customer satisfaction. The unit is envia!ly well%
esta!lished as a leading player for the highly competitive export markets ever since 6MMQ.
SEI 54 ; =JS42I’s magnificent with exports has won for it important international
markets. In facts over LCD of the produce was ma(or *uropean countries.
HND COLLEGE 46
-
8/18/2019 Ali Finalproject
47/88
MBA PROGRAMME
In recognition of its excellent -uality conforming to the highest international
standards the products of SEI 54 ; =JS42I have won widespread appreciation and
repeat orders.
/y exporting world class cotton yarn glo!ally the mill is leap fogging for the further
growth.
The thrust on higher capacity utili"ation uncompromising productivity standards
-uality management astute focus on niche markets prompt delivery schedules com!ined
with competitive pricing have in higher sales and profits
=I3*;3I*5 # Eegistered with 0ffice of the Textile commissioner 1rocessing # MQ loomsInstalled 3apacity # Q8 QCC SpindlesEaw material # 3otton lint,inished products # 3otton yarn
Environmental protection an" !afety . A Top priority:
$e !elieve that environmental protection re-uires attitude action and right
application technology. The group is an eco% friendly entity whose concern is conservation of
life and situation. The division does not release any toxic wastes and pollutants.
nd across every unit of the group humidity moisture and temperature are
constantly monitored to ensure top most safety. The very fact we have made wearing of
marks mandatory for the personnel !ear’s amp witness to our commitment to industrial
safety.
The environmental protection commitment of the company firmly !elieves that when
we use the !ounties of mother earth we have to give !ack an environmental that is
conductive to healthy living.
Co,nt Ran#e:
$e are running from :C to 6CC counts in singles well as dou!le 'T,0) yarns. $e are
running compact yarnwith 67CCC spindles 'suessen). $e will achieve 7:CCC spindles
compact yarn shortly.
HND COLLEGE 47
-
8/18/2019 Ali Finalproject
48/88
MBA PROGRAMME
Rice Division:
This division conducts Eice 2illing ctivities#
1ara /oiled Eice 2ill # 2illing of 9NC @tls of paddy per day 79 hrs working.Eice 2ill # 2illing of 9NC @tls of paddy per day of 79 hrs workingEaw 2aterial # paddy,inished 1roducts # Eice /ran
Te tile Division:
The 5ivision was started in 7CC:. The units e-uipped with imported machinery.
1resently we are running with 9N /rand ;ew =ooms.
$e have sucker wrapping and si"ing. Total plant planned for MN =ooms. In phased
manner we are expanding the looms capacity.
+ower Division:
The future is a limitless expense of changes waiting for the strongest to step in and
con-uer. 0nly those with all the answers will emergency victorious. In the wake of fast
depleting fuel resources and an increasing drive for self% reliance SEI 54 ; =JS42I
E0B1 reali"es the alarming glo!al concern.
To reach the goal of self%reliance the progressive dynamic and growth oriented
roup has naturally moved into the core sector% power. mere 9C Jms away from the
company’s factories at anapavaram.The power pro(ect will not only serve as a ma(or !oost
to the company !ut will meet the ever growing captive consumption needs. To SEI
54 ; =JS42I relia!ility is an acronym missionary self%confidence.
Eeason why SEI 54 ; =JS42I is fully geared to meet any emerging power need.SEI 54 ; =JS42I is harnessing its technology resources and inherent strengths to gain
the competitive edge.
!tatements of Acco,ntin# +olices:
eneral,ixed ssetsInvestments5epreciationInventories
HND COLLEGE 48
-
8/18/2019 Ali Finalproject
49/88
MBA PROGRAMME
*xcise 5utySalesTaxes 0n IncomeSegment EeportingEetirement /enefits1roposed dividend,oreign 3urrency TransactionsImpairment of ssets3ontingent =ia!ilities,oreign *xchange *arnings and 0ut o
General:
The accounting is prepared on historical cost convention and in accordance with
normally accepted ccounting 1rinciples.
3i e" Assets:
,ixed assets are stated at cost less accumulated depreciation. 3ost of ac-uisition of
fixed assets is inclusive of directly attri!uta!le cost of !ringing the assets to their working
condition.
The intended use and interest on !orrowings till the date of commissioning of the
assets 3*;? T&? T credit availed if any on fixed assets is not included in the cost of such
fixed assets capitali"ed.
Investments:
=ong% term investments are valued at cost price less provision for diminution on
account other than temporary decline in the value of investment.
Depreciation:
5epreciation is a written off in accordance with the provisions of schedule FI? of the
companies act 6M:Q as follows#
Bnder straights% =ine method in respect of the assets of Spinning 1ower and Textile
5ivisions.Bnder written down value method on the assets of all other division of the company.
Inventories:
HND COLLEGE 49
-
8/18/2019 Ali Finalproject
50/88
MBA PROGRAMME
?aluation of inventories is made as follows#
Eaw%material and ,inished goods at cost or net reali"a!le value whichever is lower.$ork%in%progress at cost inclusive of direct production overheads.Stores and spares at cost.*lectronic power at net releasa!le value.
E cise D,ty:
=ia!ility on finished goods is accounted for as and when goods are cleared from
factory and there is no lia!ility on closing stock of finished goods at the year end.
!ales:
Sales are exclusive of sales tax collection due to implementation of 1 ? T ct 7CC:
Ta es on Income:
current taxes are determined as pert the provisions of income Tax ct 6MQ6 in respect
of taxa!le income for the year ended 86 st march 7C6C.
5eferred tax lia!ility is recogni"ed su!(ect to the consideration of timing differences
!eing the difference !etween the taxa!le income and accounting income the originate in one
period and are capa!le of reversal in one or more su!se-uent periods. In case of power
division which eligi!le for tax 4oliday. 5eferred Tax sset&lia!ilities for timing differences
which reverse after the Tax 4oliday period are recogni"ed.
!e#ment Reportin#:
The accounting policies adopted for segment reporting are in line with the accounting
policies of the company with the following additional policies for segment reporting. Inter%
segment revenue has !een accounted for !ased on the market related prices.
Eevenue and *xpense other than interest have !een identified to segments on the
!asis of their relationship to the operating activities of the segment. Eevenue and expense
which related to the enterprise as a whole and are not alloca!le to segments on a reasona!le
!asis have !een included under “Bnallocated” head.
Retirement 0enefits:
HND COLLEGE 50
-
8/18/2019 Ali Finalproject
51/88
MBA PROGRAMME
The company makes regular monthly contri!ution to provident fund which are
deposited with the overnment and roup term Insurance is routed through =.I.3 and are
charged against the revenue. The company has taken roup radually '3ash ccumulation)
scheme with =ife Insurance 3orporation of India.
The premium on policy and the difference !etween the amounts of gratuity paid on
retirement and recovered from the =ife Insurance 3orporation of India de!ited to profit and
=oss ccount. =eave encashment is accounted as and when the la!our claimed and paid.
+ropose" Divi"en":
1rovision is made in the account for the dividend paya!le 'including of all tax
thereon) !y the company as recommended !y the /oard of 5irectors 1ending approval of theshareholders at the annual eneral 2eeting.
3orei#n C,rrency Transactions:
Import of material&capital *-uipment is accounted at the rates at which actual
payments are effected.The profit &=oss arising out of foreign *xchange transactions on sale of goods are
accounted on actual reali"ation !asis.,oreign 3urrency loans covered !y forward contracts are stated at the forward
contracts rates while those not covered are calculated at year end rate.
Impairment of Assets:
t the date of each !alance sheet the company evaluates internally indication of the
impairment if any to carrying amount of its fixed and other assets. ;o impairment loss has
!een recogni"ed.
Contin#ent 6ia$ilities:
3ontingent =ia!ilitie s are not recogni"ed in the accounts !ut are disclosed after acareful evaluation of the concerned facts and legal issues involved.
Achievements H Awar"s:
HND COLLEGE 51
-
8/18/2019 Ali Finalproject
52/88
MBA PROGRAMME
Gear 3otton seed processed <
extraction sales 2.Ts
chievements
7CCM%7C6C 6697:M.CCC
:::68.NNQ
Stood first in scientific processing of cotton
seed.Stood first in India in domestic sales of cotton
seed *xtraction7C6C%7C66 667LNM.CCC
:M6::.7NC
Stood first in scientific processing of cotton
seed.
Stood first in India in domestic sales of cotton
seed *xtraction7C66%7C67 669MQC.CCC
::C9Q.CN9
Stood first in scientific processing of cotton
seed.
Stood first in India in domestic sales of cotton
seed *xtraction7C67%7C68 66N779.77:
:7M7L.Q79
Stood first in scientific processing of cotton
seed.
Stood first in India in domestic sales of cotton
seed *xtraction
7C68%7C69 66QL77.CCC
:86::.6MC
Stood first in scientific processing of cotton
seed.
Stood first in India in domestic sales of cotton
seed *xtraction
0oar" of Directors:
• Sri. ;.raghava Eao. /.*.%3hairman < 25.• Sri. 1. Eaghava Eeddy. /.*.*lectronics%5irector.• Sri. 2.=ingaiah. 2.Sc + 5irector.• Sri. S. 4anumantha Eao. /.3om + 5irector.• Sri. 3a 1v. ;arayana ca cs + 5irector < Secretary.
Man +ower in Dhanala7shmi Gro,p:
Ta$le -)(:
0il 5ivision 8CC
Spinning 5ivision 7:C
HND COLLEGE 52
-
8/18/2019 Ali Finalproject
53/88
MBA PROGRAMME
Textile 5ivision 6CC
3otton 5ivision 8CC
1ower 5ivision 9Q
Eice 5ivision 8C3,t,re O,tloo7:
0peration on consolidated !asis continues to pose healthy trends. 4owever changes
in the industrial trends are !ound to influence spinning operations.
3ompany has ac-uired 9N looms under first phase of pro(ect implementation for
textile division. Textile operations have come out of teething pro!lem !ut have to reach
estimated levels in operation and profits. This shall take some more time in view of dip in
dollar valuation and decline in exports.
Thus company has to grapple with an industrial scenario that calls for alert and
caution.0il division is showing immense potential to reach higher levels in all spheres of
operations.1ower division shall perform well in the current year also.In view of this we are hopeful of improved performance in 7CCL%CN despite the
difficulties posed.
3orei#n E chan#e Earnin#s an" O,t Go:
The company has earned foreign exchange of Es.L7:.L7 lakhs of its finished goods
and Es.69M8.6Q lakhs !y export through merchant & trade house of its finished goods.
The company has spent Es.:N.M: lakhs of foreign exchange towards import of raw%
material Es.9.6N lakhs towards import of components < spare parts Es.66QQ.8L lakhstowards import interest on foreign currency loan and Es.66.MC lakhs towards freight
commission < traveling.
HND COLLEGE 53
-
8/18/2019 Ali Finalproject
54/88
MBA PROGRAMME
DATA ANA64!I! AND INTER+RETATION
C,rrent Ratio
li-uidity ratio that measures a companyPs a!ility to pay short%termo!ligations. The ratio is mainly used to give an idea of the companyPs a!ility to pay
!ack its short%term lia!ilities 'de!t and paya!les) with its short%term assets 'cash
inventory receiva!les). If the current assets of a company are more than twice the
current lia!ilities then that company is generally considered to have good short%term
financial strength. If current lia!ilities exceed current assets then the company may
have pro!lems meeting its short%term o!ligations. The conventional current ratio is
7#6.
Ta$leK)(
4ear C,rrent Assets C,rrent 6ia$ilities Ratio7C6C%66 9: 7Q 8N L:9&% M ML C6 97M&% 9.:8M#6
7C66%67 Q: 87 L8 68:&% 6L 7C :Q 66:&% 8.LMQ#6
7C67%68 LM QN 79 6LM&% 7: L: QN L9N&% 8.CM8#6
7C68%69 N7 :6 69 6:6&% 6: L6 98 86N&% :.7:C#6
7C69%6: 6C6 LN NL 9NC&% 79 77 7Q 77C&% 9.7C7#6
HND COLLEGE 54
C,rrent ratio > C,rrent assets @ C,rrent lia$ilities)
-
8/18/2019 Ali Finalproject
55/88
MBA PROGRAMME
INTER+RETATION
The current ratio of the Sri 5hana =akshmi 3ottons < Eice 2ills 1vt. =td in
7C6C%66wa 9.:8MO it has !een increased to 8.LMQ in the year 7C66%67 and
further decreased to 8.CM8 in the year 7C67%68.The current ratio had increased to :.7:C in the year 7C68%69. t present the
current ratio of the company was Q9.7C7 i.e. in the year 7C69%6:.It is maximum ':.7:C) in the year 7C68%69 the reason for maximum current
ratio 'in 7C68%69) is due to decrease in current lia!ilities and increase in current
assets when compared to 7C6C%66.It is minimum '8.CM8) in the year 7C67%68 the reason for this is due to high
current lia!ilities and low current assets.
The overall trend of the current ratio is in increasing pattern and percentage
change in current ratio is C.88L!etween the period 7C6C%66 and 7C69%6:
HND COLLEGE 55
-
8/18/2019 Ali Finalproject
56/88
MBA PROGRAMME
;UICF RATIO
@uick ratio is an indicator of a companyPs short%term li-uidity. The -uick ratio
measures a companyPs a!ility to meet its short%term o!ligations with its most li-uid
assets. The higher the -uick ratio the !etter the position of the company. It is also
known as the Kacid%test ratioK or the K-uick assets ratioK. It is o!tained !y su!tracting
inventories from current assets and then dividing !y current lia!ilities. The
conventional -uick ratio is 6#6.
Ta$le K)*
HND COLLEGE 56
;,ic7 ratio > C,rrent assets . Inventory
C,rrent lia$ilities9or
> ;,ic7 assets @ C,rrent lia$ilities)
4ear ;,ic7 Assets C,rrent 6ia$ilities Ratio
7C6C%66 77 89 LN 8NM&% M ML C6 97M&% 7.79#6
7C66%67 8N 97 7Q 696&% 6L 7C :Q 66:&% 7.78#6
7C67%68 8N 67 C6 76Q&% 7: L: QN L9N&% 6.9N#6
7C68%69 88 7C 6Q Q88&% 6: L6 98 86N&% 7.66#6
7C69%6: 9C Q7 LM 6L8&% 79 77 7Q 77C&% 6.QN#6
-
8/18/2019 Ali Finalproject
57/88
MBA PROGRAMME
Interpretation:
The -uick ratio of the company in 7C6C%66 was 7.79O it has !een slightly
increased to 7.78 in the year 7CCM%C6C and further decreased to 6.9N in the year
7C67%68.
The -uick ratio had increased to 7.66 in the year 7C68%69. t present the
current ratio of the company was 6.QN i.e. in the year 7C69%6:.It is maximum '7.79) in the year 7C6C%66 the reason for maximum -uick ratio
'in 7C6C%66) is due to decrease in current lia!ilities when compared to 7C66%67.It is minimum '6.9N) in the year 7C67%68 this is mainly due to higher current
lia!ilities.The overall trend of the -uick ratio is in increasing pattern and percentage
change in -uick ratio is C.:Q !etween the period 7C6C%66and 7C69%6:.
Inventory T,rnover Ratio
HND COLLEGE 57
-
8/18/2019 Ali Finalproject
58/88
MBA PROGRAMME
Inventory turnover ratio indicates the efficiency of the firm in producing and
selling its product. It is calculated !y dividing cost of goods sold !y average
inventory. verage inventory consists of opening stock plus closing stock divided !y
7. high inventory turnover ratio indicated that the product is selling well. lowturnover ratio implies poor sales and therefore excess inventory. The following
formula is fre-uently used for calculation of ratio#
Ta$le K)-
4ear !ales Av#) Inventory Ratio
7C6C%66 :7 QC QC 8LL&% 7 :6 L7 878&% 7C.MC#6
7C66%67 QN ML :8 :QN&% 9 M8 CN QC7.:&% 68.MN#6
7C67%68 L8 M7 79 C6Q&% M CM MC 9:N.:&% N.67#6
7C68%69 NN M8 6M 66:&% 66 8M 88 LC9.:&% L.NC#6
7C69%6: 679 8L :L MC6&% M ML :6 :Q9&% 67.9L#6
HND COLLEGE 58
Inventory t,rnover ratio> !ales @ Avera#e inventory
Av#) Inventory > Openin# !toc7 Closin# !toc7
*
-
8/18/2019 Ali Finalproject
59/88
MBA PROGRAMME
Interpretation:
The Inventory turnover ratio of Sri 5hana =akshmi 3ottons < Eice 2ills 1vt.
=td. in 7C6C%66 was 7C.MCO it has !een slightly decreased to 68.MN in the year
7C66%67 and then increased to N.67 in the year 7C67%68.
The Inventory turnover ratio then raised up to L.NC in the year 7C68%69. t present the inventory turnover ratioof the company was 67.9L i.e. in the year
7C69%6:.
It is maximum '7C.MC) in the year 7C6C%66 and the reason for maximum
inventory turnover ratio is due to high sales in 7C6C%66 when compared to
7C66%67.
It is minimum 'L.NC) in the year 7C68%69 and the reason for this fall in
turnover.
The overall trend of the inventory turnover ratio is in decreasing pattern and
percentage change in inventory turnover ratio is N.98 !etween the period 7C6C%
66 and 7C69%6:.
HND COLLEGE 59
-
8/18/2019 Ali Finalproject
60/88
MBA PROGRAMME
Inventory to C,rrent assets ratio
This ratio indicates the relationship !etween inventory to current assets. 4igher
the ratio shows that inventory is properly utili"ed in the organi"ation. Inventory to
current assets ratio is calculated as follows#
Inventory to c,rrent assets ratio > Inventory @ C,rrent assets)
Ta$le K)K
4ear Inventory C,rrent assets Ratio
7C6C%66 77 M6 QC 8Q:&% 9: 7Q 8N L:9&% C.:6#6
7C66%67 7Q MC 9Q MM9&% Q: 87 L8 68:&% C.96#6
7C67%68 96 :Q 77 MQ8&% LM QN 79 6LM&% C.:7#6
7C68%69 9M 8C ML :6N&% N7 :6 69 6:6&% C.:M#6
7C69%6: Q6 6Q CN 8CL&% 6C6 LN NL 9NC&% C.QC#6
HND COLLEGE 60
-
8/18/2019 Ali Finalproject
61/88
MBA PROGRAMME
Interpretation:
The Inventory to current assets ratio of the company in 7C6C%66 was C.:6O it
has !een slightly increased to C.96 in the year 7C66%67 and then decreased to
C.:7 in the year 7C67%68.
The Inventory to current ratio had raised up to C.:M in the year 7C68%69. t
present the current ratio of the company was C.QC i.e. in the year 7C69%6:.
It is maximum 'C.QC) in the year 7C69%6: the reason for maximum inventory to
current assets ratio is due to increase in !oth inventory and current assets when
compared to 7C68%69.
The ratio is minimum 'C.96) in the year 7C66%67 and the reason for this is due
to high in !oth current assets and current lia!ilities.
The overall trend of the inventory to current assets ratio is in increasing pattern
and percentage change in inventory to current assets ratio is C.6: !etween the period 7C6C%66 and 7C69%6:.
HND COLLEGE 61
-
8/18/2019 Ali Finalproject
62/88
MBA PROGRAMME
Inventory to Total assets ratio
This ratio shows the relationship !etween inventory to total assets. Inventory isa part of the current assets of the company. It shows the portion of assets tied up in
inventory. enerally a lower ratio is considered !etter.
Inventory to total assets ratio > Inventory @ Total assets)
Ta$le K)L
4ear Inventory Total Assets Ratio
7C6C%66 77 M6 QC 8Q:&% MC N8 9C :67&% C.7:#6
7C66%67 7Q MC 9Q MM9&% 6 7N 9L NQ 8:M&% C.76#6
7C67%68 96 :Q 77 MQ8&% 6 N7 M: :C 877&% C.78#6
7C68%69 9M 8C ML :6N&% 7 6: L6 Q: :99&% C.78#6
7C69%6: Q6 6Q CN 8CL&% 7 9M :6 98 L9Q&% C.79#6
HND COLLEGE 62
-
8/18/2019 Ali Finalproject
63/88
MBA PROGRAMME
Interpretation:
The Inventory to total assets ratio of the company in 7C6C%66 was C.7: it has
!een slightly decreased to C.76 in the year 7C66%67 and then decreased to C.78
in the year 7C67%68
The ratio had then decreased to C.78 in the year 7C68%69. t present the
current ratio of the company was C.79 i.e. in the year 7C69%6:.
It is minimum 'C.76) in the year 7C6C%66.The reason for minimum inventory to
total assets ratio is due to increase in totNl assets when compared to 7C6C%66.
The ratio is maximum 'C.7:) in the year 7C6C%66 the reason for th