Final Jnk (2) 18TH AUG

8/4/2019 Final Jnk (2) 18TH AUG

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Part-1:

Organizational Profile


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ABOUT VAPI ESTATE

Vapi industrial cluster

Vapi once upon a time a miniscule town in Gujarat has now turned into a jewel. It has a

beauteous halo by being credited the largest industrial zone in Asia. Covered under the

district of Valsad, Vapi is situated on the banks of Damanganga River.

The period (1965-1975) in India, was the beginning of a revolutionary industrial

development. The city is best known for its nascent industrial growth.

The geographic location of Vapi has played a pivotal role in the development. Situated about

160 kms North of Mumbai, Vapi industrial Estate offers an ideal location for Chemical

industries. Basic raw materials are easily available as Vapi is very well connected by road

and rail to Mumbai, Baroda and Ahmedabad. The Arabian Sea is about 7 kms to the west of

Vapi where the Damanganga River creates its delta.

Numerous manufacturing plants produce varied products ranging from Chemicals, Papers,

Textiles, Pharmaceuticals, and Pesticides etc. which are exported globally.

The Industries Profiling

The year 1967, was the beginning of a golden era in the history of Vapi as the Vapi IndustrialEstate was flagged by the GIDC. It has spread into 11.4 kms, housing more than 1800 small

scale industries. Ever since there has been no turning back. GIDC provides industrial

infrastructure in terms of fresh water supply, conveyance of domestic and industrial effluents,

Common Effluent Treatment Plant (CETP), Treatment Stabilization Disposable Facilities

(TSDF), wide range of road network, schools, colleges, hospitals etc.

More than 65% of the total industries in the township are chemical plants, mainly for

chemical distillation and the production of pesticides, dyes, dye intermediates and paints.

Other major industries like paper, plastics, packaging, rubber, textiles, glass, wood, food

products etc. have also come to stay.


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Environment Protection

Preserving nature is our pleasure. It is our moral responsibility towards mother nature that has

always kept us on toes with a zest to preserve and protect our environment. Common Effluent

Treatment Plant (CETP) is one of the feathers in our cap which helps us to protect our

environment. This is the largest of its kind in Asia which treats the pollutants from these

industries before they are released in the river Damanganga. Vapi Waste & Effluent

Management Company Ltd. (VWEMCL) is a management company which was instituted by

the Vapi Industries Association (VIA) and has been in operation since January 1997.

Vapi Industries Association

Vapi Industries Association, popularly known as VIA, came into existence in 1971. VIA

floated a company in the name of Vapi Waste and Effluent Management Company Limited in

1997, non equity, nonprofit entity based on co-operative principles with corporate culture of

management, with an objective of providing a comprehensive environmental management

programs for the estate. VIA has played a key role in the development and establishment of

the industrial township in Vapi.


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Vapi Estate at a Glance

Total Area : 1117 Hect.

Total Road : 96 Kms.

Total SWD Pipe : 28 Kms. Pucca and 56 Kms. RCC

Water Supply Pipe Line : 110 Kms. (25 MGD)

Raw Water Source :Damanganga River

Effluent Collection Pipe Line : 79 Kms.

No. of operational industries (approx): 759


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Industrial Break-up:

Types of industries covered by the Estate:

Dyes & dyes Intermediate, chemical industries, pigments, printing inks, pesticides, fine

chemicals, pharmaceuticals, paper mills, textile, packaging, plastic and engineering.

Water consumption:

- Industrial (for estate) 60 MLD

- Domestic (Residential colonies) 11 MLD

Waste water generation:

- Industrial (for estate) 49 MLD

- Domestic (for residential colonies) 10 MLD.

EMS provided by the industries

(A) Waste water treatment facilities:

No. of units having primary & secondary treatment:

Unit having Primary Treatment 313

Unit having Primary & Secondary treatment 106

Unit having primary, secondary & tertiary treatment 126

No. of units attached to CETP 507.


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(B) Hazardous waste:

Over all hazardous waste disposed off in to the TSDF site is @ 4, 02,000 MT and all the

hazardous waste generated units are member of TSDF site Vapi. Main hazardous waste

generation is chemical waste from process, ETP sludge and in cinerable waste. The present

capacity of the TSDF site is 7.62 lacs MT and average hazardous waste generation is @

75000 MT per year.

Environmental track record of cluster.

During period of 1992 to 1995, chemical industries flourished. Due to non -existence of

TSDF and CETP during the period, estate remained under stress of pollution of water, air and

hazardous waste. Subsequently corrective measures have been initiated. CETP and TSDF

have come up. Streamlining of industrial waste water and hazardous waste were undertaken.

Air pollution control measures have been adopted by the industrial units. For the last two

years, 151 industrial units have been issued closure by GPCB under the Water Act 1974 and

Air Act 1981. Moreover industrial units have been issued notice of direction under the

environmental Acts.

Management of waste:

(A) MSW Management of Waste:

At present 35 MT per day of municipal solid waste generated from notified area is dumped

near fire station-2, GIDC, Phase2, Vapi. Proposed landfill site for MSW is at plot nos: 4507/1

to4508, 4510.4801 to 4803/1, GIDC, Vapi, measuring Totally 40,000 m area.

At present authorization is not given to notified area authority. MSW disposal site is under

proposal stage.

Domestic waste water:

Domestic wastewater of GIDC estate is being treated at CETP along with industrial effluent


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ABOUT THE COMPANY:-

Company name:

Vapi Waste & Effluent Management Company Limited.

Registered office(Head office) :

VIA House, Plot No. 135, GIDC, VAPI - 396 195, Gujarat, INDIA.

Tel.: (0260) 2428950, Telefax: (0260) 2429950

WEBSITE: www.vapicetp.com

E-mail: [email protected]

Two operational plans

1. Common effluent treatment plant:CETP, N. H. No.8, Near Damanganga Bridge, GIDC, Vapi 3960 195.

Tel.: (0260) 2432950, Telefax: (0260) 2434929


2. Common solid waste plant:CSWP, Plot 4807 etc. Phase IV, GIDC, Vapi 396 195.

Tel.: (0260) 2427950, 2435186, 29 90161.



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Governance & organization structure of VWEMCL

Board of directors:

1. Mr. Arvind Agrawal IAS

Chairman

VC & MD.

Gujarat Industrial Development

Corporation

8. Mr. J. K. Vyas

Director, (Environment)

Forest & Environment Department,

Gandhinar.

2. Ms. A. K. Shah Vice Chairman

M/s. Haria Garments Pvt. Ltd, Vapi

9. Mr. Pravinchandra K. Modi

Superintending Engineer

Gujarat Industrial Development

Corporation

3. Mrs. Sandra R. Shroff

M/s. United Phosphorus Ltd.

10. Prof. Gaurang H. Ban

Assistant Professor,

Environmental Engineering

TSDFCETPCentre of Excellence

CP & CLP Centre

Hazardous Waste ManagementWaste Water TreatmentEnvironment Awareness & Analytical

Assistance to the Member Units

Comprehensive Environment Management Plant


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4. Mr. Mahesh M. Pandya

President Vapi Industrial Associat

L. D. Engineering Collage,

Ahmedabad

5. Mr. Kanubhai M. Desai

Chairman, Vapi Notified Area

Governing Body

11. Mrs. Anjali Khambete

Associate Professor, Civil Engineering

Department,

SardarVallabhbhai Institute of

Technology,

Surat

6. Mr. H. D. Shrimali

Joint Industries Commissioner

(Salt/Txt), GoG

12. Mr. Anil Marchant

Technical Advisor

7. Mr. S. S. Bose

Senior Development officer

Department of Industrial Policy &

Promotion, GoI

13. Dr. D. C. Sharma

CEO, VWEMCL, Vapi


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Company overview

Vapi Waste & Effluent Management Company Limited, a Non Equity- Non Profit entity,

based on cooperative principles with corporate culture of management, was formed with anobjective of providing a Comprehensive Environment Management Program (CEMP) for the

estate. The company has installed end of the pipeline treatment facilities like common

effluent treatment plant (CETP) and transport, storage, disposal facility for hazardous solid

waste (TSDF) to control pollution levels and now focus is shifted to pollution abatement by

adopting and promoting Cleaner Production, Cleaner Technology for Cleaner Development

Mechanism.

The company has been incorporate pursuant to the suggestion of honorable Gujarat high-

court to manage the common effluent treatment plant and other environment related

activities. Accordingly, the company has taken over the common effluent treatment plant

(CETP) built by Gujarat industrial Development Corporation (GIDC) during the year ending

31th march 1998. Industrial Effluents and pollutant water discharged by the member unit

situated in Vapi GIDC estate are being treated by CETP. All the member units are require to

contribute towards the capital cost, running, repairs and maintains and up- gradation of the

plant, based on their self-estimated consumption in form of license fees, after obtaining the

membership of CETP.

The Vision

To be benchmarked with Clean & Green Vapi.

The Mission

Effective pollution control efforts.

Effective pollution abatement efforts.

Effective improved resistance capacity.

Effective improved quality of life at Vapi.


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The Strategies

Institutionalization of professional management team.

Involved and active participation from beneficiaries.

Corporate culture with co-operative principles.

Structural modifications.

The co-ordinated pool of resources and networking with various agencies.

The mile stone

In order to maintain the stipulated compliance level of regulator, VWEMCL has

incurred right from inception till total of Rs. 116.4 crores and Rs. 7 crores towards

operation and maintance of common effluent treatment plant(CETP) and treatment

stabilization disposal facilities(TFDS) respectively, a total of Rs. 123.4 crores.

The project comprises disposal of treated effluent from VAPI CETP up to deep sea along

river Damanganga.

Pipeline carrying Capacity: 100MLD.

Onshore pipeline: 12.2 km Length.

Offshore pipeline: 7.6 km Length.


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Service mix

(A)Waste water treatment facilities:

No. of units having primary & secondary treatment:

Unit having Primary Treatment : 313

Unit having Primary & Secondary treatment : 106

Unit having primary, secondary & tertiary treatment :126

No. of units attached to CETP: 507.

Note- There is some units which are reusing /evaporating/incinerating their effluent after

treatment and maintaining zero discharge.

(B) Air:

As part of air pollution control measures for the flue gas/process emission, industries

have adopted multi cyclone, cyclone, dust collector/ scrubbing system as APCM. Nos. of

Industries which have installed Bag filters, ESP are as under for the up gradation of the

ambient air quality:

1) Bag filters installed by industries: 59 Nos.

2) ESP installed by Industries: 14 Nos

3) Multi Cyclone Separators: 68 Nos.

4) Scrubbers: 186 Nos.

5) No of units using natural gas as fuel: 158 Nos. Total consumption of CNG is 4 lacs

cubic meter per day.

6) Vehicular pollution-

y Nos. of Rickshaws switch over to cleaner fuel CNG-2257

y Nos. of LMVs switched over to cleaner fuel CNG-428

y Nos. of LMVs switched over to cleaner Fuel LPG-3014

y One CNG Station of 1200SCMH capacity operated by GSPC is already

working. All 7Nos. petrol pumps having 2-T Mix facility in vapi area.


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(C) Hazardous waste:

Over all hazardous waste disposed off in to the TSDF site is @ 4, 02,000 MT and all the

hazardous waste generated units are member of TSDF site Vapi. Main hazardous waste

generation is chemical waste from process, ETP sludge and in cinerable waste. The present

capacity of the TSDF site is 7.62 lacs MT and average hazardous waste generation is @

75000 MT per year.

Geographical spread:

Vapi Industrial Estate, developed by GIDC, came into existence about four decades

ago, in 1967 -68. The estate, developed in phases, now spreads over 1140 hectaresand houses nearly 759 industries, majority of them being small scale units.

Basically a declared chemical estate, about 70 % of the industries are manufacturing

chemicals such as dyes and dyes intermediates, pigments, pesticides, fine chemicals,

and pharmaceuticals. The remaining 30 % are paper mills, packaging, engineering,

plastic, textiles, food processing, printing ink and many other products.

Vapi Industries Association, popularly known as VIA, came into existence in 1971.

VIA floated a company in the name of Vapi Waste and Effluent Management

Company Limited in 1997, non equity, nonprofit entity based on co-operative

principles with corporate culture of management, with an objective of providing a

comprehensive environmental management programs for the estate.


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Functional Areas

Marketing function

The Critical Issues As Per Gujarat Pollution Control Board Only treated sewage water should

be discharged into river Damanganga from residence / industrial belt of Silvassa as it is used

for drinking purpose on the downstream. Discharge of effluent by distilleries in river

Damanganga near Daman Jetty should be as per the norms of consent. Only treated sewage

water should be discharged into river Damanganga from residential area of Vapi and full-

fledged STP needs to be established joint efforts may be envisaged between UT and GOG for

cleaning of river Damanganga under river water treatment / cleaning project.

So, accordingly all industries are supposed to release the after clarifying it. And small

company cannot afford to develop its own treatment plan. So, in this sense the company is

doing an environment clarification and there is no need to market itself.


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Operati al plants:

(A) CET

The i t i l unit are di erse in nature and consist of pesticides, pul p and paper

mills, dyes and intermediates, drugs and pharmaceuticals, fine chemicals etc. Partially treated

wastewaters from these units are collected through GIDC s underground pipeline system

and conveyed to a Common Effluent Treatment Plant (CETP). National Environmental

Engineering Research Institute (NEERI) designed the CETP at Vapi in collaboration with

KirloskarConsultants for a capacity of 70 M D. The CETP is owned and operated by the

Vapi Waste & EffluentManagementCo. Ltd. The CETP was commissioned in January 1997

and started receiving an average 18000 m3/d of partially treated effluent.

CETP, Vapi is a simple, conventional plant consisting of physical, chemical and

biologicaltreatment.

It was designed forthe following parameters:


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Table 1: Design Parameters

Capacity : 70

MLD Parameter

Influent Effluent

BOD5, mg/L 400 100

COD, mg/L 1000 250

SS, mg/L 300 100

Ph 6.5 8.5 6.5 8.5

At present the CETP treats, on an average, around 70 MLD including domestic

sewage.

It consists of following treatment:

1. Primary Treatment2. Secondary Treatment

3. Tertiary Treatment


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1. Primary treatment

The waste water generated by all the industrial units is conveyed to CETP through an

underground pipeline network of about 80 k.m.

Inlet Chamber:

The main incoming chamber receives the influent from where it goes to Coarse

Screen chamber for removal of large floating particles, plastics, debris, etc. After the coarse

screen, the effluent then moves to automatic fine screen chamber

Automatic Fine screen:

The fine screening is done by automatic screening system. The fine screens are

capable of handling solids upto the size of 4 mm. The total screen is of SS 316 MOC

resulting is longer life of the equipment. No manual labour is required to do the screening as

a result decreasing the manpower consumption with more output. The scum gets collected

automatically in the waste bins.


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Grit Chamber:

The next stage of treatment is done in de-gritters unit where the sand and grit particles

are removed through grit classifier.

Equalization Tank:

Equalization tank no. 1 78 x 19.5 x 2.5 m +0.5 m FB 3803 m3

Equalization tank no. 2 78 x 19.5 x 2.5 m + 0.5 m FB 3803 m3

Equalization tank no. 3 78 x 39.0 x 2.5 m + 0.5 m FB 7605 m3

Blower House no. 1 - 75 HP x 3 Nos.

Blower House no. 2 75 HP x 3 Nos.

Flash Mixer &Flocculator:

Flash Mixer Tank 3.5 x 3.5 x 3.5 x 2 Nos. 85.75 m3

Stirrer 2 HP x 2 Nos. 4 HP

Flocculator Tank 10 x 7 x 3.5 x 4 Nos. 980 m3

Stirrer 3 HP x 4 Nos. 12 HP

The effluent is then pumped into flash mixer and flocculator tanks where dosing of Poly

Aluminium Chloride and Polyelectrolyte is done respectively so as to coagulate and

flocculate the solids before going into Primary Clarifiers. Automatic lime dosing through silo

is done in the flash mixer to maintain the pH is the range of 7 to 7.5.

Primary Clarifier:

Primary clarifier 37 m x 2.5 m + 0.5 m FB 2688 m3 x 2 Nos.

The overflow from flash mixer and flocculator then by gravity flows into Primary

Clarifiers where the settling takes place. The sludge is scrapped from the bottom into sludge

collection tank and is then pumps to sludge thickeners. The overflow from Primary Clarifiers

flows into aeration tanks.


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2. Secondary treatment:

Aeration Tank:

Aeration Channel No. 1 85m x 17m x 3 m +0.5m FB 4335 m3

Surface Aerators in Aeration channel no. 1 40 HP x 5 Nos. 200 HP

Aeration Channel No. 2 to 11 85m x 17m x 2.5 m +0.5m FB 3613 m3


Aeration Channel No. 12 85m x 17m x 3.5 m +0.5m FB 5058 m3


Aeration tanks consist of 60 Nos. of surface aerators. Here biological treatment takes place

and maximum reduction in terms of COD & BOD takes place. RAS is circulated in the

system in order to maintain the desired level of MLSS.

12 Nos. of online DO meters are installed in each channel in order check the DO level of the

effluent in the outlet of the tank. The data is logged and stored into the system

UASB Reactors:

UASB Reactor - 37 m x 7.00 m+ 0.65 m FB - 7526 m3 X 2 Nos.

Partial overflow from Primary clarifier is taken into UASB reactors for anaerobic digestion.

The flow is pumped into the reactor in upward flow and the overflow from the top is been

taken into Reactivator Clarifier. As it is an anaerobic digestor, methane gas is obtained from

the reactor and is currently flared but shall be used as a resource for generating power in

future.

Secondary Clarifier:

Secondary Clarifier 44 m x 2.0 m + 0.5 m FB 3041 m3 x 2 Nos.


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From aeration tank the effluent, partially by gravity and partially by pumping is taken into

Secondary Clarifiers. Dosing of alum is done inthe clarifier and the sludge is scrapped from

the bottom and the overflow is then taken into Reactivator Clarifier

3.Tertiary treatment:

Reactivator Clarifier:

Reactivator Clarifier 32 m x 4.0 m +0.5m FB 3217 m3

The overflow from UASB reactors is taken into reactivator clarifier through gravity. PAC and

Polyelectrolyte are dosed in the reactor in order to bring the level of suspended solids less

than 50 ppm.

Dyna Sand Filter:

Dyna Sand filter: 12.5 m x 7.5 m

It is fine polishing unit used for removal of SS. Overflow from Reactivator Clarifier is fed

into dyna sand filter.

CAACO (Chemo Autotrophic Activated Catalytic Oxidation):

CAACO (9 A, 10 A, 11A) 17.5 m x 4.2 m + 0.5 m FB 1010 m3

CAACO (9 B, 10 B, 11B) 16.0 m x 3.7 m + 0.5 m FB 744 m3

CAACO (9 C, 10 C, 11C) 15.0 m x 3.2 m + 0.5 m FB 565 m3

CAACO 12 A 17.5 m x 5.2 m + 0.5 m FB 1251 m3

CAACO 12 B 16.0 m x 4.2 m + 0.5 m FB 844 m3

CAACO 12 C 15.0 m x 3.2 m + 0.5 m FB 565 m3

It is an aerobic treatment system. Outlet from dyna sand is fed into the CAACO reactors.

There is a carbon bed inside the reactor through which air is passed in order to facilitate

oxidation. Carbon acts as a catalytic media in the treatment of the effluent. This is the final

stage of treatment and the outlet from CAACO is discharged to tidal zone of Damanganga

river.


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2) CSWP

VWEMCL established a TSDF site forthe disposal of hazardous solid waste of 7.62 lacMT

capacity in 100000 m2 plot at GIDC Vapi. The approved common solid waste disposal site

(TSDF) was set up in year 1999, first cell was commission in year 2000 as per German

Design based on asphalt concrete base liners . In the expansion phase, for second cell, Geo

Membrane Geo Textile liner system was adopted as perCPCB guide lines.

y Loading, transporting and storage of hazardous solid waste.

y Monitoring and analysis of bore well, and cell vent.

y Bri uetting of agro waste with solid waste (at present not function due to

unavailability of agro waste)

Process flow DiagramofCSWPisgi enonthe followingpage.


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Direct Disposal

Y

Does the waste meet

disposal criteriaYes

Rejected sent back to Generator

Waste Disposal in SLF

Waste Treatment and Disposal

Pass

W

No

Waste Acceptance Criteria (FPA & CA)

Waste Transportation following the manifest to the TSDF

Hazardous Waste from the Generator


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3) CENTRE OF EXCELLENCE:

Vapi, being the home for over 1800 small & medium sized chemical manufacturing units, is

the perfect location for the centre of excellence. This has consistently been the key factor in

industrial development. Technical & Industrial development has crafted out the skilled and

competent workforce.

Established under the Industrial Infrastructure Up gradation scheme (IIUS)of the ministry ofCommerce and Industry, Government of India. The scheme covers areas such as

Infrastructure support, Market Intelligence, Technology Transfer, Human Resource

Development etc.

Undoubtedly, knowledge and communication area the need of the day. While keeping the

essence of quality, Productivity & Innovation in mind, COE comes up with Information

Technology Centre caring off the top-notched and estate-of-the-art facilities in shape of

Digital Library, Video Conferencing, Training Centre, Pilot Plant and E-Commerce and other

such Labs.


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Supply chain and logistic:

Store management

The company is having inventory management software so accurate record of inventory is

maintained. The company has codified the each and every item so it can be easily identified.

Purchase procedure

1. Purchase Order Issue: Work Order Issue

To obtain at least three quotation from different suppliers.

Prepare comparative Chart of all the quotations.

Select one of the best from them.

Issue the work order as per schedule.

2. ARC ( Annual Rate Contract ): As per Annual Rate Contract vendor has to supply the quantity and quality as

an when place the order as per ARC Rate.

ARC Rate is fluctuating accordingly throughout the year as per Market Rate.

1) At CETP:

Underground pipeline:

There is an underground pipeline of about 80 kilometers for transporting the polluted water

from Vapi GIDC to CETP plant.& the treated water is discharged into the Damanganga river

by pipeline.

2) At CSWP:

Truck Transportation:

The Hazardous Solid Waste is collected from registered company by truck & sludge is also

transferred from CETP to CSWP through VWEMCL truck & dump into the secure land field

sell.


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Human recourse Department:

The Head of the Human Resource taking the following Decisions.

Human Resource Planning, Recruitment and Selection Procedure at VWEMCL.

For requirement of the staff published the advertisement in News Paper.

On report of the application, they shortlisted the applicants.

To arrange the Interview.

Select the staff.

Issue the appointment letter.

Medical Check-up.

Than final appointment. Probationary period 6 Months.

Conformation.

Salary:

Monthly salary payment.

Leave record.

Loans & Advances to Staff ( LTA- Leave Travel Allowance)

TDS Tax Deducted at Source in March to issue form no. 16

Promotion Policy.

Disciplinary action.

Types of training programmes:

On The Job Training:

The company is provide training on the job bases. The recruited employee is getting trained

on daily routine work by their senior.


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Finance function:

Fixed Deposit & Fund Management:

In VWEMCL, fund management has been carried out as under.

The company on weekly bases study account statement with Bank of Baroda & Bank

of India. After collecting the information from the concern account department, the

chief Executive Officer discuss with Chief Accountant regarding the requirement of

the fund to the company. They prepare inflow & outflow statement, they prepare cash

flow statement. After words Chief Executive Officer & Chief Financial Officer

discuss into the matter and they determine the surplus of requirement. Then the

investment committee obtain the quotation from eight nationalized Banks regarding

rate of interest. They invest more than one to five crore rupees at a time. So that the

company will get treasury rate from the central office of the Bank which is more than

rate offered to the public.

After receiving treasury rate from nationalized Banks, they prepare comparative chart

& deposit the money to The Bank which offered maximum interest rate after

negotiation.

Budgetary process at VWEMCL

In order to prepare budget the store keeper is as asked to provide consumption data

for last two years under different heads. Then, meeting was called, consisting of

General Manager, CFO, and head of different Department to decide the figure for the

next year budget.

Then average consumption of this two year is considered and percentage in this

figure is added based on inflation rate in order to arrive at a final proposed annual

budget. The increased percentage is taken by considering the inflation rate in

different items segments and future expansion plan of the organization. Then this

proposed budget is transferred to higher authority to finalize the final budget.

After finalization of the annual budget, it is segregated in to the monthly budget is

prepared.


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Investment in various assets:

The company is having Investment in Fixed Deposits only with Nationalized Banks.

Sources of finance:

The sources of finance are,

Government Grant

Members Contributions

Grant from GIDC

Grant from Notified Area.

Accounting method / system:

The Financial statements are prepared under the historical cost convension on actual basis and in accordance with applicable Accounting standards bearing in mind the

requirements of the companies Act,1956.

The preparation of financial statements is in conformity with generally accepted

accounting principles (GAAP) require management to make estimates and

assumptions.

Inventories are stated at lower of cost(FIFO) and net realisable value.

Management information system @ VWEMCL:

The company is having inventory management software so accurate record of

inventory is maintained.

The use bill certifying process software.

The use punching system for maintain attendance level of the employee and

according to pay the salary.


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Decision making process

Decision making process at VWEMCL:

The Chairman of the VWEMCL is having the qualification of IAS & C.A. sitting at

Ghandhinagar Sachivalaya.

Chief Executive Officer sitting at Corporate Office Vapi who is looking after Day to

Day operation / functions of the Company & taking the decisions.

Chief Financial Officer also sitting at Corporate Office & taking the number of

decisions on financial matters independently.

Other Executives engaged in corporate office are fulfilling the assigned task on Day

to Day bases, At plant level i.e. CETP, CSWP, COE, G.M. Tech. taking the Day to

Day decisions supported by Deputy Manager/ Assistant Manager.

The company is having various committees like audit committee, Human Resource

Committee, Disciplinary Committee, Purchase Committee, etc& specified committee

meet once or twice in a Month. They take the suitable Decisions.


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Financial analysis

Balance sheet Analysis:

(Rs. in Lacs)

PARTICULARS 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

ASSETS

Fixed Assets 2265.34 3773.20 4067.68 4752.75 7469.50

Non-current asset 3783.95 3595.84 3288.13 2833.31 2586.90

Current Assets 4729.37 3140.16 4708.96 3994.91 4181.14

Total Assets 10778.66 10509.20 12064.77 11580.97 14237.54

LIABILITIES

Member's Funds 6216.70 6876.33 7744.05 7456.79 9244.32

Grant 4107.53 2951.98 4107.53 3850.60 3557.33

Loan Funds 17.21 41.73 17.21 17.21 17.21

.

Current Liabilities 192.00 231.94 179.81 228.99 284.93

Provisions 245.22 407.22 16.17 27.38 29.94

Deferred Liabilities - - - - 1103.81

TOTAL LIABILITIES 10778.66 10509.20 12064.77 11580.97 14237.54


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Income statement Analysis:

(Rs. In Lacs)

PARTICULARS 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Sales/ETC 1399.61 1589.47 1912.13 1890.25 2487.40

EBIDT 755.97 943.15 898.78 258.39 858.86

Less: Depreciation 308.9 301.88 135.9 287.94 487.45

EBIT 447.07 641.27 762.88 -29.55 371.41

Less: Interest Charges 0 0 0 0 0

PBT 447.07 641.27 762.88 -29.55 371.41

Less : Tax 103.12 137.62 121.99 90.27 62.66

PAT (Net Profit) 343.95 503.65 640.89 -119.82 308.75


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Ratio analysis

Profitability Ratio

Every firm is most concerned with its profitability. Profitability ratios show a company's

overall efficiency. Profitability measures are important to company managers and ownersalike. If a small business has outside investors who have put their own money into the

company, the primary owner certainly has to show profitability to those equity investors.

Ratios that show returns represent the firm's ability to measure the overall efficiency of the

firm in generating returns for its shareholders.

1. Gross Profit Ratio

Gross profit would be the difference between net sales and cost of goods sold. This ratio shows the

relation between production costs and selling costs. A high Gross Profit Ratio related to the industry

average implies that the firm is able to produce at relatively lower cost.

Formula:

Gross Profit Ratio =Gross Profit

X 100

Sales

Table showing Gross Profit Margin ratio

Year Gross Profit Sales Gross Profit Margin

2006-07 711.11

1399.61

51%

2007-08 826.411589.47

52%

2008-09 908.71

1912.13

48%

2009-10 352.381890.25

19%

2010-11 1304.24

2487.40

52%


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Interpretation:

The gross profit earned should be sufficientto recover all operating expenses and tobuild up

reserves after paying all fixed interest charges. Company had enough gross profitto cope up

with its operating expenses

Here, The Gross ProfitRatio maintain during 2006-07 to 2010-11 but recovers later but only

in 2009-10 it falls down. It occurs due to low sales value and change in economic policy &

loss during financial year. The increasing gross profit may be due to government policy for

environment control.

2006-07 2007-08 2008-0

200

- 10 2010-11

51% 52% 48%

1

%

52%

Gross Profit Margin

Gross rofitMargin


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2. NetProfit Ratio

The net profit margin measures profitability after consideration of all expenses including taxes,

interest, non operating expenses like donations, penalties & fines loss on sale of assets, interest, taxes

etc. Incomes such as interest on investments outside the business, profit on sales of fixed assets are

excluded.

Formula:

Net Profit =

Net Profit

X 100

Sales

Tableshowing NetProfitMarginratio

NETPROFIT SALES

NETPROFIT RATIO

YEAR (Rs. InLacs) (Rs. InLacs) (In%)

2006-07

343.95

1399.61 25%

2007-08

503.65

1589.47 32%

2008-09

640.89

1912.13 34%

2009-10 -119.82 1890.25 (6%)

2010-11

308.75

2487.40 12%

2006-07 2007-08 2008-09 2009-10 2010-11

25% 32%34%

-6%12%

NET PROFIT RATIO

NETROFIT RATIO


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Interpretation:

If net profit ratio is not enough then company will not be able to achieve a satisfactory return

on its investment. The Net Profit Ratio declines up to (6%) during 2009-10 but recover in

2010-11, before 2009-10, Net profit has shown strong overall efficiency of the company. The

higher the ratio, better for the company.

3 Return on Capital Employed ratio

This ratio shows how much return (profit) the company is getting on its total capital

employed

Table showing Return on Capital Employed ratio

Year EBIT

Capital Employed

ROCE ( in % )

2006-07 447.07

6638.79

7%

2007-08 641.27

8146.69

8%

2008-09 762.88

8441.17

9%

2009-10 -29.55

9126.23

-0.32%

2010-11 371.41

11842.97

3%


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Interpretation:

In the company, Return On Capital Employed shows how productively the company utilize

its money. Here, the ROCE ratio is positive during 2007,2008,2009& 2011 &its helps to

getting higher net profit. Only in 2010, the company had to face loss. It shows a good rate

return due to no interest and finance charges and government policies were also contributing

factor.

Li ui ityratio

Li uidity ratio shows firms ability to pay its shortterm liability as when they due.

1. Current Ratio

Current ratio is the most common ratio for determining li uidity. It attempts to measures the ability of

a company to meetits short-term solvency. Itis calculated as under.

CurrentRatio =

Current Assets

Current Liabilities

2006-07 2007-08 2008-09 2009-10 2010-11

7%8%

9%

-0.32%

3%

ROCE ( i % )

ROCE ( in% )


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TableshowingCurrentratio

YEAR CURRENTASSETS CURRENTLIABILITIES CURRENT RATIO

2006-07 4729.37 355.88 13.29

2007-08 3140.16 533.57 5.89

2008-09 4708.96 179.81 26.19

2009-10 3994.91 228.99 17.45

2010-11 4181.14 284.93 14.67

Interpretation:

The ideal current ratio is 2:1. Thatimplies for every one rupee of currentliability, two rupees

of current assets are available to meetthem.

Here, the current ratio ofthe company during last five years was too high because of fewer

liabilities. It means the current assets were not fully used up to its capacity. Too high ratio is

also not good forthe company. High current ratio also indicate working capital management

in the company.

2006-07 2007-08 2008-09 2009-10 2010-11

13.29

5.89

26.19

17.4514.67

CURRE T R TIO

CURRENTRATIO


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2 Liquid Ratio

The true liquidity refers to the ability of a firm to pay its short term obligations as and when

they become due. Liquid assets include current assets minus inventories (stock) and prepaid

expenses. Inventories cannot be termed as liquid assets because it cannot be converted into

cash immediately without a loss of value. In the same manner, prepaid expenses are also

excluded from the list of liquid assets because they are not expected to be converted into

cash. In current liability some time bank overdraft is not included in current liabilities, on the

argument that bank overdraft is generally permanent way of financing and is not subject to be

called on demand.

Formula:

Quick Ratio =

L iquidAssets

Liquid Liability

YEAR LIQUID ASSETS CURRENT

LIABILITIES

QUICK RATIO

2006-07 4713.43 355.88 13.24

2007-08 3122.49 533.57 5.85

2008-09 4684.31 179.81 26.05

2009-10 3966.84 228.99 17.32

2010-11 4138.62 284.93 14.53


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Financial Health and future of the organisation:

The Organization is on a way expand CETP Plant Capacity up to 100 MLD in its

Master Plan.

The other Waste to Energy Plant to use the energy in CETP Plant to save its high

electricity bill & made efficient solution of Plastic Waste.

The Company is going to Under Ground pipeline project to discharge their treated

water directly to the sea by Onshore & Offshore pipeline.

The Financial Analysis of the Firm is favorable for the Non- Profit organization.

So, it shows that companys Financial Health is so strong. & Due to future project,

The future of the organization will be strong.


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My leanings

In VWEMCL I come to knowabout different functional areas.

Human resources

In the particular HR section of the company I learned that there is a proper built in HR

section where the different types of facility like training are provided and company is concern

very much with safety of the employees that provide safety equipments.

Organizational environment and organizational behavior and how different departments are

interacting with each other to accomplish the goal. I also come to know about how intra

personal communication takes place within the organization.

Finance

In the particular finance section of the company I come to know about the budgetary process

of the company.

I also come to know how the company is managing its excessive cash.

Inventory management is very crucial for any organization as proper level of inventory is not

maintained it results into heavy financial loss to the organization.

Store departments

In the particular store department of the company I come to know about purchasing policy ofthe company and inventory management techniques of the company.


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Part-2:

Project Study


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Overview of the project

Background of the study

The study mainly aims to find out best inventory management techniques for the company.

Objectives of the study

The main objective of the study was to know the company is managing a huge

inventory.

To study the various techniques to inventory control over key materials of the

company.

To analyze the best technique for inventory management.

To analyze the effective purchase orders process for the inventory.

Importance of the study

The organization is wants to explore most viable technique for inventory management

which results into lower total cost for maintain the inventory. So, this study will be useful

to the company in implementing the best inventory management technique.


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Research

Research design

For research design I have select DESCRIPTIVE STUDIES because as

inventory management is topic in which there must detail description of all

transaction related inventory are required to study so that we get idea how

inventory is received from various sources & utilized in organization .further

while doing in depth study we get complete picture of process that follow in

organization

Data collection method:

The required data for the study are basically secondary in nature and the data are

collected from the audited reports of the company.

Both primary and secondary data were used in preparation of the report.

Primary data

Primary data were collected through discussion with the staff member of the

VWEMCL.

Secondary data

Annual report ofVWEMCL"

Website ofVWEMCL


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Introduction to

Inventory management

Inventories constitute the most significant part of current assets of a large majority ofcompanies in India. On an average, inventories are approximately 60 % of the current assets

in public limited companies in India. Because of the large size of inventories maintained by

firms, a considerable amount of funds is required to be committed to them. It is, therefore,

absolutely imperative to manage inventories efficiently and effectively in order to avoid

unnecessary investment. A firm neglecting the management of inventories will be

jeopardizing its long-run profitability and may fail ultimately. It is possible for a company to

reduce its levels of inventories to considerable degree, without any adverse effect on

production and sales, by using simple inventory planning and control techniques. Thereduction in excessive inventories carries a favorable impact on a companys profitability.

Nature of inventories

Inventories are stock of the product a company is manufacturing for sale and

components that make up the product. The various forms in which inventories exist in a

manufacturing company are:

Raw Materials are those basic inputs 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.

Work-In-Process inventories are semi-manufactured products. They represent products that

need more work before they become finished product for sale.

Finished Goods inventories are those completely manufactured products which are ready for

sale. Stock of raw materials and work-in-process facilitate production, while stock of finished

goods is required for smooth marketing operations. Thus, inventories provide link between

the production and consumption of goods.

The level of three kinds of inventories for a firm depends on the nature of its business.

A manufacturing firm will have substantially high levels of all three kinds of inventories,


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while a retail or wholesale firm will have a very high level of finished goods inventories and

no raw material and work-in-process inventories.

Firms also maintain fourth kinds of inventory, supplies or stores and spares.

Supplies include office and plant cleaning material like soap, oil, brooms, fuel, light bulbs

etc. These materials do not directly enter production, but are necessary for production

process. Usually, these supplies are small part of the total inventory and do not involve

significant investment. Therefore, a sophisticated system of inventory control may not be

maintained for them.


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Need to hold inventories

There are three motives for holding inventories.

Transaction Motive emphasizes the need to maintain inventories to facilitate smooth

production and sales operations.

Precautionary Motive necessitates holding of inventories to guard against the risk of

unpredictable changes in demand and supply forces and other factors.

Speculative Motive influences the decision to increase or to reduce inventory levels to take

advantage of price fluctuations.

What is Inventory management?

Inventory management is primarily about specifying the size and placement of stocked

goods. The scope of inventory management also concerns the fine lines between

replenishment lead time, carrying costs of inventory, asset management, inventory

forecasting, inventory valuation, inventory visibility, future inventory price forecasting,

physical inventory, available physical space for inventory, quality management,

replenishment, returns and defective goods and demand forecasting.

Other definitions of inventory management are:

y Systems and processes that identify inventory requirements, set targets, provide

replenishment techniques and report actual and projected inventory status.

y Management of the inventories, with the primary objective of determining controlling

stock levels within the physical distribution function to balance the need for product

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


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Objective of inventory management

The aim of inventory management should be to avoid excessive and inadequate levels of

inventories and to maintain sufficient inventory for the smooth production and sales

operations. Effort should be made to place an order at the right time with the right source to

acquire the right quantity at the right price and quality.

The objectives of inventory management are as follows

Ensure a continuous supply of raw materials to facilitate uninterrupted production.

Maintain sufficient stocks of raw materials in periods of short supply and anticipate

price charges.

Maintain sufficient finished goods inventory for smooth sales operation, and efficient

customer service. Minimize the carrying cost and time.

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

Developments in Inventory Management

In recent years, two approaches have had a major impact on inventory management:

y Just-In-Time (JIT).

y ABC analysis

y VED analysis

y SDE analysis

y FSN analysis


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Just-in-time

This is an inventory management is an approach which works to eliminate inventories rather

than optimize them. The inventory of raw materials and work-in-process falls to that needed

in a single day. This is accomplished by reducing set-up times and lead times so that small

lots may be ordered. Suppliers may have to make several deliveries a day or move close to

the user plants to support this plan. This system requires perfect understanding and co-

ordination between manufacturer and supplier in terms of timing of delivery and quality of

material.

ABC analysis

Large number of firms has to maintain several types of inventories. It is not desirable to keep

same degree of control to all items. The firm should pay maximum attention to those items

whose value is the highest. The firm should therefore, classify the inventories to identify

which should receive the most effort in controlling.

ABC analysis thus tends to segregate all items into three categories: A, B and C based

on their annual usage.

A-items:

It is usually found that hardly 10-15 % of the total items account for 70-75 % of the total

money spent on material. These items require detailed and right control and need to be

stocked in smaller quantities. These items should be procured frequently, and quantity per

occasion should be small.

B-items:

These items are generally 15-20 % of the total items and account 15-20 % of the total money

spent on material. These are intermediate items.


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C-items:

These items are numerous in number about 70-75 % the total item account for 10-15 % of the

money spent on material. Hence these items do not require close control; C item should be

procured infrequently and in sufficient quantities. This enables the buyer to avail price

discount reduces the work load.

Large firms have to maintain several types of inventories. ABC analysis tends to measure the

significance of each item of inventories in terms of its value & importance.

Degree of control

A-items:

An items which account for bulk of the annual usage value and hence attract utmost

attention. The inventory should be kept at minimum by placing open order or (orders

covering annual requirement) and arranging supplies in staggered lots. Every attempt shouldbe made to reduce both internal and external lead time by closer follow up at the home plant

better vendor-vendee relation and market research for alternate sources of supply.

Item Value Control

A class High value Tightest control

B class Value fall in between two

categories

Reasonable control

C class Least value Simple control


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Policy for 'A' items

y Maximum control

y Value Analysis

y More than one supplier

y Control by top executives.

B-items:

B items should be brought under normal control made possible by good record keeping and

periodic attention.

Policy for 'B' itemsy Minimum control

y Bulk Orders

y More items from same supplier.

C-items:

Little control is required for C item large inventories should be maintained to avoid stock

outs.


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VED ANALYSIS:-

Classification Based On Criticality:

Several factors contribute to the criticality of an inventory. For e.g. If a spare is for a

machine on which many other processes depend, it could be of very vital importance.

Also if a spare is, say, an imported component for which procurement lead time could

be very high its non-availability may mean a heavy loss.

In general, criticality of a spare part can be determined from the production downtime

loss, due to spare being not available when required.

Based on criticality, spare parts are conventionally classified into three classes,

Viz. vital, essential and desirable.

Vital (V):

A spare part will be termed vital, if on account of its non-availability there will be very high

loss due to production downtime and/or a very high cost will be involved if the part is

procured on emergency basis.

Essential (E):

A spare part will be considered essential if, due to its non-availability, moderate loss is

incurred. For example, bearings for motors of auxiliary pumps will be classified as essential.

Desirable (D):

A spare part will be desirable if the production loss is not very significant due to its non-

availability. Most of the parts will fall under this category.

The VED analysis helps in focusing the attention of the management on vital items

And ensuring their availability by frequent review and reporting. Thus, the downtime

Losses could be minimized to a considerable extent.


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SDE Analysis:-

Classification based on the lead time:

This classification is carried out based on the lead time required to procure the Spare part

(inventory). The classification is as follows:

Scarce (S) : Items which are imported and those items

Which require more than 6 months lead

time.

Difficult (D): Items which require more than a fortnight

But less than 6 months' lead time.

Easily Available (E): Items which are easily available i.e., less

than a fortnights' lead time.

This classification helps in reducing the lead time required at least in case of vital Items.

Ultimately, this will reduce stock-out costs in case of stock-outs. A Comprehensive analysis

may ultimately bring down lead time for more & more number of items. This will also result

in streamlining the purchase and receiving Systems and procedures.


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FSN Analysis:

Classification based on Frequency of Issues/Use:-

F, S & N stand for fast moving, slow moving and Nonmoving items. This form Of

classification identifies the items frequently issued, less frequently issued for use and the

items which are not issued for longer period, say, 2 years. For instance,

the items can be classified as follows:

Fast Moving (F) = Items that are frequently issued say

more than once a month.

Slow Moving (S) = Items that are issued less than once a month.

Non-Moving (N) = Items that are not issued\used for more than 2 years.

This classification helps spare parts management in establishing most suitable stores layout

by locating all the fast moving items near the dispensing window to reduce the handling

efforts. Also, attention of the management is focused on the Non-Moving Items to enable

decision as to whether they are required in the future or they can be salvaged.


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Inventory Management Control Methods:

To maintain an in-stock position of wanted items and to dispose of unwanted items, it is

necessary to establish adequate controls over inventory on order and inventory in stock.

There are several proven methods for inventory control. They are listed below, from simplest

to most complex.

y Visual control enables the manager to examine the inventory visually to determine if

additional inventory is required. In very small businesses where this method is used,

records may not be needed at all or only for slow moving or expensive items.

y Tickler control enables the manager to physically count a small portion of the

inventory each day so that each segment of the inventory is counted every so many

days on a regular basis.

y Click sheet control enables the manager to record the item as it is used on a sheet of

paper. Such information is then used for reorder purposes.

As a business grows, it may find a need for a more sophisticated and technical form of

inventory control. Today, the use of computer systems to control inventory is far more

feasible for small business than ever before, both through the widespread existence of

computer service organizations and the decreasing cost of small-sized computers. Often the

justification for such a computer-based system is enhanced by the fact that company

accounting and billing procedures can also be handled on the computer.

A principal goal for many of the methods described above is to determine the minimum

possible annual cost of ordering and stocking each item. Two major control values are used:

y The order quantity, that is, the size and frequency of orders; and

y The reorder point, that is, the minimum stock level at which additional quantities is

ordered.


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Concept of Economic Order Quantity

[How much to buy]

- Whatever the quantity one decides to purchase, 2 types of costs are associated that areordering cost and inventory carrying cost.

- If a smaller quantity is chosen, the purchase order frequency will rise, the no. of

purchase orders per year will be larger and the total ordering cost will rise.

- If a larger quantity is chosen the number of purchase order per year will be fewer and

the total ordering cost will be lower.

- The problem is one of balancing these two opposing costs ordering costs and

inventory carrying cost and determines the optimum quantity called Economic order

quantity [EOQ] so as to secure minimum overall cost.

For ideal conditions there should be no stocks at all. Every item should arrive just before

it is required in right quantity. This however is not practical for two reasons. Firstly, the

supplies & requirements are not so certain and, secondly, the costs of placing orders and

follow-up work will shoot up very high, if ordering in such small batches is resorted to.

So, for a particular annual consumption as we go on increasing the quantity of order, the

average stock increases and, hence, carrying charges go on increasing. Thus, the total cost of

ordering and inventory carrying will vary.

While the ordering quantity is varied it may be seen from the graph that at a particular

Ordering quantity, the total cost will be the lowest and that ordering quantity is

Called Economic Ordering Quantity (E.O.Q).


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Costs associated with inventory management

In such an industry inventory costs has the majority share in total cost, here in RIL VMD

its no different, so due care is to be taken for inventory management so that profitability

can be increased. Following are the types of cost for inventory management.

1. Ordering cost

Whenever the order is placed for the stock there is cost occurs, the cost will differ as

per the nature of inventory. The cost will differ as per the category of the inventory; if

it is of A type then more attention is needed so it will incur more cost and so on for B

and C.

a. Clerical work of preparing, issuing, following and receiving orders.

b. Physical handling of goods

c. Inspection

2. Inventory carrying cost

Inventory carrying cost is always proportional to the investment in inventory and it is,

therefore expressed as a percentage of average investment in inventory. Various costs are

follows:

a. Obsolescence cost

The value of an item gets progressively reduced, as the life of inventory goes on.

Obsolescence is done due to life span of inventory, technology changes, and loss due to

handling.

b. Insurance

Insurance cost is incurred against loss due to some unforeseen circumstance like fire,

pilferage and others.


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C. Capital cost

This is the largest component of the carrying cost and it represents the cost of capital invested

which includes the cost of borrowing capital which is the borrowing rate or the bank lending

rate.

d. Storage cost

The chief elements of storage cost are the cost of space, maintenance and repairs, lighting,

wages of personnel, handling charges and other .i.e.

- Utilities

- Warehouse/stockroom personnel

- Maintenance of building and equipment

- Warehouse security

e. Stock out cost

This is the cost of not carrying the inventory, this is one type of opportunity cost, as when

demand occurs but system is out of stock. Costs consist of loss of production resulting in idle

machine hour and idle operator our cost, extra cost expediting and exiting purchase order,

extra cost of transportation if faster means of transport are to be substitute, profit lost due to

loss of production.

f. Overstocking cost

This is also an opportunity cost incurred as a result of investment in inventory larger then

normally necessary. Usually, the items in stock are ultimately used. But they remain in

inventory for an appreciable length of time incurring additional carrying cost. Where the

items are not used, they become surplus and have to be ultimately scrapped and sold at a loss.


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Purchasing method @ VWEMCL

In, VWEMC the company is purchasing on monthly basis. Various items like chemicals,

engineering, repairs & maintance etc. company has prepared the budget for yearly

requirement and divided into monthly budget.

Chemicals, engineering items & other miscellaneous items are easily available. Company is

having the store keeper who regularly maintains the inventory. He is responsible for running

the CETP plant smoothly.

The plant in charge submits the Intend for their requirements. After words the store keeper

prepares the work order with delivery schedule. The company has made Annual Rate

Contract with number of vendors and the company select out of them and with delivery

schedule.

Annual rate contract

Annual Rate Contract (ARC in short) is a procurement cost reduction strategy aimed at

standardizing procurement prices for commonly procured, homogenous and price varying

inputs.

The process of setting up a rate contract in a category follows a set of standard steps:

1. Procurement spend analysis:

Identification of cumulative spend, identification of key suppliers and their share of

business, identification of average price of procurement, spend growth projections

2. Market analysis:

Study of the nature of the market, exhaustive identification of suppliers and their

capabilities, study of supplier cost structures. One of the primary objectives of this

step is the identification and introduction of new suppliers


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3. Supplier Interactions:

Selection of a fit-list of suppliers, invitation to suppliers for discussions, supplier

discussions and interactions, RFQ (request-for-quotes) to selected suppliers

4. Receipt of Quotes from suppliers

5. Selection of a fit list of suppliers

6. Agreement on the points of the rate contract and finalization of the rate contract.

Post the setup of a rate contract, a definitive monitoring mechanism must be set up. Such a

monitoring mechanism needs to be done centrally by the organization and involves -

monitoring of off take by supplier, monitoring of non-RC off take and monitoring of supplies

and periodic quality audits. Without the setup of a monitoring mechanism, much of the

effectiveness and purpose for a setup might be lost.

Setup process of ARC at VWEMCL

Following procedure is being followed in case of annual rate contract for supply of various

raw-materials.

1. First of all they collect the information regarding the various suppliers for particular

item from the external link. Then, invitation for negotiation of ARC is given to these

suppliers who are the most viable.

2. These supplies are asked to bring sealed quotations which are to be opened in the

presence of the members of VWEMCL.s the contract after verifying whether he is

able to supply the enough stock at time or not. Company keeps at least two supplier

for each items. So that to ensure uninterrupted supply.

3. In case, if supplier fails to supply the material as per the delivery schedule, in such a

case, VWEMCL purchases the material from other source and extra cost of purchase

has to be borne by the supplier.

4. The supplier has to deposit some amount in advance to VWEMCL on finalization of

the contract.


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5. ARC is prepared and copy of it is issued to the party (supplier) and copy of same is

circulated to all concern departments (CETP, CSWP, Corporate office, and COE).

6. The concern department issues the delivery schedule for the month in advance and

same is forwarded to the party.

7. As per the delivery schedule and as per terms and condition of ARC, the party

supplies the material to the concern department.

8. On the receipt of the material the same shall be inspected/analyzed and

remarks/approval note is prepared with GRN.

9. Bill processing note is prepared by the concern for supplies with cut-off date of 25 th of

each month with necessary noting and such as quantity received, quality and net

payable.

10.Total set along with GRN, bill processing note and an individual/cumulative from the

party for all the supplies between 1st to 25th of each month.

11.The party sends the Credit note if any, for the earlier supply in stipulated period.

12.Accountant release the payment strictly as per the terms and condition of ARC.

13.If there is any necessary suggestion it is conveyed by e-mail for necessary

amendments.

Following are the benefits of Annual rate contract to Buyers and Suppliers

To Buyers:

o Facility of purchase at lowest, economic and competitive price.

o Saving in time and effort in tedious and frequent tendering at multiple user

locations.

o No scope for corruption.

o Enables buying as and when required.

o Reduces inventory carrying cost.

o Availability of the quality goods with full quality assurance back up.

o To adopt uniform technical specifications.

o Uniform purchase procedures, forms, policies and rates.


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To Suppliers:

o Access to large volume of purchase without going through tendering and

follow up at multiple user locations.

o Saving in administrative and marketing efforts and overheads.

o Rate contract lends respectability and image enhancement.


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RECEIVING PROCEDURE @ VWEMCL

Inward in gate entry

Uploading

Computerized recording

Verification

Quality check

RejectAccept

Resend to vendorStoring at store


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Different Inventory Levels

In every manufacturing organization, there is a need to maintain inventories at different levels

like minimum level, maximum level, reorder level.

Maximum level

Maximum level means inventory should not exceed this level.

Minimum level

This means minimum level stock, which any company has to maintain to avoid the stock out

position. The minimum level is determined by the consumption of the inventory and lead-

time.

Reorder level

This is the point where the order has to place again for the inventory.

The manager in charge told that there is no such reorder points. Orders are placed as and

when required.

Safety stock

This is the point of safety where a firm must get the placed order; it has to be added because

the lead-time may variety as per the condition.

Lead-tim

This is the time taken from placing an order to receiving the inventory, so Calculation of the

lead-time makes large importance for the availability of the inventory.

The lead period of any item is 2 to 3 days so, the stock is easily available.


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Tools for inventory control @ VWEMC

1. Codification

2. Receipt

3. Inspection

4. Storage and preservation

5. Issue

6. Scrap and disposal.

1. Codification

Unique code is given to item to identify an item. It helps to search the item in the stock

according to requirement.

By classifying and codifying all the spare parts, it becomes easy to minimize the duplication

of spare parts thereby effecting reduction in the inventory. Codification also helps easy

accounting and computerization in addition to easier communication between concerned

parties.

In addition to codifying the spare part, it will be of immense benefit to codify the

location of spare parts. Stock location number helps the stores personnel to locate the

part and issue the same as and when the same is requisitioned. Also the stock

verification and upkeep programme becomes less and less cumbersome.

The company is having the inventory management software and accordingly the company is

managing the number of items in the software package so that the internal control is very well

managed and the position of the stock is identified.

2. Receipts

When goods received, first entered by the security department and the security officer enter

the goods in to security register. After words the goods received by the store keeper.


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3. Inspection

Inspection of all the materials is to be done on the basis of the ARC/Purchase order that have

been placed; they will check for the quality and the quantity of the material as per the ARC/

purchase order. If all the criteria are ok then they will accept the material and will send to

stores. Then store keeper prepares the goods received note and includes the goods/material

into specific item. And if the material is inferior then they will reject that material and will

quote the reasons for the rejection of the materials.

4. Storage and preservation

After the materials are checked they are kept in stores, where due care is been taken for the

material so that they are not damaged or Obsolescence. Chemicals and other hazardous

material are kept well preserved so that they may not prove vital for the health of the

employees. The store keeper has made various blocks for keeping the inventory so that

physical verification of number of items can be done smoothly.

5. Issue

Issue of the material is done as per the requirement of different plant. Whenever item has

been issued entry is made in inventory management software and where it is used and

signature of the issuer is taken.

6. Scrap and disposals

After the use of the materials some materials may turn to wastages or useless due to some

reasons. So they are to be scraped, not only the materials but also any type of inventory like

spares and mechanical will go Obsolescence with the time passing and will be useless for the

plant that has to be scraped. Then this scraped stock is sold out.

y


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Past Inventorytrends@ VWEMCL

YearwiseinventorytrendinBar Graph forlastsi yearsisattachedbelow for

comparativeanalysis.

We can observe from the graph that consumption ofinventory has been continuously

increasing forthe last six years. This is because ofincreased capacity ofthe plant.

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

2005-06 2006-7 2007-08 2008-09 2009-10 2010-11

i ve ry c ump iYear Inventory value

2005-06 12,22,271

2006-7 15,93,835

2007-08 17,66,891

2008-09 24,65,271

2009-10 28,07,253

2010-11 42,52,004


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Month wise inventory trend from in Bar Graph for last three months is attached below

for comparative analysis.

y During the year 2011 inventory consumption was highest in the month of April and in

decreasing trend in May and June respectively.

0

500000

1000000

1500000

2000000

2500000

3000000

a ril ay j e

i u p i

Month inventory value

April-2011 2393286

May-2011 2298379

June-2011 1829149


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Percentage of inventory to current assets

(RS. In lakhs)

Year inventory Current Assets Percentage

2006-7 15.93835 4729.37 0.3370%

2007-08 17.66891 3140.16 0.5627%

2008-09 24.65271 4708.96 0.5235%

2009-10 28.07253 3994.91 0.7027%

2010-11 42.52004 4181.14 1.0169%

Here we can observe that the percentage of inventory to current assets is very low as the

company belongs to service industry and it maintain only consumable inventory.


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Total inventory distribution in the year of2010-11

Item Amount Percentage

Engineering 1373241 3.8533%

Hard-ware 3916846 10.9907%

Nut-bolt 103664 0.2909%

Machine & spares 1371666 3.8489%

Tools 291246 0.8172%

Lubricant and fuel 1700871 4.7727%

Electrical 2519161 7.0688%

Safety 142606 0.4002%

Plant chemical 2095027158.7869%

Lab chemical 2076131 5.8257%

Store consumable 568604 1.5955%

Stationary 623358 1.7492%

Total 35637665 100%


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We chart shows that company has the highest consumption in plant chemical item. This isbecause of requirement of various chemicals used in the process. The chemical expense is the

major expense forthe company which contributes about 59% oftotal consumption.


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Inventory Control Methods @ VWEMCL

A firm needs an inventory control system to efficiently manage its inventory. The nature of

business and the size dictate the choice of an inventory control system.

It is necessary for an organization maintain a self operating, automatic computer system for

tracking the inventory position of various items & placing orders.

Various inventory control system are as follow:

1. ABC analysis

2. VED analysis

3. Perpetual Stock Count System

ABC

Control System

Perpetual

Stock Count

Just in Time

System

Methods of Inventory Control @ VWEMCL

Visual control


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ABC Control System

Here at VWEMCL they are following ABC analysis for inventory control. According to this

method all the inventories lying in the store department are classified in A.B.C based on their

unit cost.

The base for the classification of inventory is as under:

y Unit value > 50,000 is given A Grade

y Unit value between 15,000 to 50,0000 is given B Grade

y Unit value < 15000 is given C Grade

Grade

GroupWise

numbers of

items

Value of

items% of items

% of the

value

%cumulative

value

"A" 965 23045000 15.02 64.66 64.66

"B" 1300 7841000 20.24 22.00 86.67

"C" 4159 4751666 64.74 13.33 100.00

Total 6424 35637666 100.00 100.00


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Accordingly for high value Item (A Grade) Company is keeping lowest stock and keeps a

close watch on that.

For middle value item (B Grade) the company is keeping the stock more than requirement.

And for lowest value Item Company is keeping the stock for requirement of 3-4 months.

Just in time system

VWEMCL belongs to a service industry, so it does not have the inventories like raw-

materials, work-in-progress and finished goods. But there is large inventory of consumable

stores and spares that is difficult to manage properly. It gets material from domestic suppliers

as well as imports some of materials. It follows JIT concept when it deals with domestic

suppliers.

000

1000

2000

30 00

4000

50 00

60 00

70 00

1 2 3 4

%

f ite

s

%

f t

e val

e


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Perpetual inventory system

It may be defined as a method of recording stores balances after every receipt and issue to

facilitate regular checking and to obviate closing down for stock taking." So perpetual

inventory system implies continuous maintenance of stock records and in its broad sense itcovers both continuous stock taking as well as up to date recording of stores books.

Perpetual Stock Count System @ VWEMCL

y VWEMCL is consists perpetual stock taking method for inventory control. In this

method the accounting of stock is done consciously throughout the year or more

frequently at regular intervals of time. Stock accounting is done on the bases of grades

of inventory that is mentioned above.

y Perpetual stock counting is done in a Bi-monthly, quarterly, half-yearly basis just to

know the status of physical stock and socks shown in the system. Because sometimes

due to theft or due to short supply of inventory physical stock may be less than in

system and sometimes stocks entry are not recorded then physical stocks may be more

than in system.

y Bi-Monthly: Counting is being done forA grade inventory that is precious inventory

and needs strict control. This grade gets covered 6 time count in one financial year.

y Quarterly: Counting of inventory is being done forB grade inventory that is good

inventory and need control at regular interval. This grade gets covered 4 time count in

one financial year.

y Half yearly: counting is inventory is done for C grade inventory that is average

inventory. This grade gets covered 2 time count in one financial year.

Because of continues accounting of stock there is an effective control over inventory.

Information regarding material can be obtained whenever required in detail. The

possibility of misappropriation becomes almost negligible.


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Visual controls

In order to have an efficient inventory control, the store keeper has made various blocks for

keeping the inventory so that physical verification of number of items can be done quickly

and accurately.


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Conclusion & Limitations

Conclusion

In conclusion, it can be concluded that the company has good inventory management systemand is an effective one. Without proper inventory control system they could not have proper

inventory record so it will not able to maintain optimum inventory level. If it keeps high

stock then higher carrying cost wills occurs. If it keeps lower stock plant may shut down. So,

it is very important for company to maintain proper inventory stock by implementing proper

inventory control techniques.

Limitations

My study is totally based on secondary data.

Time was too short for completion of project report.

The company belongs to service industry so it has only consumable inventory. So,

detail report could not be possible.


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Recommendation & suggestion

Company should implement vendor evaluation technique for selecting the best supplier.

Vendor Evaluation

In order to evaluate the overall performance of vendors, this vendor evaluation matrix form

should be filled up. This form contains of weightage score to each criteria and rating of the

supplier on different criteria, in which 5 is the strongest, to each item in evaluation. Then the

weightage score and obtain point is multiplied for each row(criteria) should be add to arrive at

final total. Compare this total against the totals of similar vendors to measure the vendors

performance.

Sr.no. Criteria weightage Rating weighted

score

1 2 3 4 5

1. Timeliness Of

Deliveries

3

2. Quality Of

Parts/Products/Material

Upon Delivery

3

4. Competitiveness Of

Price

4

5. Quality Of Service

Provided

3

6. Quality Of Design

Compared To

Specifications

4

7. Credit Rating 3

Total weighted score


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Combining the ABC & VED analysis

The company has already implemented ABC technique for inventory management. The

company maintains the inventory of consumables so combination of ABC & VED analysis

would be more useful.

ABC and VED analysis, used for classification, one deepening on consumption value and the

other on the criticality, both are important. In case we combine both and classify the material

depending both on consumption value and criticality it will give a good result.

This can be made in nine ways, which is shown in the matrix given below.

V E D

Combined

category

Combined category Combined

category

A AV AE AD

B BV BE BD

C CV CE CD

This type of classification will help the management to decide the material policy and what

service level are expected to see that no difficulty is faced. An item belongs to both class A

and V, is costlier and at the same time higher criticality, the management should see that it

should be available any time the need arise and stock level to be controlled properly to see

that inventory carrying cost are kept under control. At the same time if the item belongs to

CV class higher stock should be kept as it is very vital but having a less value.

Tackling the items on the basis of their consumption value and also criticality will be in

reducing the carrying cost and at the same time meet the requirement of emergency of the

inventory.


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Classification A B C

Vital 4 2 1

Essential 7 5 3

Desirable 9 8 6

Numbers indicate the focus priority for best results both in terms of service as well as

resources required.We can design the stock levels in such a manner that maximum service is

provided forC category vital items which provide high satisfaction levels at very little cost,

while for Acategory Desirable items service can be minimum desirable as the require

largeresources and provide very low satisfaction. For remaining items, service levels can bein

between these two levels and average stock holdings can be designed accordingly.

OPTIMUM STORE LAYOUT

FSN Analysis

For optimum store layout the company should also implement FSN analysis.

By this technique company can develop most suitable layout by locating all the fast moving

items near the dispensing window and slow moving and non-moving item at back part of the

store in order to reduce the handling efforts. Also, attention of the management is focused on

the Non-Moving Items to enable decision as to whether they are required in the future or they

can be salvaged.

EOQ MODEL

The company should also implement EOQ techniques in order to make balance

between ordering cost and carrying cost and finally minimizing the total cost.EOQ

minimizes the sum of holding and setup costs


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In order to implement this model the company is require carrying out following steps.

1. Estimating the ordering cost of an item

2. Estimating the carrying cost of an item

Then, the company can fix the quantity to be purchased by using the following formula.

EOQ = 2AO/ C

Where,

A= total annual consumption

O= order cost

C= carrying cost


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BIBLIOGRAPHY

BOOKS

y Financial management by I.M. Pandey

y Annual reports of VWEMCL

WEBSITES

WWW.VAPICETP.COM

WWW.TOTALINVENTORYCONTROL.COM

Final Jnk (2) 18TH AUG

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