1

Industry Overview





Chemical industry is one of Indias oldest industries, contributing significantly towards the
industrial and economic growth of the nation. The Indian Chemical Industry forms the backbone
of the industrial and agricultural development of India and provides building blocks for several
downstream industries. According to the Department of Chemicals and Petrochemicals, the
Indian chemical industry is estimated to be worth approximately US$ 35 bn, which is about 3%
of Indias total GDP. The total investment in the Indian chemical industry is approximately US$
60 bn and total employment generated was about 1 mn. In terms of volume, it is 12th largest in
the world and 3rd largest in Asia.

Exports of chemicals from India have increased significantly and account for about 14% of total
exports and 9% of total imports of the country. The Indian chemical industry comprises both
small and large-scale units. Fiscal concessions granted to the small sector in the mid-eighties led
to the establishment of a large number of units in the Small Scale Industries (SSI) sector.

The major sub segments of this industry include alkali, organic chemicals, inorganic chemicals,
pesticides, dyes & dyestuffs and specialty chemicals. The Indian chemical industry deals in
products like fertilizers, bromine compounds, catalyst, sodium and sodium compounds, dye
intermediates, inks and resins, phosphorous, paint chemicals, coatings, isobutyl, zinc sulphate,
zinc chloride, water treatment chemicals, organic surfactants, pigment dispersions, industrial
aerosols and many more.

The commodity chemicals are the largest segment in the chemical market. Some of the major
markets for chemicals are North America, Western Europe, Japan and emerging economies in
Asia and Latin America. The Indian chemical industry is matured and is in the midst of a major
restructuring and consolidation phase. Globalization has opened the doors for this sector to
capture a major part of the global market pie.

The sector has experienced many reforms in India and is expected to grow at 15% p.a. in the near
future. The investment in R&D will also play a vital role in this sector. In a nutshell, the Indian
chemical industry has a large potential to grow in domestic as well as in export markets. In the
current market conditions, with an appreciating rupee, pricing will be a crucial factor while
competing with other exporting countries.


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Company Overview



Established in the year 2006 Tridev Resins is an organization situated in Vapi (Gujarat),
India, . The company is engaged in the manufacture, sales and exports of various Synthetic
Resins & Acrylic Emulsions and caters to various industries like the Printing Inks, Ball Point Pen
Inks, Lacquers, Varnishes and Paint Industries.

The factory building is designed in such a way that it can process approx. 3600 tonnes of
Resins in a series of reactors, fully equipped with condensers, receivers, filter machines, boilers
to process all kinds of Resins & Acrylic Emulsions.

Tridev Resins Pvt. Ltd products are of international standards to multinational companies, large,
medium and small scale Indian industries. It is also engaged in exporting of many products to
various countries.

Tridev Resins Pvt. Ltd. is equipped with latest Quality Control facilities to test the raw materials
as well as finished products. It also has round the clock working process control laboratory, so as
to make the products of consistent quality. Tridev is very keen to update qualities of their
products and to develop newer products to keep pace with international range of products, used
with added advantage of better properties at a much competitive price. The efforts of upgrading
the quality of all the existing products is a continuous process of the company, based on the
growing need of the customers for the higher quality of the products from time to time.

The management and administration of the Tridev Resins flourishes under the flagship of young
and dynamic Mr. Shwetal Sakaria (Marketing Management) and the backbone of technical
expert Mr. Vinod Oza (B.Sc.) who has tremendous experience on the chemistry of polymers.












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General Information

TRPL runs 24 hours.
The number of working days 26 in a month.
Number of working hours is 8hours in a day.
TRPL runs 3 shifts in a day.
TRPL provide weekly off on Tuesday.
CL and PL as per government norms.
TRPL manufacture two types of products synthetic resin and acrylic emulsion
The TRPL exports 70 percentage of their products in Europe, USA, Gulf and China.
.



5




History Of The Company

Established in the year 2006 Tridev Resins is an organization situated in Vapi (Gujarat), India.
The company is engaged in the manufacture, sales and exports of various Synthetic Resins &
Acrylic Emulsions and caters to various industries like the Printing Inks, Ball Point Pen Inks,
Lacquers, Varnishes and Paint Industries .

BOARD OF DIRECTORS
Name of Person Designation E-mail ID

Shwetal Sakaria

Managing Director

shwetal.sakaria@tridevresins.com

Vinod Oza

Technical Director

vinod.oza@tridevresins.com














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COMPANY PROFILE


Name : Tridev Resins (I) Pvt. Ltd .
Constitution : Private Limited Company.
Activity : Manufacturing of Synthetic Resins and Acrylic Emulsions
Date of Establishment : 21
st
June, 2006.
Registered office : 11, Peninsula Center, S S Rao Road, Parel,
Mumbai 400012. .
Tel.: +91.22.40586777 | Fax.: +91.22.40586770
Factory Address : Tridev Resins (India) Pvt. Ltd.
136/E-1, II Phase, G.I.D.C.,
Vapi - 396195, Dist. - Valsad, Gujarat
Telephone : +91 260 6535410 / 6452157
Fax : +91 260 2401382
e-mail : info@tridevresins.com



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Total Quality Management Principles

We are committed to continually improve in:
Satisfying the customer.
Having the minimum practical number of managerial layers management supporting,
coaching, and empowering employees.
Performing only value-added activities and rigorously eliminating those which are not.
Becoming effective and efficient in the performance of these value-added activities.
Maximizing effective teamwork, both multi-functional and within the natural work
group.
Measuring our performance, correcting our deficiencies, and applauding our successes.
Above all, continuing to learn new techniques, new tools, and new methods to meet the
challenges of the future.

Quality Policy

Tridev is dedicated to providing products and services which consistently meet or exceed the
requirements of our customers. We promote personal involvement, teamwork, continuous
improvement, and proactive problem solving to drive this commitment to quality. In every facet
of our operations we are dedicated to applying these principles while maintaining an equal
commitment to the health and safety of our employees, plant neighbours, customers, and the
environment
Product Stewardship

Tridev Resins is concerned about the health and well-being of our customers, employees, and the
community. We are committed to reviewing and improving upon our manufacturing processes
and products to minimize any adverse safety, health and environmental impacts.
In accordance with this commitment, Tridev will strive to:
Design safe, energy-efficient, and environmentally sound products and processes.
Transport products safely in packaging which conserves resources and meets customers
needs.
Bring value to our customers by continually improving our products and processes.
Enhance partnerships with our customers, suppliers, and the community to fulfil these
responsibilities.





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Company Policy
Remain committed to servicing the industry via a Distribution network.
To build long lasting, profitable business relationships with our Distributors and
Customers.
Concentrate on growing globally

Safety Standards
Tridev Resins (I) Pvt. Ltd. is basically a chemical based company. So there were many
hazardous reactions taken place so that safety and health of all the employees and workers is the
prior concern for Tridev Resins (I) Pvt. Ltd.
Tridev Resins (I) Pvt. Ltd. takes due care to ensure safety aspects in conformity to
various applicable low rules there under to offer safe and healthy work culture within
the plant.
The entire employee in the plant safety measure is must like helmet, goggles, gloves,
gum-boot, shoes, mask, etc. as applicable.
Safety, health & Environment policy has been formulated and is integrated in all plant
activated.
Permit to work system strictly followed and job is initiated only after ensuring the safe
work environment.
Personal protective equipment is must for all plant personnel to prevent exposure/injury
during course of work.
Adequate application is provided to each plant in ready to use condition.
A detailed safety audit is conduction at regular intervals by the expert agency.
Safety committee meets on regular basis to review to safety aspect.
Practical training regarding accident solution given two or three times in a year.
Safe & open place in kept in the company for emergency accident
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12



Human Resources Department
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Human Resource Management is the staff activity requiring special knowledge
and skill in understanding and predicting individual behaviour, interpersonal
Behaviour, group Behaviour and Organisation Behaviour.

Recruitment Policy
In Recruitment procedure firstly assess the requirement from the plant or at any place in the organization
and check the no. of. Requirement against the work, then only decided the actual no. of Vacancy.
Sources of recruitment:
Advertisement in News papers
Recruitment by Internal Sources
Through Recruitment Agencies
Contractors of Labours
Casual Labours

Minimum Qualification needed for
Plant in charges M.Sc / B.Sc. or B. E with a minimum 5 years of experience.
Chemists BSc. Pass, Engineers B.E./Diploma,
Fitters, Wiremen, Welders ITI Passed Certificate.

General Policy
The staff have compulsory one day off per week.
The staffs members are allow having 21 days leave in a years(voluntary)
Salary is also given in advance if require by the employee.
Med claim for each employee is provided and the employees have to go medical check-up in a
year.
Employees are allowed to come up to 10 minutes late with a genuine reason.
Except manufacturing process of Dyes & dye intermediates all the works are done by taking
permission of Environment & Safety Department.






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MAN POWER PLANNING:-

According to the requirement of the personnel for the plant is met with keeping in view of
following:
Technical concept of plant, Including process control and instrumentation.
Smooth and efficient operation of plant.
Effective co-ordination between the various departments within the plant.
Optimum organization with well designed and judicious job distribution.
Optimum utilization of different grades of workmen and supervisory staff members.
Maximum capacity utilization of capacity.

Man power planning is done formally by the different departments in charges. The department in charge
sends the requirement to the Personal Department.
Man power planning is done generally through workout that are the requirements of different department
is send to personal department and then further appropriate action is taken. At the time of expansion the
requirement of the plant in charge is fulfilled by erector so as to have a full and appropriate utilization of
the capacity. For Labours Man power planning is done by way as per the present requirement and fulfilled
by Labour Contractor.



RECRUITMENT AND SELECTION PROCESS:-
It is simple terns, recruitment is understand as the process of searching for the and obtaining application
for jobs, from among whom the right people can be selected.
The man power requirement is fulfilled by local sources or advertisement in News papers. Before
deciding above the person to be recruiting, the company takes various criteria into consideration.
Employees physical fitness to the job. The employees health is the most prior thing.
Employees Bio-Data.
Employees education qualification
Employee work experience
His image in society
Salary and Benefits



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Process for Fulfilling Man Power Requirement
Tridev Resins (I) Pvt. Ltd. has their own way of recruitment of people
For general Labour recruitment:
Labour Contractor
Casual Labours
For staff like chemists, Engineers, in charges, officers follow a particular process.
Step 1
The company advertises in News paper or through local sources to make the candidate aware about
vacancy in the company with qualification and experience required.
Step 2
Then the applications fitting the company requirement comes and collect the application forms.
Step 3
Then after the forms are filled company takes interview and written test for the assessment of the theory
knowledge.
Step 4
The company selects among the candidates, by bifurcating the candidates into two parts (1) whose score
in exam is high and passed the interviews (2) person who has passed interview but scoring is bed.
Step 5
The candidates then have to cross practical interview and the one who is found more practical is then
selected.
Step 6
The selected candidate is called to fulfill all legal requirements and asked for induction training.






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PERFORMANCE APPRISAL PROCESS:-

1. Employees are evaluated annually and performance appraisal done by hierarchical basis. That is
each Department Head evaluate their subordinates.

2. For workers, technicians, fitter, wiremen, electricians, supervisors, chemists, engineers etc. are
evaluated by relative plant in charges and the evaluation of in charges is done by directors.

3. For workers, technicians, fitters, wireman, electricians are evaluate on the basis of attendance
and work-disciplines.

4. For supervisors, chemists, engineers, plant in charge performance appraisal form is prepared
and the forms are filled by hierarchical basis.

5. Employees are motivated by awarding annual increment/promotion etc the annual promotion is
to be awarded to the individual employees accordingly to their seniority, grades, pay-scale,
performance efficacy, punctuality, attendance.

6. Performance appraisals of marketing agents are done on the basis of monthly performance and
discipline in payment schedule (within 15 days).




TRAINING AND DEVELOPMENT:-
For all the new employees staff induction training is given in plant new employees had to work in general
shift until plant in charge feel that the new employee is responsible for the night duty.
For all employees monthly related training or lectures are given by the safety executive or by outside
lecturer.
For in charge various training or lectures about maintenance planning, best utilization of workers and
maintenance, cost reduction are give.




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WELFARE ACTIVITIES:-

Tridev Resins (I) Pvt. Ltd provide P.F to those employees whose salary is below Rs. 6500 and
above Rs. 6500. It volunteers for them to cut the P.F. not compulsory.
Group accident policy was done once in year, the beneficiary may be the father, mother and
children.
Workman compensation policy for employee welfare.
Bonus is given in the month of April & October to the entire employee as per percentage
described. Six month salaries provide Bank through foe the employees.
Yearly medical check-up is done.
In the night-shift company provide two time tea & coffee at free of cost at 1:00, 3:00am.
Training is given about safety and pollution control.
Celebration of world Environment Day i.e. 5
th
June.
Celebration of National Safety Day i.e. 4
th
March.
Company provide for supervisor for the Housing Facilities.
Company provide Schools, Banks, Transport, Game, Club, Cultural Programmers etc, facilities
provide the employees.



HEALTH DEPARTMENT:-
Tridev Resins (I) Pvt. Ltd is very conscious about health and care of the employees and
therefore maintains OHC within the plant premise.
The first aid boxes with necessary medicines are kept by the trained first aids and plant in charge
in the plant.
Regular medical check-up of all employees is carried out by the factory medical officer at the
interval of six months and again by external expert agency every year.
Training programmers on first aid is frequently conducted by factory Medical Officer to train the
Plant personal.

WAGES & SALARY ADMINISTRATION:-
Wage & Salary administration refers to the establishment and implementation of sound polices and
practices of employee compensation. Generally the wage is the compensation which is given to the
worker categories. In Tridev Resins (I) Pvt. Ltd wage and salary is given in following structure.
For staff it includes:
Basic Salary
Medical Allowances
Housing Allowances
Transportation Allowances


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For workers it includes:
Basic Salary
Medical Allowances
Overtime






Salary and advance is given regularly to all the workers from the cashier in the company staff
salary was made by cheque of Bank of Baroda, vapi GIDC Branch. Date of salary is fixed i.e.
between 10 to 15& for advance it is 25th of the every month.

Joining module
The company allows the employee to join within a week or according to his convenience
i.e(max.1 month)
Grievances & grievances handling
The disputes or issues in the company are handled by Mr. AMIT KOTHARI ( H.R MANAGER)
Provident fund schemes:
12% P.F is deducted from the salary and 1.75% E.S.I.C of workers and supervisors.
Office Time:
For workers- 2 shift (8:00 am to 8:00 pm)
For employees-9:30 am to 6: pm

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Marketing department
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In Tridev Resins (I) Pvt. Ltd. the marketing of the resins are done by using direct marketing.
Here in companys finished products i.e. resins are used by other company as a raw material . so
customers directly contact to the company & customers place an order to the company directly as
per their requirement. The transaction of the customers are mainly done through the phone & e-
mails with the company. The marketing of the product is done by the company.
Here the local market of the product is managed by mr.vinay ojha & mrs.rupal Mehta. While the
international market is managed by mr.vinod ojha & nr. Swetal sakaria.


Channels of marketing
Internet
Seminars



All material is sold through company itself no agent is there. The company is currently supplying
finished RESINS products in countries like , Singapore, Syria, , Nepal, Bangladesh, us. North
America and Hong Kong as well in local market like
Western region-Gujarat& Maharashtra
South region-Bangalore, Hyderabad, Chennai
North region-Noida, Ghaziabad, Kanpur, Gurgaon, Delhi
East region- Kolkata.




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Production Department
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A plant lay-out refers to the arrangement of machinery, equipment and other industrial facility such as
receiving and shipping departments, tool rooms, and maintenance room and employee amenities for
the purpose of achieving the quickest and smoothest production at the least cost.
A plant lay-out is a floor plant for determining and arranging the desired machinery and equipment of a
plant, whether established or contemplated, in the one best place to permit the quickest flow of
material at the lowest cost and with the least amount of handballing in processing the product from the
receipt of the raw material to the shipment of the finished product.
Tridev Resins (I) Pvt. Ltd. has such a wonderful arrangement of their production plant. In all the plant the
starting point of the process is at the top floor and end is at the ground floor and at the basement, here
in the plant all the process is being on the continues basis so the arrangement of wesseles, coupler, etc.
are very crucial.



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Production Process:-
This resin is made through the elimination reaction process between polyvinyl alcohol and
butyraldehyde with acid as a catalyst. It has the fine characteristics of being transparent,
insulating, impacting resistant and highly adhesive to glass, metal, wood, films, ceramics, leather
and fibers etc. The products are non-toxic, odourless, with good adhesion and highly transparent.
Step1- Raw material is taken from the store department. Raw material like cyclohexamount,
formaldehyde, caustic soda plus additives.
Step2 In reactor cyclohexamount is formally heated at 50 to 60

C here the heating process is

done for 90 minutes.
Step 3 Than caustic soda is added for reaction purpose including additives & than again it is
heated for 150 min in reactor.
Step 4 Cooling is done at a specific temperature & it is 90 to 95

C this process is done for 1

hour.
Step 5 Than it is collected in a vessel which is again washed with water & put it in a stream
dryer at 80 to 90

C.
Step 6 Than the resin is packed in to different packets.











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Product manufactured by the company


Synthetic Resin

Acrylic Emulsion


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Purchase & Stores
Department

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Material receipt procedure

Receiving of Material
Security will verify the challan and entry in gate inward register then they inform in the store
department regarding the material. Then inspection of physical quantity with challan copy and
quality checking are done. If that will ok then material received by store assistance then he
inform to purchase manager.
Storage and Maintenance
For the storage of materials the FIFO is being followed. For maintenance of material everyday
inspections are done by purchase manager. In store fire extinguishers are provided. Store builder
in such a way that air ventilation will then store keeper will allow to issue of materials.
Issue of Materials
For issue of material issue slip should be signed by the required plant in charge and then store
keeper will allow to issue of materials.
Store Manager files various records such as
Material issue record
Stock register
Gate pass register
Pending purchase order
Purchase indent register









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28







Classification of inventories



In Tridev Resins (I) Pvt. Ltd premium quality material used to produce resins & Acrylic Emulsions.
All inventories are mainly classified in to two categories i.e. solid & liquid. The classification is
represented graphically as follow.






Inventory
Solid
Resins
colour
silica sand
Adhesion
promoters
Liquid
Aqueous
Acrylic
Emulsions
Acrylic
Resin
Solution
overprint
Varnishes
Heat Seal
Lacqures
Wax
Emulsions
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Maintenance planning systems
In simple words, maintenance may be understood as a set of activities which help keep plant
machinery and other facilities in good condition. In formal definition of maintenance is that
function of manufacturing management that is concerned with the day-to-day problem of
keeping the physical plant in good operating condition. It is an essential activity in every
manufacturing establishment, because it is necessary to insure the availability of the machines,
building and services needed by other parts of the organization for the performance of their
function at an optimum return on the investment, whether this investment is in machinery,
materials or employees.
There is a separate discipline called maintenance planning. According to this science there can
be two extreme approaches.
1. Preventive Maintenance Planning
2. Corrective Maintenance Planning
In first planning company periodic serving the all department machinery after two month. In
second approaches it is unplanned and done when there is requirement. There is a formal
procedure for this type of maintenance work called permit book which divided in to two
categories:
1. Hot Work: Inside the plant or chemical pipelines
2. Cold Work: Outside the plant
In hot work permit mainly tree parties is concerned one where it requires second the safety
department to check the condition for oxygen level 7 etc. and the third party is the maintenance
department. In Cold Work permit only two party is concerned that not the safety department.



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Material handling systems:-
Material Handling is defined as control movement of material from receipt of material, during
storage and production operation up to the dispatch of finished product. It concern with all type
of material like raw material, work in progress, finished product, scraped and surplus material
and capital equipments. There are mainly two objectives of material handling.
1. Storage of material
2. Shifting of material from one location to another within production unite.
It is not concerned with external movement of material. It is covered by separate discipline called
Logistics


Types & classes of material handling equipment:-
In Tridev Resins (I) Pvt. Ltd. Material handling is done by pipelines, trolleys, lifts, drums and
manually also. It is depend up on the form of material. Following table will help in
understanding.
TYPE OF MATERIAL MATERIAL HANDLING EQUIPMENT
Liquid Pipelines
Powder Trolleys, Lifts (With Manual help)
Water Drums (With Manual help)



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32

Financial Department
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Financial Management is the activity which is concerned with Planning and Controlling of the
firms financial recourse. Finance is regarded as the life blood of business or organization. The
study of finance management related to the process of procuring financial resources and its
judicious utilization with a view of wealth maximizing of owner. Every Business is based on
Finance.
The first and most function of finance department are providing money for the purchase
of raw material for the production department.
Definition
Financial Management means managerial function like Planning, organizing, controlling
and using of funds needs in the business.
OBJECTIVE
To prepare a balance sheet at ever.
To Monitor and measure internal customer satisfaction.
To maintain working capital at minimum level compound to last year.










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FINANCIAL HIGHLIGHT:-
The year 2011-2012 proved to be improved for the company oaring the year under review
the sales increased from Rs. 217337757.6 RS in the previous year to Rs.269056363 an
increase of 23.79%. However the internal expenses to introduce new product is relate to
expansion and due to heavy the PBT and PAT was effect. The management is taking due
measure to maintain the Profitability of the company.
OPERATION OF FINANCE DEPARTMENT:-
The company has a very effective internal control system covering both accounting and administrative
control. Internal audit by outside agencies has further assisted in the assessment and effectiveness and
also the implementation of the internal control system.
The company has an adequate and proper system of internal control to ensure that all the assets are
safeguarded and protected against loss from unauthorized use or disposition and that all transactions are
authorized, recorded and reported correctly.
Audit committee is constituted in TRPL. The committee members are well versed in finance matters,
accounts, company law and general business practices. The constitution of audit committee also meets the
requirement under section 292A of companies act, 1956.
SOURES & APPLICATION OF FOUND:-
SOURCES OF FUND
1. Sales of material
2. Debt capital
3. loans
APPLICATION OF FUND
1. Fixed assets.
2. Investment in different projects.
3. Current assets & current liabilities.
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4. ACCOUNTING SYSTEM METHOD:-

1) BASIS OF ACCOUNTING
The financial statements have been prepared on the historical cost basis and on the accounting
principle of going concerns.
Accounting principles not specifically referred to are otherwise consistent and in consonance
with generally accepted accounting policies.
2) USE OF ESTIMATES
The preparation of financial statement requires estimates and assumptions to be made that
affect the reported amount of assets & liabilities on the date of the financial statement and the
reported amount of revenues & expenses during the reporting periods. Difference between the
actual results & be estimates are recognized in the period in which the results are known /
materialized.
3) FIXED ASSETS
Fixed Assets are stated at historical cost of acquisition or construction less accumulated
depreciation /amortization all cost relating to the acquisition & installation of fixed assets are
capitalized the cost excludes the duty benefits are admissible against installation of specific
assets.
Advances paid towards the acquisition or construction of fixed assets & the cost of the assets
not put to use as at reporting date are disclose under capital work-in progress.

4) DEPRECIATION
Depreciation are provided on straight line method as per section 205(2) (b) of the companies
act, 1956 and in the manner so prescribed under schedule XIV to the companies act, 1956.

5) REVENUE RECOGNITION
Domestic sales are recognized at the time of dispatch to the customers invoicing being the
conclusive events.
Exports sales are recognized on the basis of dispatch from the factory . the difference in tax
invoice and export commercial invoice recognized as exchange
Interest income is recognized on time proportion bases taking in to account the amount
outstanding & rate applicable
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6) INVESTMENTS
Investments are stated at cost.

7) INVENTORIES
Raw materials are valued at cost on FIFO basis.
Work-in-process is valued at raw material cost.
Finished goods are valued at cost or net realizable value whichever is lower.

8) FOREING CURRENCY TRANSACTION
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on
the date of transaction and difference if any on realization payment are adjusted to Profit and
Loss Accounts Current assets & liabilities in foreign currencies as at the Balance Sheet date are
reconverted at the rate prevailing at the year and the resultant net gains and losses are adjusted
in the Profit & Loss Accounted.

9) EXCISE DUTY & SALES TAX / VALUE ADDED TAX
Excise duty is accounted on the basis of both, payment made in respect of goods cleared as also
provision made for goods lying in bonded warehouses. sales tax/ value added tax paid is charged
to profit and loss account .

10) RETIREMENT BENEFITS
THE COMPANY HAS NOT MADE ANY PROVISION FOR GRATUITY & LEAVE WAGES &THUS AS -15
OF THE ICAI HAS NOT BEEN FOLLOWED.
COMPANYS CONTRIBUTIONS ARE MADE TO PROVIDENT FUND &ESIC & ARE CHARGED TO
PROFIT AND LOSS ACCOUNT ON AN ACCRUAL BASIS.



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11) INCOME TAX

Tax expenses for the year comprising current tax and deferred tax is included in determining the
net Profit for the year. Deferred tax, asset and liabilities are recognized for the future tax
consequences of temporary difference between the carrying value of asset and liabilities and
their respective tax bases, and operating loss carry forward. Deferred tax assets are recognized
subject to managements judgment that realization is more likely than not. Deferred tax, asset
and liabilities are measured using enacted tax rates expected to apply to taxable income in the
year in which temporary difference are expected to be reviewed or settled.




MANAGEMENT OF PAYABLES & RECEIVABLE:-

1) For the management of payables
The supplier of raw material & other supplier provides 90 days credit period to the
company. They timely make their payments to the supplier & have maintain very good and
healthy relationship with them.

2) For the management of receivables
The customer of resins is other business units of the market as most of customers are
foreign company
They sale goods on credit basis by giving 60 days credit period to their customers.
Here for creditors they are using liberal credit policy & if customer fails to payment than
they follow up the credit as here the customers of the company are very loyal.




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MISSION OF THE COMPANY

To provide better market to employee with maximum return of them.
To get yield and minimize past problem.
To criminate old technology by bring modernization in chemical and increasing the yield
informing.
To become 100 crores company with in next 3 years

VISSION OF THE COMPANY

The Company's core objective is to provide better value to its customers on the price-
quality matrix. At Tirupati Inks, we starve for having customers' success and not only
customers' satisfaction.
To consolidate the companys position as a leading supplier of printing inks in national
and international market, we set forth to become responsive, flexible, innovative and
progressive
To become leading manufacturer internationally

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CORPORATE OBJECTIVE
To Maintain International Quality Standards by embedding the best practices in all
systems and processes.
To develop a special relationship with customers by providing prompt technical support
& services.
Continue efforts in developing cost effective, reliable and efficient technologies for
Indian and overseas customers.
To develop an agile and effective organization which adopts and adapts to the changes
in business environment by continuously assessing the opportunities and encashing
them and evaluating the threats to mitigate them.
We are actively involved in collaborating with our customers, agents, dealers, allies, and
industry stalwarts to ensure that the printing industry continues to excel and grow


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SWOT Analysis

The SWOT analysis is done to know the companys present strength & weakness
and the future opportunities & threat of the company


Strength:
In Tridev Resins (I) Pvt. Ltd strength is their product namely kenotic resin also known as HK-
100. As the company is the no.1 producer of the world.
In Tridev Resins (I) Pvt. Ltd have well qualified & young team to cater their objective
In Tridev Resins (I) Pvt. Ltd have strength of
Water Availability,
Raw material Availability,
Skill labours,
Modern Machinery

Weakness:
In Tridev Resins (I) Pvt. Ltd the main week point is management.
As the company have young team they need more training for upgrading of their knowledge





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Opportunities:
As company is supplying the resins in 29 countries around the world. As in European country &
in North America resins are not available & government of that country also not supporting them
to produce resins. So they are looking to more supply resins in that country in future & capture
more market shares.
Government policy is suitable for growing in international business


Threat:
In India also Tridev wants to expand their business but due to the government policies ,rules &
regulation they are not able to expand.
Regulatory board is not co-operating to lead in their product


42

Competitors
Company is working on domestic as well as international level.so company is facing competitors
of both levels.
domestic compititors are as follow
-Micro Inks,Vapi
-D.R Coats,Palghar
-Polyois Chemicals
-Uniform Synthetic,Vapi
-Bharat Resins
-Suparna Chemicals
Here from the entire above competitor the main one is micro inks & the other is suparna resins.
Turn overs
-Micro Inks has turnover of 4000 tunes
- d.r coats has a turnover of 1000-1500 tunes
- Suparna chemicals have a turnover of 1500 tunes
All above are the main competitors of the tridev resins (i) pvt. Ltd from them micro ink is the
tough competitor of TRPL.
- Here as TRPL has a turnover of 2500-3000 units







43

CUSTOMER SEGEMTS:-
These resins are the separate raw material suitable for selective ink materials.
These resins can also be applies on coating and paint categories.
The customers of Tridev Resins (I) Pvt. Ltd can be classifies into following categories:

Coating (roller, paper)
ink units (printing ,water based, paper, pen gravure (marker))
painting (paints )
tissue & foils
lacquers



Suppliers

GSFC
BSF
Indula
Kanoria
GACL
WAKER
Sakart

Bank Partners
HDFC
B.O.B
44

ORGANISATIONAL STRUCTURE CHART






WORKMAN
LAB ASSISTANT
TECNICIAN
MANAGER
BOD
45

LITERATURE REVIEW


INTRODUCTION
FLOYD D. HEDRICK, library of congress, Washington D.C "Inventory" to many small business
owners is one of the more visible and tangible aspects of doing business. Raw materials, goods in
process and finished goods all represent various forms of inventory. Each type represents money
tied up until the inventory leaves the company as purchased products. Likewise, merchandise
stocks in a retail store contribute to profits only when their sale puts money into the cash register.
In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks
represent a large portion of the business investment and must be well managed in order to
maximize profits. In fact, many small businesses cannot absorb the types of losses arising from
poor inventory management. Unless inventories are controlled, they are unreliable, inefficient
and costly.
SUCCESSFUL INVENTORY MANAGEMENT
Successful inventory management involves balancing the costs of inventory with the benefits of
inventory. Many small business owners fail to appreciate fully the true costs of carrying
inventory, which include not only direct costs of storage, insurance and taxes, but also the cost of
money tied up in inventory. This fine line between keeping too much inventory and not enough
is not the manager's only concern. Others include:
- Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too thin;
- Increasing inventory turnover -- but not sacrificing the service level;
- Keeping stock low -- but not sacrificing service or performance.
- Obtaining lower prices by making volume purchases -- but not ending up with slow-moving
inventory; and
- Having an adequate inventory on hand -- but not getting caught with obsolete items.
The degree of success in addressing these concerns is easier to gauge for some than for others.
For example, computing the inventory turnover ratio is a simple measure of managerial
performance. This value gives a rough guideline by which managers can set goals and evaluate
performance, but it must be realized that the turnover rate varies with the function of inventory,
the type of business and how the ratio is calculated (whether on sales or cost of goods sold).
Average inventory turnover ratios for individual industries can be obtained from trade
associations.
46

.
DEVELOPMENTS IN INVENTORY MANAGEMENT
In recent years, two approaches have had a major impact on inventory
management: Material Requirements Planning (MRP) and Just-In-Time (JIT and Kanban). Their
application is primarily within manufacturing but suppliers might find new requirements placed
on them and sometimes buyers of manufactured items will experience a difference in delivery.
Material requirements planning is basically an information system in which sales are converted
directly into loads on the facility by sub-unit and time period. Materials are scheduled more
closely, thereby reducing inventories, and delivery times become shorter and more practical
predictable. Its primary use is with products composed of many components. MRP systems are
for smaller firms. The computer system is only one part of the total project which is usually long-
term, taking one to three years to develop.
Just-in-time 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.
TIPS FOR BETTER INVENTORY MANAGEMENT
At time of delivery
- Verify count -- Make sure you are receiving as many cartons as are listed on the delivery
receipt.
- Carefully examine each carton for visible damage -- If damage is visible, note it on the delivery
receipt and have the driver sign your copy.
- After delivery, immediately open all cartons and inspect for merchandise damage.
When damage is discovered
- Retain damaged items -- All damaged materials must be held at the point received.
- Call carrier to report damage and request inspection.
- Confirm call in writing--This is not mandatory but it is one way to protect yourself.
Carrier inspection of damaged items
- Have all damaged items in the receiving area -- Make certain the damaged items have not
moved from the receiving area prior to inspection by carrier.
47

- After carrier/inspector prepares damage report, carefully read before signing.
After inspection
- Keep damaged materials -- Damaged materials should not be used or disposed of without
permission by the carrier.
- Do not return damaged items without written authorization from shipper/supplier.




















48

Author


:


Brent D. Williams, (Department of Marketing and Logistics, Sam M. Walton College
of Business, University of Arkansas, Fayetteville, Arkansas, USA), Travis Tokar,
(The Ohio State University, Fisher College of Business, Marketing and Logistics,
Columbus, Ohio, USA)
Abstract:
Purpose The purpose of this paper is to provide a review of inventory management
articles published in major logistics outlets, identify themes from the literature and
provide future direction for inventory management research to be published in logistics
journals.
Design/methodology/approach Articles published in major logistics articles,
beginning in 1976, which contribute to the inventory management literature are
reviewed and cataloged. The articles are segmented based on major themes extracted
from the literature as well as key assumptions made by the particular inventory
management model.
Findings Two major themes are found to emerge from logistics research focused on
inventory management. First, logistics researchers have focused considerable attention
on integrating traditional logistics decisions, such as transportation and warehousing,
with inventory management decisions, using traditional inventory control models.
Second, logistics researchers have more recently focused on examining inventory
management through collaborative models.
Originality/value This paper catalogs the inventory management articles published in
the major logistics journals, facilitates the awareness and appreciation of such work,
and stands to guide future inventory management research by highlighting gaps and
unexplored topics in the extant literature.

49

Author:
Geoff Buxey

Abstract
Purpose This paper sets out to discuss practical inventory control systems.
Orthodox theory revolves around the purchaser and balances ordering costs against
charges for carrying goods in stock. However, for any company holding thousands of
different items the directives for constructing the best system(s) are confusing and the
logic seems inconsistent. The research objective is to clarify this hitherto unsatisfactory
situation and to provide robust guidelines for managing such inventories.
Design/methodology/approach A small number of published examples are described in
sufficient detail to reveal what these firms actually do. Each case is dissected to uncover
management's motives, since the original reports were not embellished with useful
analytical comments. The aim is to reconstruct the overall design process.
Findings The myopic standpoint of established models neglects the impact of various
ordering policies at the supplier's end, where the promotion of cost-effective and
responsive warehouse and transport operations is paramount. As a rule, both areas benefit
from stable resources planning, based on cyclic orders and delivery schedules along fixed
vehicle routes.
Practical implications An alternative top down approach is proposed. The main
thrust is the efficient deployment of a designated transport fleet. Also, some salient points
are made concerning the relative merits of P- and Q-type stock replenishment modes.
Originality/value The paper provides a new perspective on stock control that brings
theory into line with modern supply chain management concepts.


50

INVENTORIES
The theoretical background is a ground for the various analyses done in the company. It is the
base on which the statistics and analysis is done. The ground on which the various analyses done are
given below, which is stated as the Theoretical Background.

Let me step inside the theoretical background for The Role of Finance in the Inventory
Management by first conveying a small incident which took place in a company.

A journalist once asked a director of a very big company,
Sir how your company is able to increase its profit year after year when other companies find going very
tough?
The director laughed and said, Because we plug our cost-leaks before they become cost-holes.

The reply given by the director is both interesting and true. Small leaks if plugged in time, can contribute
a lot towards profit and hence to the productivity of the company. There are number of areas in which
cost-leaks exist and one of the major ones is in the area of inventory management. That is why inventory
control is considered a gold minefor saving.






51

INTRODUCTION
Every one, be it a firm, or an institute or an establishment, or an individual, is familiar with the word
stock because each of these carry some items to meet their requirements. In trade and industry, the word
stock, is called Inventories. Inventories constitute the most significant part of current assets of a large
majority of companies in India. On an average, inventories are approximately 60% of current assets in
public limited companies in India. Because of the large size of inventories maintained by firms, a
considerable amount of feuds is required to be committed to them. It is therefore, absolutely imperative to
mnage inventories efficiently and efficiently 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 fore a company to reduce its levels of inventories to a considerable degree e.g. 10 to 20
percent, without any adverse effect on production and sales, by using simple inventory planning and
control techniques. The reduction in excessive inventory carries a favourable impact on a companys
profitability.

MEANING OF INVENTORY
Inventory is the physical stoke of goods maintained in an organization for its smooth sunning. In
accounting language it may mean stock of finished goods only. In a manufacturing concern, it may
includes raw materials, work-in-progress and stores etc. In the form of materials or supplies to be
consumed in the production process or in the rendering of services. In brief, Inventory is unconsumed or
unsold goods purchased or manufactured.

OBJECTIVES OF INVENTORY MANAGEMENT
The basic managerial objectives of inventory control are two-fold; first, the avoidance over-investment or
under-investment in inventories; and second, to provide the right quantity of standard raw material to the
production department at the right time. In brief, the objectives of inventory control may be summarized
as follows:


52

A. Operating Objectives:
(1) Ensuring Availability of Materials:
There should be a continuous availability of all types of raw materials in the factory so that the production
may not be help up wants of any material. A minimum quantity of each material should be held in store to
permit production to move on schedule.
(2) Avoidance of Abnormal Wastage:
There should be minimum possible wastage of materials while these are being stored in the go downs or
used in the factory by the workers. Wastage should be allowed up to a certain level known as normal
wastage. To avoid any abnormal wastage, strict control over the inventory should be exercised. Leakage,
theft, embezzlements of raw material and spoilage of material due to rust, bust should be avoided.
(3) Promotion of Manufacturing Efficiency:
If the right type of raw material is available to the manufacturing departments at the right time, their
manufacturing efficiency is also increased. Their motivation level rises and morale is improved.
(4) Avoidance of Out of Stock Danger:
Information about availability of materials should be made continuously available to the management so
that they can do planning for procurement of raw material. It maintains the inventories at the optimum
level keeping in view the operational requirements. It also avoids the out of stock danger.
(5) Better Service to Customers:
Sufficient stock of finished goods must be maintained to match reasonable demand of the customers for
prompt execution of their orders.
(6)Highlighting slow moving and obsolete items of materials.
(7) Designing poorer organization for inventory management:
Clear cut accountability should be fixed at various levels of organization.



53


B. Financial Objectives:
(1) Economy in purchasing:
A proper inventory control brings certain advantages and economies in purchasing also. Every attempt
has to make to effect economy in purchasing through quantity and taking advantage to favourable
markets.
(2) Reasonable Price:
While purchasing materials, it is to be seen that right quality of material is purchased at reasonably low
price. Quality is not to be sacrificed at the cost of lower price. The material purchased should be of the
quality alone which is needed.
(3) Optimum Investing and Efficient Use of capital:
The basic aim of inventory control from the financial point of view is the optimum level of investment in
inventories. There
Should be no excessive investment in stock, etc. Investment in inventories must not tie up funds that
could be used in other activities. The determination of maximum and minimum level of stock attempt in
this direction.








54

TYPES OF INVENTORIES
A manufacturing firm generally carries following major kinds of inventories:-
1. Raw materials
2. Work-in-progress
3. Finished goods
4. Tools
5. Supplies (E.g. Materials used in running the plant or in making companys product like broom,
cotton waste, cloth waste)
6. Machinery spares (Ball bearings, v-belt, oil seals, springs)

Inventories are stock of the product a company is manufacturing for sale and components
that make up the product. The various forms in which inventory exist in a manufacturing company are
raw materials, work in progress and finished goods.
RAW MATERIALS:-
Raw materials are those inputs that are converted into finished product though the
manufacturing process. Raw materials inventories are those units which have been purchased and stored
for future productions.
WORK IN PROGRESS:-
These inventories are semi manufactured products. They represent products that need
more work before they become finished products for sales.
FINISHED GOODS:-
Finished goods inventories are those completely manufactured products which are ready
for sale. Stock of raw materials and work in progress facilitate production. While stock of finished goods
is required for smooth marketing operation. Thus, inventories serve as a link between the production and
consumption of goods. The level of three kinds of inventories for a firm depend on the nature of its
business. A manufacturing firm will have substantially high levels of all three kinds of inventories, while
are tail or wholesale firm will have a very high and no raw material and work in progress inventories.
Within manufacturing firms, there will be differences. Large heavy engineering
55

Companies produce long production cycle products, therefore they carry large
inventories. On the other hand, inventories of a consumer product company will not be large, because of
short production cycle and fast turn over. Firms also maintain a fourth kind of inventory, supplies or
stores and spares.
SUPPLIES:
It includes office and plant cleaning materials like soap, brooms, oil, 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.

MANAGEMENT OF INVENTORY
Inventories constitute the principal item in the working capital of the majority of trading and industrial
companies. In inventory, we include raw materials, finished goods, work-in-progress, supplies and other
accessories. To maintain the continuity in the operations of business enterprise, a minimum stock of
inventory required. However, the physical control of inventory is the operating responsibility of stores
superintendent and financial personnel have nothing to do about it but the financial control of these
inventories in all lines of activity in which they comprise a substantial part of the current assets is a
frequent problem in the management of working capital. Management of inventory is designed to regulate
the volume of investment in goods on hand, the types of goods carried in stock to meet the needs of
production, and sales while at the same time, the investment in them is to be kept at reasonable level.






56

CONCEPT OF INVENTORY MANAGEMENT

The term inventory management is used in two ways- unit control and value control. Production and
purchase officials use this word in term unit control whereas in accounting this word is used in term of
value control. As investment in inventory represents in many cases, one of the largest asset items of
business enterprises particularly those engaged in manufacturing, wholesale trade and retail trade.
Sometimes the cost of material used in production surpasses the wages and production overheads. Hence,
the proper management and control of capital invested in the inventory should be the prime responsibility
of accounting department because resources invested in inventory are not earning a return for the
company. Rather, on the other hand, they are costing the firm money both in terns of capital costs being
incurred and loss of opportunity income that is being foregone.

MAJOR REASONS TO HAVE INVENTORIES
1. To gain economy in purchasing.
2. To keep pace with the changing market conditions.
3. To satisfy demand during period of replenishment.
4. To carry reserve stock to avoid stock-out.
5. To prevent loss of sale.
6. To stabilize production.
7. To satisfy other business constraints
E.g. Suppliers condition of minimum quantity.
Government regulation.
Seasonal availability.

CONTROL OF MATERIALS
Rigid control over materials are necessary not only to guard against theft, but also to minimize waste and
misuse from causes such as excessive inventories, over issue, deterioration, spoilage, and obsolescence.
There are certain prerequisites to an effective control system for materials: 1.Materials of the desired
quantity will be available when needed; 2.Materials will be purchased only when a need exists and in
57

economical qualities; 3.Purchases of materials will be made at most favourable prices; 4.Vouchers for the
payments of materials purchased will be approved only if the materials have been received in good
condition;
5. Materials will be protected against loss by proper physical control; 6.Issue of materials will be properly
authorized and accounted for; and 7.All materials, at all times, will be charged, as the responsibility of
some individual. The control of materials, as an element of cost of production, is illustrated with reference
to the purchase and issues procedures, inventory systems, and inventory control techniques.

IMPORTANCE OF INVENTORY CONTROL:
The importance or necessity of inventory control is well explained in the terms of the objects of inventory
control, which are obtained through it. A proper inventory control lowers down the cost of production and
improves profitability of enterprise.
ADVANTAGES OF INVENTORY CONTROL:
(1)Reduction in investment in inventory.(2)Proper and efficient use of raw materials. (3)No bottleneck in
production. (4)Improvement in production and sales.(5)Efficient and optimum use of physical as well as
financial resources.
(6)Ordering cost can be reduced if a firm places a few large orders in place of numerous small orders.
(7)Maintenance of adequate inventories reduces the set-up cost associated with each production run.
Risk and cost Associated with Inventories:
Holding of Inventories expose the firm to a number of risks and costs.
Major risks are:-
(a) Price decline
: They may be due to increase in market supply of the product, introduction of a new competitive product,
price-cut by the competitors etc.
(b) Product deterioration:
This may due to holding a product for too long a period or improper storage conditions.
58

(c) Obsolescence:
This may due to change in customers taste, new production technique, improvements in product design,
specifications etc.
The Costs of holding inventories are as follows:
(a) Material Cost:
This includes the cost of purchasing the goods, transportation and handling charges less any discount
allowed by the supplier of goods.
(b) Ordering Cost:
This includes the variables cost associated with placing an order for the goods. The fewer the orders, the
lower will be the ordering costs for the firm.
(c) Carrying Cost:
This includes the expenses for storing and handling the goods. It comprises storage costs, insurance costs,
spoilage costs, cost of funds tied up in inventories etc.
ESSENTIALS OF INVENTORY CONTROL SYSTEM
For an efficient and successful inventory control there are certain important conditions that are a follows:
(1) Classification and Identification of inventories:
The usual inventory of manufacturing firm includes raw-material, stores, work-in-progress and
component etc. To facilitate prompt recording the dealing, each item of the inventory must be assigned a
particular code number and it must be classified in suitable group or sub-divisions. ABC analysis of
material is very helpful in this context.
(2) Standardization and simplification of inventories:
In order to facilitate inventory control, the inventory line should be simplified. It refers to the elimination
of excess types and sizes of items. Simplification leads to reduction in classification of inventories and its
carrying costs. Standardization, on the other hand, refers to the fixation of
Standards of raw material to be purchased and specification of the components and tools to be used.
59


(3) Setting the Maximum and Minimum limits for each part of inventory:
The third step in this process is to set the maximum and minimum limits of each item of the inventory. It
avoids the chances of over-investment as well as running a short of any item during the cost of producing.
Reordering point should also be fixed beforehand.
(4) Economic Order Quantity:
It is also a basic inventory problem to determine the quantity as how much to order at a time. In
determining the EOQ, the problem is one to set a balance between two opposite costs, namely, ordering
costs and carrying costs. This quantity should be fixed beforehand.
(5)Adequate storage Facilities:
To make the system of inventory control successful and efficient one, it is also essential to provide the
adequate storage facilities. Sufficient storage area and proper handling facilities should be organized.
(6)Adequate Reports and Records:
Inventory control requires the maintenance of adequate inventory record and reports. Various inventory
records must contain information to meet the needs of purchasing, production, sales and financial staff.
The typical information required about any class of inventory may be relating to quantity on hand,
location, quantities in transit, unit cost, code for each item of inventory, reorder point, safety level etc.
Statements forms and inventory records should be so designed that the clerical cost of maintaining these
records must be kept a minimum.
(7)Intelligent and Experienced Personnel:
An important requirement of successful inventory control system is the appointment of qualified and
experienced staff in purchase and stores department. Mere establishment of procedures and the
maintenance of records would not give the desired results as there is no substitute for sincere and devoted
as well as
Experienced hands. Hence, the whole inventory control structure should be manned with trained,
qualified, experienced and devoted employees.

60

(8)Coordination:
There must be proper coordination of all departments involved in the process of inventory control, such as
purchase, finance, receiving, approving, storage and accounting departments. These all departments have
different outlook and objects in inventory management but financial manager has to coordinate them all.
(9)Budgeting:
An efficient budgeting system is also required. Preparation of budgets concerning materials, supplies and
equipment to ensure economy in purchasing and use of material is also necessary.
(10)Internal Check:
Operating of a system of internal check is also vital in inventorymanagement so that all transactions
involving material supplies and equipment purchase are properly approved and automatically checked.

TECHNIQUES OF INVENTORY CONTROL
In managing inventories, the firms objective should be in consonance with the wealth maximization
principle. To achieve this, the firm should determine the optimum level of investment in inventory. To
deal with the problems of inventory management effectively, it becomes necessary to be conversant with
the different techniques of inventory control. Although the concepts involved in inventory management
are production-oriented and are not strictly financial it is important that the financial manager understand
them since they have certain built-in financial costs. The different techniques of inventory control may be
summarized as follows:
(1) Inventory level Technique
The main objective of stock control is to determine and maintain the optimum level of stock so that there
is neither shortage of any material nor unnecessary investment in inventory. For this purpose,
determination of maximum and minimum limits of inventory and ordering level is necessary.
(2) Maximum stock Limit:
This represents the quantity of inventory above which it should not be allowed to be kept. The main
object of fixing this limit is to ensure that unnecessary working capital is not blocked in stores. The
quantity is fixed keeping in view the disadvantages of overstocking.
61

The disadvantages of overstocking are:
1. Capital is blocked up unnecessarily in stores so there will be loss of interest.2.More go down space is
needed so more rent will have to be paid.3.There are chances of deterioration in quality because large
stocks will require more time for use is the factory.4.There is the possibility of loss due to
obsolescence.5.There is danger of depreciation in market values.
The maximum stock level is fixed by taking into account the following factors:
(1) Amount of capital available for maintaining stores.(2) Go down space available.(3) Rate of
consumption of the material.(4) The time lag between indenting and receiving of the material.(5) Length
and technical nature of the production process.(6) Possibility of loss in stores by deterioration,
evaporation etc. There are certain stores, which deteriorate in quality if they are stored for longer
period.(7) Cost of maintaining stores.
(8) Likely fluctuation in prices. For instance, if there is a possibility of a substantial increase in prices in
the coming period, a comparatively large maximum stock level will be fixed. On the other hand, if there
is the possibility of decrease in price in the near future, stocks are kept at a much reduced level.(9) The
seasonal nature of supply of material. Certain materials are available only during specific periods of year.
So these have to be stocked heavily during these periods.(10)Restrictions imposed by the government or
local authority in regard to materials which there are inherent risks, e.g. fire and explosion.(11)Risk of
obsolescence, i.e., possibility of change in fashion and habit which will necessitate change in
requirements of materials.
The following formula may be applied to calculate the maximum stock:
(1)Maximum Stock = Minimum Inventory + Lot size (2)Maximum Stock = Reorder Level - Minimum
consumption during Minimum lead time +Lot size
Minimum Stock Limit (Safety or Buffer stock)
This represents the quantity below which stock should not be allowed to fall. It is maintained to save from
the situation of stock out in the event of abnormal increase in material usage rate and/or delivery period.
In fact determination of this quantity is significant because of uncertainty in respect to material usage rate
and delivery period. The main purpose of this level is to ensure that production is not held up due to
shortage of any material. This level is fixed for all items of stores and following factors are taken into
account for the fixation of this level:
62

(a) Lead time
i.e. time lag between intending and receiving the material.

(b) Rate of consumption
of the material during the lead time.
(c) Re-order Level
The following formula is applied to calculate Minimum Stock:
Minimum Stock = Re-order Level - Normal usage during Normal Lead time
But if normal usage and normal lead time is not known then average usage will be treated as normal
usage and average re-order will be treated as normal re-order period.
Re-ordering Level (Ordering Level)
It is the point at which if the stock of the material in stores reaches, the storekeeper should initiate the
purchase requisition for fresh supply of material. This level is fixed somewhere between maximum and
minimum level is such a way that the difference of quantity of the material between the reordering level
and the minimum level will be sufficient to meet requirements of production up to the time of fresh
supply of the material. It is fixed after taking into consideration the following factors:
(a) Rate of material usage
: Generally this rate is found out as usage rate per day, pre week or per month. The quantity of production
fluctuates according to demand of the product which results in variation in usage rate.
Hence, the following three factors:
(i) Maximum usage rate:
It implies quantity of material required at maximum capacity production.
(ii) Minimum usage rate:
It implies quantity of material required at capacity production in most unfavourable business conditions.
63

(iii) Normal or average Usage Rate:
It implies quantity of material required at capacity production under normal business conditions.

(b) Ordering Period:
The time taken in preparing the order for purchase of material is called ordering period. In some concerns
this period may be significant but in large concerns this
Period is significant because before placing the order the purchase manager has to trace out to best
suppliers, after that only he places the order.
(c) Delivery, Lead or Procurement Time:
The time taken from the date of placing the order to the date of delivery by the suppliers is called
procurement time. The maximum, minimumand average procurement time should also be determined.
(D) Minimum Stock Level:
This is the level of stock below which stocks should normallynot be allowed to fall.

Danger Level
This means a level at which normal issues of the material are stopped and issues made only under specific
instructions. The purchase officer will make special arrangements to procure
The materials reaching at their danger levels so that the production may not stop due to shortage of
materials. It is determined as follows:
Danger level = Average Consumption x Maximum
Re-order period for Emergency Purchase



64

PERPETUAL INVENTORY CONTROL TECHNIQUE
Perpetual inventory system implies maintenance of up-to-date stock records and in its broad sense it
covers both continuous stock taking as well as up-to-date recording stores books. According to Weldon, 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 sock-taking. The basic object of this system is to make
available details about the quantity and value of stock of each item at all times. The system thus provides
a rigid control over stock of each item of store can regularly be verified with the stock records in the bin
cards kept in the stores and stores ledger maintained in cost office.
Advantages of Perpetual Inventory system:
1. Saving in time:
The long and costly work of stocktaking is avoided. Hence, interim and final financial accounts can be
prepared with greater convenience.
2. Arrangement of proper verification:
In this system a detailed and more reliable checking of the store is exercised because of the continuous
and random checking.
3. Verification of Errors:
Errors are easily located and rectified. This gives an opportunity for preventing a recurrence in many
cases.
4. Double control
: Due to separate records in Bin card and stores ledger, double control is maintained.
5. Optimum size of material:
Overstocking and under stocking can be avoided because perpetual inventory system covers verification
of stock with regards to maximum, minimum and other levels.
6. Lack of misuse of Material:
Under this system, effective control on issue of material is possible, thus misuse of material can be
avoided.
65

7. Moral Check on Stores staff:
Due to continuous checking, this system serves as a moral check on the stores staff. They are discouraged
from committing dishonesty.
8. Loss of stock due to obsolescence:
It is detected at an early stage and so timely action can be taken to prevent recurrence.


















66


TYPES OF CLASSIFICATION:-
Sr.
No.
Classification Criterion employed
1. ABC analysis Usage Value (consumption per period/price
per unit)
2. HML analysis
(High-Medium-Low)
Unit price (it does not take consumption into
account)
3. VED analysis
(Vital-Essential-Desirable)
Criticality of item (loss of production)
4. SDE analysis
(Scarce-Difficult-Easy)
Procurement difficulties.
5. GOLF analysis
(Government-Ordinary-Local-Foreign)
Source of procurement
6. SOS analysis
(Seasonal-Off seasonal)
Seasonality
7. FSN analysis Issue from stores
8. XYZ analysis Inventory investment.






67

The details for the ABC criteria of analysis are given below:

ABC ANALYSIS

Usage Value (consumption per period/price per unit)
ABC ANALYSIS
ABC analysis underlines a very important principle Vital few: Trivial many. Statistics reveals that
just a handful of items account for bulk of the annual expenditure on materials. These few items, called
A items, therefore hold the key to the business.
The other item, known as B and C items, are numerous in number but their contribution is less
significant.ABC analysis thus tends to segregate all items into three categories: A, B, C on the basis of
their annual usage. The categorization so made enables one to pay the right amount of attention as merit
by the item.
A- Items: It is usually found that hardly 5-10% of the total items accounts for 70-75% of the total
money spent on the materials. These items require detailed and rigid control and need to be
stocked in smaller quantities. These items should be procured frequently. The quantity per
occasion being small.
A healthy approach, however would be to enter into contract with the manufacturers of
these items and have their supply in staggered lots according to the production programme of the
buyer. The inventory can be kept minimum by frequent ordering.

B- Items: These items are generally 10 15% of the total items, and represent 10 to 15 % of the
total expenditure on materials. These are intermediate items. The control on these items need not
be as detailed and as rigid as applied to A items.

C- Items: These are numerous (as many as 70 80 % of the total items, inexpensive (represents
hardly 5-10 % of the total annual expenditure on the materials and hence insignificant (do not
require lose control) items. C items should be procured infrequently and in sufficient quantities.
This avails the buyer to avail price discounts.
68


Item A Item B Item C
1. Very strict control Moderate control Loose control
2. No safety stocks Low safety stocks High safety stocks
3. Frequent ordering or weekly
deliveries
Ordering once in three months Bulk ordering, once in six
months
4. Weekly control statements Monthly control statements Quarterly reports
5. Maximum follow up and
expending
Periodic follow up Follow up in exceptional cases
6. Accurate forecast Estimates based on past data Rough estimates
7. Maximum efforts to reduce
lead time
Moderate efforts Minimum efforts
8. To be Handled by senior
officer
To be handled by middle
management
Can be fully delegated
9. Rigorous value analysis Moderate value analysis Minimum value analysis









69

ECONOMIC ORDER QUANTITY (EOQ) MODEL

The economic order quantity (EOQ) is that level of inventory order that minimizes the
total costs associated with inventory management. It is the size of quantity to be purchase is one lot so
that the total cost of managing inventory is reduced. In determining this order quantity, it is assumed that
the cost managing and inventory is made up solely of two parts ordering cost and carrying cost. In the
word of EOQ is that order size at which the total of ordering cost and carrying cost is minimum.

Buying in bulk implies higher inventory level involving higher carrying cost but since the
number of order will be less to procure materials during a particular period, he ordering cost will b less.
On the other hand, if we place small orders, the number of orders will go up and so the ordering cost, but
carrying cost of holding inventory will be reduced to a great extent EOQ is the level of order quantity at
which total cost is minimum. The graph showing determination of EOQ is shown below:
ASSUMPTIONS OF EOQ MODEL

EOQ model, as the technique to determine the economic order quantity is based on three
major assumptions
The annual demand or usage for a particular item of inventory is known with certainty.
The rate of usage of inventory is firm.
The order to replenish the inventory of an item is filled instantaneously.
In other word lead time is assumed to be 0.
There is known or constant price per unit, i.e. there are no price discount.





70

DETERMINATION OF EOQ
The economic by order quantity n be ascertained using the following formula

Where,
A= Annual usage of inventory
O= Ordering cost per order
C= Annual carrying cost per unit

Objectives
To minimize the average annual variable cost

Problem
To determine when an order should be placed and how much quantity should be order
The annual variable cost for this problem is two type
Ordering or setup cost
Inventory holding cost
As Q is order quantity and D is annual demand the number of order per year will be D/Q. Therefore, the
annual ordering cost will be = A.D/Q









71

HML CLASSIFICATION

The high, medium and low (HML) classification follows the same procedure as his
adopted in ABC classification. Only difference is that in HML , The classification unit value is the
criterion and not the annual consumption value. The items of inventory should be listed in the descending
order of unit value and it is up to the management to fix limits for three categories. For example, the
management may decide that all units with unit value of Rs. 2000 and above will be H items, Rs.1000 to
2000 M items and less than Rs.1000 L items.
The HML analysis is useful for keeping control over consumption at
departmental level, for deciding the frequency of physical verification , and for controlling purchases.


SDE CLASSIFICATION

The SDE analysis is based upon the availability 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. D refers to difficult items, which are available indigenously but are difficult
items to procure. Items, which have to come from distant place or for which reliable suppliers are difficult
to come by , fall into D category. E refers to items which are easy to acquire and which are
available in the local market.
The SDE classification, based on problems faced in procurement, is vital to the lead-
time analysis and in deciding on purchasing strategies.





72

FSN ANALYSIS

FSN stands for fast moving slow moving and non- moving. Here, classification is based
on the pattern of issues from stores and is useful in controlling obsolescence.
To carry out an FSN analysis the date of receipt or the last date of issue, whichever is
later, is taken to determine the number of months, which have lapsed since the last transaction. The item
usually grouped in periods of 12 months.
FSN analysis is helpful in identifying active items, which need to be reviewed regularly,
and surplus items, which have to be examined further. Non moving items may be examined further and
their disposal can be considered.

VED CLASSIFICATION

The VED analysis is done to determine the criticality of an item its effect on production d
other services. It is specially used for classification of spares parts. If a part s Vital it is given V
classification, if it is essential, then it is given E classification and if it is not so essential, the part is
given D classification. For V items, a large stock of inventory is generally maintained, while for D
items, minimum stock is enough.

JUST IN TIME
Just-in-time inventory system is designed to ensure that materials or supplies
arrive at a facility just when they are needed so that storage and holding cost are minimised. The just in
time system requires considerable cooperation between the suppliers and the customer. The customer
must specify what will be needed, when, and in what amounts. The supplier must be sure that the right
supplies arrive at the agreed on time and location.
Japanese firms popularized the just in time system in the world. In a JIT system material r
the manufactured components and parts arrive to the manufacturing sites or stores just few hours before
73

they are put to use. The delivery of material is synchronized with the manufacturing cycle and speed. JIT
system eliminates the necessity of carrying large system requires perfect understanding and coordination
between the manufacturer and suppliers in terms of the delivery and quality of the material. Poor quality
material or components could halt the production. The JIT inventory system complements the total quality
management (TQM). The success of the system depends on how well company manages its suppliers. The
system puts tremendous pressure on suppliers.

ADVANTAGES OF JUST IN TIME SYSTEM (JIT)

Lower investment in inventory.
Reduce inventory carrying and handling cost.
Reduce costs resulting from obsolete inventory.
Smaller investment in inventory storage space.



GOLF analysis

In this analysis, the classification of existing inventory is based sources of the items. They are classified
as Government supply, ordinarily available, local availability and foreign source of supply items.
SOS analysis

In this analysis, the classification of existing inventory is based nature of supply of items. They are
classified as seasonal and off-seasonal items.



74

CHANGES IN WORKING CAPITAL
The excess of current assets over current liabilities is referred to as the companys working
capital. The difference between the working capital for two given reporting periods is called the change in
working capital. Changes in working capital simply show the net effect on cash flows of this adding and
subtracting from current assets and current liabilities.
When changes in working capital are negative, the company is investing heavily in its current
assets, or else drastically reducing its current liabilities. When changes in working capital are positive, the
company is either selling off current assets or else raising its current liabilities.

PROPORTION OF INVENTORY TO TOTAL ASSETS
For the calculation of inventory to total assets, you can get the values of the inventory and total
assets from the balance sheet of the company. The inventory will be available in the current assets of the
company. Take this value and divide it by the total assets given on the balance sheet. Total assets are
equal to the sum of current and non-current assets.
The percentage of inventory to total assets is known as Inventory to assets ratio. It shows the
percentage of the assets tied up in the inventory of the company. Generally, the lower percentage value of
this ratio is considered better for the company

INVENTORY TURNOVER RATIO
Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a high
inventory turnover/stock velocity indicates efficient management of inventory because more frequently
the stocks are sold, the lesser amount of money is required to finance the inventory.
A low inventory turnover implies over-investment in inventories, dull business, poor quality of
goods, stock accumulation, accumulation of obsolete and slow moving goods and low profits as
compared to total investment. The inventory turnover ratio is also an index of profitability, where a high
ratio signifies more profit, a low ratio signifies low profit.
Sometimes, a high inventory turnover ratio may not be accompanied by relatively high profits. Similarly
a high turnover ratio may be due to under-investment in inventories
75


JUST IN TIME
Just-in-time inventory system is designed to ensure that materials or
supplies arrive at a facility just when they are needed so that storage and holding cost are
minimized. The just in time system requires considerable cooperation between the suppliers and
the customer. The customer must specify what will be needed, when, and in what amounts. The
supplier must be sure that the right supplies arrive at the agreed on time and location.
Japanese firms popularized the just in time system in the world. In a JIT system
material r the manufactured components and parts arrive to the manufacturing sites or stores just
few hours before they are put to use. The delivery of material is synchronized with the
manufacturing cycle and speed. JIT system eliminates the necessity of carrying large system
requires perfect understanding and coordination between the manufacturer and suppliers in terms
of the delivery and quality of the material. Poor quality material or components could halt the
production. The JIT inventory system complements the total quality management (TQM). The
success of the system depends on how well company manages its suppliers. The system puts
tremendous pressure on suppliers.
ADVANTAGES OF JUST IN TIME SYSTEM (JIT)
Lower investment in inventory.
Reduce inventory carrying and handling cost.
Reduce costs resulting from obsolete inventory.
Smaller investment in inventory storage space

76

FINANCIAL MANAGERS ROLE IN INVENTORY MANAGEMENT
Inventory represents a large investment by manufacturing concern: therefore, great emphasis must be
placed on its efficient management. Though, the operative responsibility for Inventory management lies
with the inventory manager, the financial manager must also be concerned with all types of inventories-
raw materials, work-in-progress and finished goods. He must monitor Inventory levels and see that only
an optimum amount is invested in Inventory. He should be familiar with the Inventory control techniques
and ensure that Inventory is managed well.
He should try to resolve the conflicting view points of all the departments in order to have efficient
inventory management. He has to act as a careful inspector levels. He should introduce the policies which
reduce the lead time, regulate usage and thus, minimize safety stock. All these techniques of Inventory
management lead to the goal of wealth maximization.
LIMITATION OF INVENTORY MANAGEMENT
From the above discussions, it will be seen that on the one hand inventories are idle and valuable
resource i.e. capital remain locked up in the inventories which can be used for other productive
purpose but on the other hand, they are desirable to satisfy manufacturing, maintenance operation
requirement of the organization. Hence basic problem of the inventory management is to optimize the
stock level of different material so that their stocks are maintained at optimum level without affecting
the production or day to day maintenance. There are three basic problems of stocks are:

When to initiate purchase of the materials.
How much quantities are to be purchase at a time and
What should be the levels of different items.

For getting answers to these questions, we have to investigate various types of costs related to inventories
management.


77

RESEARCH METHODOLOGY

Objectives of the study
The objectives of inventory management are as follows

1.To know, how the various inventory tools & techniques are used in the
company.
2.To understand whether the organization is adopting the best inventory
tools and techniques.
3.To find out the control over the inventory management by management.
S
Research
In common parlance Research means "search for knowledge". Research is an art of scientific
investigation. It is a movement from the unknown to known. Curiosity is the mother of all inventions. It
is an essential natural feeling of every human being, the researcher try to find the meaning and causes of
that fact, which lead to the Research
.
Source of Data
The source of data is primary data and the secondary data.
Primary data
Primary data is those data which is achieved by getting the direct response from the respondents or
from the person concerned. The method for collection of such information is questionnaire, direct
communication, conferencing etc. For the project the researcher used the following tool for the
collection of the primary data.
Formal and informal discussions
Consultation with the employees at the site.


78

Secondary Data
Secondary data consist of information that is already in existence, and that is collected from the
published sources, books and brouchers, prospectus etc. The secondary data was collected from the
following:-

Annual Reports.
Books / Broachers.
Published Information.
Internet

Tools and Technique for evaluation

ABC Analysis
EOQ
FIFO
Ratios

1.6 LIMITATIONS
The following are the limitations experienced by the researcher during the research in the organisation.
The study was confined to the limitation to the data available according to the companys
disclosure policy.
The study was to be conducted in limited period allotted according to their busy company
schedule.


79

DATA ANALYSIS
























80

FIFO


2009-10

Particulars
Kilograms.
Opening stock 13893349
Purchase 117152805
Total 131046154
Cost of good solds 124647136
Closing stock 6399018


2010-11
Particulars
Amount
Opening stock 6399018
Purchase 155394225
Total 161793243
Cost of good solds 143009156
Closing stock 18784087




81


2011-12
Particulars
Kilograms.
Opening stock 18784087
Purchase 189182720
Total 207966807
Cost of good solds 185849336
Closing stock 22117470
















82


We can interpreted from the analysis of year 2009-10 & 2010-11 that the inventory in 2011-12 is less than
that of 2009-10 & 2010-11. So we can say that with the proper usage of the inventory in 2011-12 the
company sold their product. Which tell us that the companys inventory management with the raw
material is far better than that in 2009-10 & 2010-11.




0
50000
100000
150000
200000
250000
2009-2010 2010-2011 2011-2012
Opening Stock
Closing Stock
83


EOQ (Economic Order Quantity)

EOQ

A= annual demand/usage=5110 tons unit
O=ordering cost per order=Rs1200
C= carrying cost =20% of inventory value.
P=purchase price per unit=Rs. 881

Here carrying cost/is= Rs. 881 X 20%=Rs.176

EOQ

EOQ 263 tons


84

Number of
order
placed
Order
Quantity
Average Stock
Holding(Order
Quantity/2)
Average
inventory
carrying
cost(20 % of
avg stock
value Rs.
Ordering
cost(No. Of
orders * Rs
1200)
Total Cost(Carrying +
Ordering Cost)
1 5110 2555 511 1200 1711
2 2555 1277.5 255.5 2400 2655.5
3 1703.333 851.6667 170.3333 3600 3770.333
4 1277.5 638.75 127.75 4800 4927.75
5 1022 511 102.2 6000 6102.2
6 851.6667 425.8333 85.16667 7200 7285.167
7 730 365 73 8400 8473
8 638.75 319.375 63.875 9600 9663.875
9 567.7778 283.8889 56.77778 10800 10856.78
10 511 255.5 51.1 12000 12051.1



85


Graphical Approach of EOQ Model
The economic order quantity can also be found graphically. The figure illustrates the EOQ
function . In the figure cost carrying cost and order cost and total cost are plotted on vertical axis
and horizontal axis is used to represent the order size. We note that the total carrying cost
increases as the order size increase, because on average a large inventory level will be
maintained and ordering cost decline with increase in order size because large order size means a
less number of order. The behavior of total cost line is noticeable since it is a sum of two type of
cost, which behave differently with order size. The total cost decline in first instance, but they
started rising when the decrease in average ordering cost is more than offset by the increase in
carrying cost.


GRAPHICAL PRESENTATION:

TC (Total cost)

(Carrying cost) Q/2 H

Cost
DS/Q (Ordering Cost)




EOQ

Order quantity size (Q)

The EOQ occurs at the point Q where the total cost is minimum. Thus the firms operating
profit is maximized at point Q.
It should be noted that the total cost of the inventory are fairly intensive to moderate change in
order size. It may be appropriate to say, therefore, that there is an economic order range, not a
point. To determine this range the order size may be changed by some percentage and the impact
on the total cost may be studied. If the total cost do not change very significantly, the firm can
change EOQ within the range without any loss.
86


87

Analysis of the Collected Data

ABC ANALYSIS

To conduct ABC analysis the following steps are necessary.

1. Prepare the list of the item & estimate there consumption.
2.Determine price per unit of each item.
3.Multiply each annual consumption by its unit price to obtain its annual consumption in
rupees[Annual Usage]
4.Arrange the item in the descending order of there annual usage starting with the highest annual usage
down to the smallest.
5.cacculate cumulative annual usage and express the same as cumulative usage percentage. Also express
the number of the item in to cumulative item percentage.
6.plot cumulative usage percentage against cumulative items percentage and segregate the item into A B
& C categories.


88


Item description Auuual
consumption
kgPrice per unit
) Rs (
Annual usage
.(Rs)
usage () Rank
I-1
2000000 110 220000000 57.89 1
I-2
2500000 16 40000000 10.52 3
I-3
10000 400 4000000 1.053 6
I-4
400000 85 34000000 8.95 4
I-5
200000 130 26000000 6.84 5
I-6
400000 140 56000000 14.73 2




Based on TC
Items value % 0f TC Cumulative % Category

1 220000000 61.69377 61.69
6 56000000 15.70387 77.39 A
2 40000000 11.21705 11.22
4 34000000 9.534492 20.75 B
5 2600000 0.729108 0.72
3 4000000 1.121705 1.84 C
356600000

89

Degree Of Control
A items which account for bulk annual usage value and hence attract at most attention. The inventory
should kept at minimum by placing open order or (order covering annual requirement) and arranging
supplies in staggered lots. Every attempt should be made to reduce both internal and external lead time by
closer follow up at the home plant better vender-vendee relation and market research for alternative
source of supply.
B item should be brought under normal control made possible by good record keeping and periodic
attention.
C little control is required for C item large inventory should be maintained to avoid stock outs.
Individual posting should be replaced by group postings.

















90

Inventory turnover ratio
Inventory turnover ratio = cost of goods sold
Avg stock

Inventory turnover Ratio


Years COGS Avg. Stock Ratio
2009-10 124647136 10146183.5 12.2851253
2010-11 143009156 12591552.5 11.3575475
2011-12 185849336 20450778.78 9.08764101


91




In the above chart the inventory turnover ratio is continuously decreasing. Idle inventory
turnover ratio should be within range 5.0 to 8.3.In the year 2009-10 the ratio was 12.28 and its
decrease in year 2010-11 was 11.38. And its also decrease in the year 2011-12 is 9.08. The ratio
is decreasing . It means that the turnover of the company achieving the idle turnover ratio.









0
2
4
6
8
10
12
14
2009-10 2010-11 2011-12
Inventory Turnover Ratio
92

Work in Progress Conversion Period

Work in Progress Conversion = Work in progress inventory X 365
Period cost of production

WIP

Years COP WIP Days
2009-10 229119504 18784087 29.9240861
2010-11 228754209 22117470 35.2906143
2011-12 228445120 25126460 40.1460005






93




Interpretation-
Here WIP means the average time taken to complete the semi-finished goods. The suggested
norm is that the working progress conversion period should be less than 1 days.As in year 2011-
12 highest days are there in WIP i.e. 40 days where as lower days of WIP is found in 2009-10 i.e.
30 days . As in year 2011-12 the company is having more inventory consumption & in 2009-10
they had very less raw material consumptions so low WIP is in that year.








0
5
10
15
20
25
30
35
40
45
2009-10 2010-11 2011-12
WIP
WIP
94

Inventory as a Percentage of Current assets

Inventory as a % of CA= Total Inventory X 100
Total Current assets

Years Invt. CA Percentages
2009-10 8960443 55252339 16.22
2010-11 24775758 84972190 29.16
2011-12 24483318 126229771 19.39




95


In above chart represent the inventory as a percentage of current assets. In the year 2009-10 the
percentage is 16.22% and its increase in year 2010-11 and it was 29.1%1 which is not good for
the firm and in the year 2011-12 it also decrease at the level of 19.39%. This, ratio is decrease
which is good for the company to liquidate their current assets in to cash. Lower ratio is better
than a higher ratio. In India most of the firm inventory occupies on an average about 50% of total
current assets.












0
5
10
15
20
25
30
35
2009-10 2010-11 2011-12
CA
CA
96

Inventory as a Percentage of Total assets

Years Invt. TA %
2009-10 8960443 91773272 9.76
2010-11 24775758 93733924 26.43
2011-12 24483318 135726892 18.04










97



In above chart represents the inventory as a percentage of total assets. In the year 2009-10 was
9.2% and it is increase in the next year. In the year of 2010-11 the percentage of inventory as a
total assets is 26.43% and it decrease in the year 2011-12 and it is 18.04%. For a company to
maintain this ratio as a level of 16 to 30 % is a good. In these, company the last year ratio is
good. The average ratio in India is 54.4%.










0
5
10
15
20
25
30
2009-10 2010-11 2011-12
Total Assets
Total Assets
98

Stores and Spares Inventory holding period

Stores & Spares inventory turnover ratio
= Annual consumption of stores & spares
Stores and Spares inventory.

Stores and Spares Inventory holding period
= 365 .
Turnover of Stores & Spares

Years Annual SP Store of SP Ratio Months
2009-10 210000 135000 1.555555556 7.714286
2010-11 270000 162600 1.660516605 7.226667
2011-12 315000 181560 1.734963648 6.916571




99



In the above chart represent the Stores and spares inventory holding periods. In these, suggest
that the inventory of spares & stores holding is 3 to 6 months is good for the firm. In the year
2009-10 was 8 month and in the year of 2010-11was 7 months and in the year 2011-12 is also 7
days. Which indicate the good sign for the company. But most of the firms, the store and spare
holding period is above the suggested norms.










6.4
6.6
6.8
7
7.2
7.4
7.6
7.8
2009-10 2010-11 2011-12
S & P
S & P
100

Inventory holding ratio
= 365
Inventory turnover ratio



years


ratio
2009-10 29.71
2010-11 32.13
2011-12 40.16



101


In the above chart the inventory holding ratio is increasing, this ratio shows the number of days
stock in hand. The more number of days stock in hand shows lack of efficiency in selling the
goods











0
5
10
15
20
25
30
35
40
45
2009-10 2010-11 2011-12
days
days
102

Return Per Rupee Invested Ratio
Years Gross Profit Invt. Ratio
2009-10 35132308 8960443 3.920822665
2010-11 43271128 24775758 1.746510763
2011-12 48385256 24483318 1.976254036








103


In above chart shows the efficiency of the management. Higher the ratio, the better the
management. In year 2009-10 the ratio was 3.92 and it decrease in the next two years. In year
2012 the ratio is 1.97 which is not good for the firm.










0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2009-10 2010-11 2011-12
Retun per rupee invested ratio
104

Inventory in terms of months , Cost of production

Years Invt. COP Ratio
2009-10 8960443 157183945 0.684073148
2010-11 24775758 186629388 1.593045443
2011-12 24483318 231895409 1.266949688





105


In above chart represent the inventory in terms of months, cost of production. It is used to
measure the adequacy of inventory is the months value of its usage. Aggregate value is converted
in months value production. In year 2010-11 the ratio was 1.59 and its decrease in the next year
is 1.26








0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2009-10 2010-11 2011-12
COP
106

Findings
1. Inventory turnover ratio is continuously decreasing but it is achieving
recommended ratio .
2. Work in progress ratio is continuously increase, which is not good for the
company. Because the suggested norms WIP conversion period should be less
than 15 days.
3. In the Tridev Resin Pvt. Ltd. Use the method of First In First Out for handling
inventory.
4. They maintain less inventory, so they can reduce their carrying cost.
5. They use Delphi method for demand forecasting.
6. Store and spares inventory ratio is decreasing and achieving the suggested norms.
















107

Suggestion

Spare parts management will be very successful if the system is computerized and
integrated with other systems. Computerization will bring in all round improvement by
streamlinining the process as well as reducing the total cost of stock holding, ordering and
stock-out costs.
They should try to reduce the work in progress conversion period, because it is
continuously increasing.



108

Conclusion

The inventory turnover ratio is an important parameter used to evaluate the performance
of inventory management technequies.
It has direct relationship with profit earning capacity of a firm.
Inventory as a percentage of current assets, total assets and in term of month value of
production, are all important parameters that reflect the adequacy or otherwise of the
inventory holdings.



109

BIBLIOGRAPHY
Books
1. Inventory Management, D.Chandra bose.
2. Inventory management, Max muller



Websites
www.trpl.com
www.gortal.com
www.zoominfo.com