a study on inventory management

AN ORGANIZATIONAL STUDY

AND

A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD

CEMENT CORPORATION LIMITED, KARUR

INTERNSHIP PROJECT REPORT

Submitted by

L.BOOPATHI

Register No: 732211631005

in partial fulfillment for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

in

DEPARTMENT OF MANAGEMENT STUDIES

NANDHA ENGINEERING COLLEGE

ERODE – 638052

JULY 2012

BONAFIDE CERTIFICATE

NANDHA ENGINEERING COLLEGE

ERODE – 638052

DEPARTMENT OF MANAGEMENT STUDIES

INTERNSHIP PROJECT WORK

This is to certify that the project entitled

AN ORGANIZATIONAL STUDY

AND

A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD

CEMENT CORPORATION LIMITED, KARUR

is the bonafide record of project work done by

L.BOOPATHI


of MBA during the year 2011-2013

Project Guide Head of the Department

Submitted for the Summer Internship Training Viva-Voce examination held on

Internal Examiner External Examiner

DECLARATION

I affirm that the project work titled AN ORGANIZATIONAL STUDY

AND A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD

CEMENT CORPORATION LIMITED, KARUR being submitted in partial

fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION

is the original work carried out by me. It has not formed the part of any other

project work submitted for award of any degree or diploma, either in this or any

other University.

(Signature of the Candidate)

L.BOOPATHI


I certify that the declaration made above by the candidate is true.

(Signature of the Guide)

K.NATHIYA, MBA, M.Phil.

Assistant professor

ACKNOWLEDGEMENT

I would like to express my gratitude to Chairman Thiru.V.SHANMUGAM

of NANDHA ENGINEERING COLLEGE, ERODE for giving me an

opportunity and facility to complete this project.

I wish to place my deep sense of gratitude to principal Dr.V.R.SAMPATH,

of NANDHA ENGINEERING COLLEGE, ERODE.

I offer my profound gratitude to Mr.N.DEVRAJ, B.E., MBA. Head,

Department of Management Studies, NANDHA ENGINEERING

COLLEGE, ERODE. for his entire support to complete this project report.

I owe my boundless gratitude to my faculty guide K.NATHIYA, MBA.

MPhil. Assistant Professor of MBA Department, for his guidance and

supervise of this project for successful completion.

I sincerely thank to Mr.THIRUNAVUKARASU, HUMAN

RESOURCE MANAGER, CHETTINAD CEMENT CORPORATION

LIMITED, KARUR. for giving me permission to do this project at their

concern.

I express my sincere thanks to my beloved parents, friends and the staff

member for and those who are encouraged and supported for completion and

this project report.

L.BOOPATHI

CONTENTS

CHAPTER` DESCRIPTION PAGE NO

ABSTRACT I

LIST OF TABLES II LIST OF CHARTS III

1 INTRODUCTION

1.1 Introduction to the study 1 1.1 Industry profile 2 1.2 Company profile 15 1.3 Organization chart 25

2 DEPARTMENT PROFILE

2.1 Production Department 26 2.2 Store Department 27 2.3 Human Resource Department 27 2.4 Marketing Department 29 2.5 Financial Department 30 2.6 Quality Department 32 2.7 Scope of the study 33 2.8 Limitations of the study 34

3 MAIN THEME OF THE PROJECT

3.1 Objectives of the study 35 3.2 Need of the study 35 3.3 Research Methodology 36 3.4 Tools for Analysis 37 3.5 Review Literature 38

4 DATA ANALYSIS & INTERPRETATION 39

5 SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 Findings 56 5.2 Suggestions 57 5.3 Conclusion 58

BIBILOGRAPHY & ANNEXTURE 59

LIST OF TABLES

TABLE NO

DESCRIPTION

PAGE NO

4.1.1 Level of inventory 40

4.1.2 Inventory turnover Ratio 42

4.1.3 Inventory conversion period 44

4.2.1 EOQ analysis for the year 2006-07 46





LIST OF CHARTS

CHART NO

DESCRIPTION

PAGE NO

4.1.1 Level of inventory 41

4.1.2 Inventory turnover ratio 43

4.1.3 Inventory conversion period 45






ABSTRACT

The purpose of inventory management is to ensure availability of raw material

in sufficient qualities as and when required and also minimize investment in

inventories. There is an essential to manage inventories efficiently and effectively in

order to avoid excess investment. It is possible for a company to reduce the level of

inventories to a considerable extent without any adverse effect on production and sales

by using simple inventory planning and control techniques. The reduction of excessive

inventories will create a favorable impact on the company profitability. Inventory

turnover ratio, inventory conversion period are very helpful to know how effectively

plays and control in the organization EOQ analysis will enables the organization to

use of EOQ analysis is very effective and useful tool for classifying, monitoring and

control of inventories.

CHAPTER 1

1.1 INTRODUCTION TO THE STUDY

The study entitled as A study on Inventory Management of Chettinad Cement

Corporation Ltd, Karur. We are going to see the importance of Inventory Management in

production and how it will helps to controlling the inventory cost. Controlling the inventory

cost which enable to earn more profit. Inventory management is primarily about specifying

the size and placement of stocked goods. Inventory management is recurred at different

locations within a facility or within multiple locations of a supply or network to protect the

regular and planned course of production against the random disturbance of running out of

materials or goods. The scope of Inventory management also concerns the fine lines between

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

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

returns and defective goods and demand and forecasting.

Types of inventory

Normally the inventory has divided into two types. These,

1. Merchandising inventory,

2. Manufacturing inventory.

The manufacturing inventory has been subdivided into three types. These,

1. Raw materials,

2. Work in process,

3. Finished goods.

1.2 INDUSTRY PROFILE

History of the origin of cement

It is uncertain where it was first discovered that a combination of hydrate non-

hydraulic lime and a pozzolan produces a hydraulic mixture, but concrete made from such

mixture was first used on large scale by roman engineers. They used both natural pozzolans

(trass or pumice) and artificial pozzolans (ground brick or pottery) in the concretes. Many

excellent examples of structures made from these concretes are still standing. Notably the

huge monolithic dome of the pantheon in Rome and the massive Bath of Caracalla. The vast

system of roman aqueducts also made extensive use of hydraulic cement. The use of

structural concrete disappeared in medieval Europe. Although weak pozzolanic concretes

continued to be used as a core fills in stone walls and columns.

Modern cement

Modern hydraulic cement began to be developed from the start of the industrial

Revolution (around 1800) driven by three main needs: Hydraulic renders for finishing brick

buildings in wet climates Hydraulic mortars for masonry construction of harbor works etc. in

contact with sea water.

Varieties of the cement

There are some varieties in cement that always find good demand in the market. To

know their characteristics and in which area they are most required, it will be better to take a

look at some of the details given below.

Portland blast furnace slag cement (PBFSC)

The rate of hydration heat is found lower in this cement type in comparison to PPC. It

is most useful in massive construction projects, for example-dams.

Sulphate resisting Portland Cement (SRPC)

This cement is beneficial in the areas where concrete has an exposure to seacoast or

sea water or soil or ground water. Under any such instances, the concrete is vulnerable to

sulphates attack in large amounts and can damage to the structure. Hence, by using this

cement one can reduce the impact of damage to the structure. This cement has high these

cement one can reduce the impact of damage to the structure. This cement has high demand

in India.

Rapid hardening Portland Cement (RHPC)

The texture of this cement type is quite to that OPC. But, it is bit more fine than OPC

and possesses immense compressible strength, which makes casting work easy.

Ordinary Portland Cement (OPC)

Also referred to as grey cement or OPC, it is of much use in ordinary concrete

construction. In the production of this type of cement in India, Iron (fe2O3), Magnesium

(MgO), Silica (SiO2), and Sulphur, trioxide (SO3) components are used.

Portland Pozolona Cement (PPC)

As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The

rate of hydration heat is lower in this cement type. Coal waste or waste or burnt clay is used

in the production of this category of cement. It can be availed at low cost in comparison to

OPC.

Oil Well Cement (OWC)

Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing

or fixing oil wells. This is applied on both the off-shore and on-shore of the wells.

Clinker Cement (CC)

Produced at the temperature of about 1400 to 14560 degree Celsius, Clinker cement is

needed in the construction work of complexes, houses and bridges. The ingredients for this

cement comprise iron, quartz, clay, limestone and bauxite.

A part from these, some of the other types of cement that are available in India can be

classified as:

Low heat cement,

High early strength cement,

Hydrophobic cement,

High aluminum cement and

Masonry cement.

1.2.1 CEMENT INDUSTRY IN GLOBAL

Cement is a basic ingredient for the construction industry. It is estimated there are

1500 integrated cement production plants in the world. Although the players such a Lafarge

or CEMEX, the share of the four largest firms account only for 23% of the overall demand.

Demand

World cement demand was 2,283MT in 2005, with China accounting for 1,064MT

(47% of total). The expected demand for 2010 is estimated at 2,836 MT. China will increase

its demand by 250MT during the period, an increase higher than the total yearly European

demand.

Demand of Cement

Demand for cement in MT 2005 2010 Growth rate

North America 170 200 2.9%

Western Europe 208 236 2.2%

Asia/Pacific 1500 1900 5.2%

Other regions 405 500 4.7%

World cement demand 2283 2836 4.7%

Top 25 Cement companies in the world

S.NO Name of the Company Name of the Country

1. Aditya Birla Group-Grasim India

2. Al-Ghurair Group Dubai

3. Ambuja Cements Limited India

4. Anhui Conch Cement Company China

5. Arabian Cement Company Egypt

6. Ararat Cement Co. South Africa

7. Cement Cruz Azul Cement Co. Armenia

8. CEMEX Co. U.S.A

9. China National Cement Materials Group Corporation China

10. Cimpor Cement corp. China

11. CompanhiaSiderurgical National S.A Brazil

12. Concrete Casting Cement Company Pacific Alloy

13. CRH plc America

14. Eagle Materials Inc U.S.A

15. Heidelberg Cement Company Germany

16. James Hardie Cements U.S.A

17. Lafarge India

18. Libyan Cement Company Libya

19. Monarch Cement Ltd. U.S.A, California

20. Norcem Germany

21. Pretoria Portland Cement Company South Africa

22. Ready Mix Inc India

23. Rinker Group Australia

24. Semapa Group Europe

25. Smith-Midland Cement Company U.S.A, Milford

1.2.2 CEMENT INDUSTRY IN INDIA

The cement industry in India has undergone a major shift over the last 6 years. The

Indian cement industry is the second largest producer of quality cement. Indian cement

industry is engaged in the production of several varieties of cement such as, ordinary Portland

cement (OPC), Portland pozzoland cement (PPC), Portland blast furnace slag Portland

cement (PBFSPC), sulfate resistance Portland cement (SRPC), white cement, etc., They are

produce strictly as per the Bureau of Indian standards (BIS) specifications and their quality is

comparable with the best in the world.

The industry occupies an important place in the national economy because of its

strong linkage to other sectors such as, construction, transportation, coal and power. The

cement industry is also one of the major contributors to the exchequer by way of indirect

taxes.

S.NO Name of the company Details of the company

1. ACC Limited

Year of establishment

Head quarters

Web site

1994

Maharashtra

www.acclimited.com

2. Ambuja Cements Limited


Head quarters

Web site

1981

Gujarat

www.ambujacement.com

3. Andhra Cements Ltd


Head quarters

Web site

1936

Andhra Pradesh

www.andhracements.com

4. Barak Valley Cements Ltd


Head quarters

Web site

1999

Assam

www.barakcement.com

5. Bheema Cements Ltd


Head quarters

Web site

1978

Andhra Pradesh

www.bheemacement.com

6. Binani Cement Ltd


Head quarters

Web site

1996

West Bengal

www.binani.com

7. Birla Corporation Limited


Head quarters

Web site

1919

West Bengal

www.grasim.com

8. Burnpur Cement Ltd


Head quarters

Web site

1986

West Bengal

www.burnpurcement.com

9. Chettinad Cement Corporation

Limited


Head quarters

Web site

1962

Tamil Nadu

www.chettinadcement.com

10. Dalmia Cement (Bharat)

Limited


Head quarters

Web site

1951

Tamil Nadu

www.dalmiacement.com

11. Deccan Cements Ltd Year of establishment

Head quarters

1979

Andhra Pradesh

Web site www.deccancem.com

12. Everest Industries Ltd Year of establishment Head quarters

Web site

1934

Maharashtra

www.everestind.com

13. Grasim Industries Limited


Head quarters

Web site

1948

Madhya Pradesh

www.grasim.com

14. Gujarat Sidhee Cement Ltd


Head quarters

Web site

1973

Gujarat

www.gujaratsidhee.com

15. Heidelberg Cement India Ltd


Head quarters

Web site

1958

Karnataka

www.mycemco.com

16. Hyderabad Industries Ltd


Head quarters

Web site

1946

Andhra Pradesh

www.hil.in

17. Indian Hume Pipe Company

Ltd


Head quarters

Web site

1962

Maharashtra

www.indianhumepipe.com

18. J. K. Cement Limited


Head quarters

Web site

1994

Uttar Pradesh

www.jkcement.com

19. JK Lakshmi Cement Ltd


Head quarters

Web site

1938

Rajasthan

www.jklcem.com

20. Kalyanpur Cements Ltd


Head quarters

Web site

1937

West Bengal

www.kalyancemenet.com

21. Katwa Cements Ltd


Head quarters

Web site

1993

Karnataka

www.katwagroup.com

22. Kesoram Industries Ltd


Head quarters

Web site

1919

West Bengal

www.kesocorp.com

23. Madras Cements Limited


Head quarters

Web site

1954

Tamil Nadu

www.madrascements.com

24. Mangalam Cement Ltd


Head quarters

Web site

1976

Rajasthan

www.mangalamcement.com

25. NCL Industries Ltd


Head quarters

Web site

1979

Andhra Pradesh

www.nclind.com

26. Nirman Cements Ltd


Head quarters

Web site

1983

Bihar

www.nirmancements.com

27. OCL India Ltd


Head quarters

Web site

1949

Orissa

www.ocl.in

28. Panyam Cements & Mineral

Inds Ltd


Head quarters

1955

Andhra Pradesh

Web site www.panyamcements.com

29. Prism Cement Ltd


Head quarters

Web site

1992

Andhra Pradesh

www.prismcement.com

30. Rose Zinc Ltd


Head quarters

Web site

1990

Rajasthan

www.rosezinc.com

31. Sagar Cements Ltd


Head quarters

Web site

1981

Andhra Pradesh

www.sagarcements.in

32. Sainik Cement Inds. Ltd


Head quarters

Web site

1991

Delhi

www.sainikcem.in

33. Sanghi Industries Ltd


Head quarters

Web site

1985

Andhra Pradesh

www.sanghicement.com

34. Saurashtra Cement Ltd


Head quarters

Web site

1956

Gujarat

www.saurashtra.com

35. Shiva Cement Ltd


Head quarters

Web site

1985

Orissa

www.shivacement.com

36. Shree Digvijay Cement

Company Ltd


Head quarters

Web site

1983

Gujarat

www.digvijaycement.com

37.

Somani Cement Company Ltd


Head quarters

Web site

1983

Andhra Pradesh

www.anjanicement.com

38. Sri VasaviInds. Ltd


Head quarters

Web site

1985

Andhra Pradesh

www.srivasavi.com

39. Sri Chakra Cements Ltd


Head quarters

Web site

1981

Andhra Pradesh

www.chakracement.com

40. Stresscrete India Ltd


Head quarters

Web site

1983

Maharashtra

www.stresscrete.com

41. The India cements Ltd


Head quarters

Web site

1946

Tamil Nadu

www.ramcocement.in

42. Udaipur Cement Works Ltd


Head quarters

Web site

1993

Rajasthan

www.udaipurcement.com

43. UltraTech Cement Limited


Head quarters

Web site

2000

Maharashtra

www.ultratechcement.com

44. Vinaycements Ltd


Head quarters

Web site

1986

Assam

www.vinaycements.com

45. Visaka industries Ltd


Head quarters

Web site

1981

Andhra Pradesh

www.visaka.org

46. Zuari cement corporation Ltd


Head quarters

Web site

1985

Andhra Pradesh

www.zuaricement.com

1.2.3 CEMENT INDUSTRY IN TAMILNADU

The cement industry of India hopes the most in Tamilnadu. The Tamilnadu is the state

which has produces the quality cement in India.

The Tamilnadu government was formed a company name is “Tamilnadu cement

corporation limited (TANCEM) in the February 1976 as public limited company. The

TANCEM was formed two cement plants in Tamilnadu. These,

1. Alangulam cement works. Alangulam, virudhunagar districts.

2. Ariylur cement works. Ariyalur, perambalur districts.

The following table shows the details of cement companies in districts of Tamilnadu. These,

S.NO Name of the company

1 Chettinad Cement Corporation Limited


1962

Corporate office Chennai

Plant Places Karur, Dhindukal, Ariyalur

Brand name Chettinad.

2 The India cements Ltd


1946

Corporate office Chennai.

Plant Places Ramanathapuram, Sangakiri, Ariyalur.

Brand name Sankar cement, Coromandel cement.

3 Madras cement Ltd


1950

Corporate office Chennai.

Plant place Ariyalur.

Brand name Ram co cement.

4

Tamilnadu cements corporation Ltd


1979

Corporate office Chennai (Govt).

Plant place Ariyalur.

Brand name Arasu cement

Details

5 Janathacem industries limited


1976

Corporate office Madurai.

Plant place Rajapalayam,madurai.

Brand name Janatha cement, agsar cement.

Cement Company in Karur District

Chettinad Cement Corporation limited, karur is the one of most popular cement

manufacturer in Tamilnadu. The Chettinad cement work plants other than karur district,

1. Karikalini cement works, Dhindukal district,

2. Ariyalur cement works, Ariyalur district,

The Chettinad cement corporation limited, Karur is the head company in Chettinad cement

companies. They are produced 5,00,000 tons of cement per year. They are used those cement

for their own company use such as,

1. Chettinad builders pvt ltd,

2. Chettinad house pvt ltd,

3. Chettinad group of companies.

1.3 COMPANY PROFILE

History of the company

The history of the group house of Chettinad is linked with the 9 decades old saga. In

1912 took birth the House of Chettinad through a visionary idealist, born entrepreneur Dr.

Rajah Sir Annamalai Chettiar who believed in Social Transformation through business. The

founder of the House of Chettinad envisioned, his companies providing the stimulus for

Industrial Growth and conceived business as a means of improving the living standards of

people.

The corporate credo of the House of Chettinad “STRIVE, SAVE AND SERVE” is the

very thought of our founder. IN order to continue fulfilling his dreams and aspirations. To

reach greater heights and the reins were taken over by equally visionary businessmen his son,

Dr. Rajah Sir Muthiah Chettiar and grandson Dr. MAM. Ramaswamy. The house of

Chettinad reached new heights with generations of hard work, dedications and remains the

stamp of quality, integrity and reliability under the versatile, pragmatic and visionary

leaderships.

Present position of the company

Today, a 8500 million business group has ventured and diversified in varying fields

including manufacturing (Cement, Silica, Quartz, Grits), services (construction Transports,

Steel fabrication, Ship management and stevedoring. Clearing and forwarding) Trading,

power generation, plantation, farms, logistics. Education, sports management, literature, art

and music fields have also been contributed vastly. It is a matter of great pride and

satisfaction that the group finds worldwide patronage and earns precious foreign exchange for

the country.

The group aims to broaden its horizons and reach and the zenith in this millennium

under the yond, dynamic, enthusiastic, able leadership of Mr. MAMR Muthiah. The future of

the companies in the house of Chettinad is based on the time tested and proved guidelines of

total customer orientation, technology in the service of man and business as an instrument of

social service. To these timeless truths, we remain steadfast forever.

Management of Chettinad Cement Corporation Limited

CHAIRMAN : MR.M.A.M.RAMASWAMY

MD : SRI.M.A.M.R.MUTHAIAH

STARTED : 1962

DIRECTORS : SRI.RAMANATHAN PALANIAPPAN

SRI.R.KRISHNA MOORTHY

SRI.SP.S.T.PALANIAPPAN

SRI.K.GANAPATHY&C.S.PARI

Dr.T.PRABHAKARA RAO, IAS (TIIC

NOMINEE)

COMPANY SECRETARY : SRI.S.HARIHARAN

TYPE : PUBLIC

CO-SECRETARY : SRI.S.HARIHARAN

AUDITORS : M/S.P.B.VIJAYARAGRAN&CO

M/S V.SOUNDARARAJAN&CO

M/S KRISHAAN &CO

REGISTERED OFFICE : Chettinad Cement Corporation Ltd,

5th Floor, Rani Seethai Hall,

603 Anna Salai, Chennai - 600 006.

Telephone No: +91-44-28292727

Fax No : +91-44-28291594

e-mail : [email protected]

PRODUCTION PLANTS : PULIYUR, KARIKKALI, ARIYALORE.

WEBSITE : www.chettinad.com

VISION

With almost a century of continuous growth and prosperity behind us we envisage our

future as another opportunity to which greater heights and to perfect the art of perfectionism

upholding the vision of our founder Dr. Rajah sir Annamalai Chettiar STRIVE, SAVE AND

SERVE. The nature ethics and style of business believe that nothing can supplement the

idealism which motivates the business we fall back on the time tested. Principles of total

customer’s orientation technology in service of man and business as an instrument of social

service to this timeless truth we remind steady fast forever.

MISSION

To achieve & sustain cost leadership in the cement market. The harness technology to

its full potential in a safe & clear environment in the entire business cycle & integrate quality

with continuous improvement. To became a vibrant learning organization by building skills

and competitiveness of employees for growth. To be the best and most respectable corporate

citizen.

Product profile of Chettinad Cement Corporation Ltd.

Pavithram: Unique cement manufactured at Puliyur works having high quality for

special concrete applications.

Chettinad Grade 53: Superior finely ground cement, suitable for plastering works,

giving a silky finished look. For RCC applications laser controlled manufacturing

would yield best result.

Chettinad Grade 43: Multipurpose cement, suitable for plastering and binding.

Chettinad PPC: A finely blended cement, providing very fine result for plastering

work, devoid of hair line cracks and giving excellent appearance to the building.

Sulphur Resistant Cement: Finds applications in the construction activity in the

coastal areas to save from corrosiveness due to salty environment.

MANUFACTURING DETAILS

Mines-Puliyur Works

Limestone is sourced from our mines at palayam which is located 40kms from the

factory. The mines are equipped with the latest machinery and technology including for

sequential blasting. The mined limestone is then crushed through primary and secondary

crusher.

Mines-Karikkali works

Limestone Mines are located at about 3 kms. from the factory. The mines are fully

mechanized and have also a terminator for mechanized breaking of individual boulders. The

Crusher is located at Mines and crushed limestone is transported by long belt conveyors to

factory.

Stacker and Reclaimer-Puliyur Works

The crushed limestone is then sent through the X-Ray analyzer and approved for

further process only on meeting quality standards backbone of the quality control.

Stacker and Reclaimer- Karikkali works

The entire quantity of crushed limestone passes through the online cross belt

analyzers’ and is stacked at the pile in the factory. Three numbers of separate stacker-

reclaimer are available with truck tipplers for proper stacking and

Reclaiming of corrective raw materials, fuels and additives. Stacker Declaimer’s help to

achieve high degree of stacking and ensure maximum level of consistency for the input

materials to raw mill, coal mill and cement mill.

Raw Mill-Puliyur Works

The limestone from the reclaimed is mixed with additive of bauxite and Iron ore and

transported to the vertical roller mill through weigh feeders (which control the additive

addition). The operator takes corrective steps on viewing any deviation. The loesche-German

make vertical roller mill is similar in principle to the tilting grinder with gigantic roller and

operated by the hydraulic system, to give fine blended raw material. From the loesche mill

the raw material is the taken to two silos to produce Varity of cement.

Raw Mill- Karikkali works

Pre-stacked limestone of stockpile is ground in the VRM along with corrective

materials with required ratios are made to produce raw meal and that is stored in Blending

cum Storage Silo. There are separate hoppers with weigh feeders for continuous and

regulated addition of each raw material. The mix passes through the cross belt analyzers

which analyze the mix chemistry and solve the mix ratio every minute to have very good

consistency in the raw mix.

Kiln-Puliyur Works

The finely grounded blended raw material is sent to a five stage kiln. Kiln is a key

process in the manufacture of cement where the calcinations & chemical reaction take place.

Coal fired burner (Controlled through latest solid & low feeder) is used to heat the air to

1400°c and is fed from one end of the kiln. The data accusation and control center

meticulously monitor the entire process including the temperature.

Kiln- Karikkali works

Raw meal extracted from silo is fed to the kiln where it is sintered at about 1400o C to

clinker. This process is called preprocessing which consists of a five stage suspension heaters

with precalciner, the kiln and the clinker cooler. Clinker cooler with CIS and CFG for

maximum heat recuperation and the cooled clinker is transported to a storage silo.

Cement Mill-Puliyur Works

The clinker is then ground, depending upon the grade, the additive is added. For all

grades of cement 5% gypsum is added to control setting of cement we use Japanese

technology in fine grinding with vertical roller mill from anode Kobe, Japan, laser practical

size analyzer is used to monitor fineness of the cement for yielding very good quality cement.

Cement Mill- Karikkali works

Finally, grinding is done in OK Vertical Roller Mill for optical particle size

distribution and less power consumption with excellent ease of operation for feeding,

grinding and classification. To maintain quality of various types/grades of cement, there are

separate hoppers with weigh feeders for the addition of fly ash, gypsum, etc. Quality of final

product is monitored and controlled every hour by testing samples in the XRF analyzer. Final

products are stored in cement silos.

Packing House - Puliyur woks

The four automatic packing machines have been installed, together they have the

capacity to deliver 4800 tons per day of packed cement. These packing equipment’s are very

accurate and any fault can be rectified as each bag is verified before the next is filled. These

are also cross-checked by the Electronic weighing scale used to note the load carried by the

Lorries.

Packing House - Karikkali works

There are 2 nos. of Electronic Rot packer which automatically pack cement in bags,

each with a capacity of 150 tons/hour. Packed cement is loaded into trucks/wagons with

automatic loading machines.

ACHIEVEMENTS OF CHETTINAD CEMENT CORPORATION LTD.

S.No AWARDS YEAR

1

National Safety Award (for outstanding performance in Industrial Safety in

achieving lowest frequency rate in Industry)

Runners up Highest % reduction in frequency rate

1976

1977

2 Merit Awards from Regional Directorate of Workers Education 1972

3 Tamil Nadu Film Arts Association, Chennai Shield 1978

4

National Productivity Award (Best Productivity Performance in Cement

Industry issued by NPC)

Second Best

Best

Best

Second Best

1985

1986

1995

1996

1997

5

National Safety Award (Mines)-(for lowest injury frequency rate Metal Mines

Mechanized Open Cast).

Longest Accident Free Period.

Best performance of the year.

1986

1986

1989

6 Conservationist of the year (for outstanding progress in the field of

Conservation of Energy, Metal Components & Machinery)

1987

7

NCBM National Awards (Improvement in Energy Performance).

Second Best

Best

Best

1994

1995

1998

8 TNEB Energy Conservation Award - (One among the 15 Energy Efficient

H.T. Industries of 2000 KVA)

1998

9 NCBM National Award

Second Best for Energy Efficiency Performance

1998

Source: Annual report of Chettinad Cement Corporation Limited

MILESTONES OF CHETTINAD CEMENT CORPORATION LIMITED Sl. No. MILESTONES YEAR

1 0.4 MTPA cement production capacity with wet process plant installed at

Puliyur. 1967

2

Modernized into dry process plant to a capacity of 0.8 MTPA with a kiln

capacity of 2000 TPD commissioned with modern vertical roller mills for

fuel & limestone grinding.

1989

3 2 Nos. of 5.4 MVA Capacity WARTSILA DG set installed. 1990

4 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed at

PoolavadiUdumapletTaluk. 1994

5 ISO – 9002 Certificate received. 1995

6 Stacker & Re-claimer for Limestone installed. 1996

7 Belt Elevator for Raw mill and Kiln feed installed. 1996

8 A) Impact Crusher for lime stone crushing at mines installed.

B) Bag filter for coal mill grinding system. 1997

9 Vertical roller mill for cement grinding installed. Additional ESP installed

for Kiln/ Raw mill to handle excess process gases. 1998

10

CIS/CFG Cooler installed. Low pressure cyclone installed.

Latest Technology LV-Tech classifier installed in Raw Mill. The plant

capacity increased to 1.2 MTPA cement.

2000

11 Green field Cement plant with capacity of 0.9 MTPA was commissioned at

Karikkali. 2001

12 Rock breaker (Terminator) installed in mines. 2001

13 ISO 14001:2004 is implemented. 2003

14 Environment Management Service Certificate option. 2004

15 1 No. 15MW Coal based Captive Power Plant commissioned in 12 Months

at Karikkali. 2004

16 Fly Ash Silo construction work completed at Puliyur and Karikkali. 2005

17

Roller press with ball mill for cement grinding with capacity 0.7

MTPA installed at Karikkali.

2006

18 Vertical roller mill for cement grinding installed. Additional ESP installed

for Kiln/ Raw mill to handle excess process gases. 2006

19 Karikkali plant capacity increased to 2.0 MTPA by increasing of blended

cement production. 2007

20 Bag House installed in Raw Mill/Kiln Circuit in addition to the existing ESP

at Puliyur. 2007

21 Energy dispersive X-Ray specto meter was put into service for increasing

the output and economical mines operation & conservation of minerals. 2007

22

Advance Research laboratories, Switzerland make X-Ray Spectrometer –

Sequential type was commissioned for augmenting clinker production and

its quality.

2007

23 Seethainagar Mines crusher capacity was upgraded for supply of 40%

Karikkali plant requirement of limestone. 2007

24 Coal based 15 MW capacity CPP was commissioned during Feb-2008 at

Puliyur Works. 2008

25 Automation & control sections PLC's OS software up gradation and PLC's

capacity. 2008

26 KHD make Burner Management System for kiln operation to improve

quality of clinker and to save thermal energy. 2008

27 Coal based 2 x 15 MW capacity CPP was commissioned during Sep-2008 at

Ariyalur. 2008

28 Green field Cement plant with capacity 2.75 MTPA was commissioned

during Dec-2008 at Ariyalur. 2008

29

Video conferencing facility was commissioned between Puliyur, Karikkali,

Ariyalur and Head Office for more effective and faster communications and

project monitoring.

2008

30 Brown field Cement plant with capacity 2.75 MTPA was commissioned at

Ariyalur during October-2009. 2009

31

Coal based 1 x 15 MW capacity CPP was commissioned during Jan-

2010 Erection and Commissioning of 2 Cement Plants in World Record

time at ariyalur – 30 months from BhoomiPooja to commissioning highest

production capacity for cement in a single location at Ariyalur Three No. 15

2010

MW coal based captive power plants commissioned in 18 months at

Ariyalur Chettinad Cement Technical team rated No1 by FLS Denmark at

Ariyalur.

32 Roller press with ball mill for cement grinding with capacity 0.5 million

commissioned during February -2010 at Puliyur. 2010

33

Brown field Cement Plant with capacity of 2.5 MTPA was commissioned

at Karikkali in March 2011 along with coal based 30MW captive power

plant within the same premises

2011

34

Work is under progress for a new Green field production line of 2.5 MTPA

cement with 1 No. of 30MW Coal based captive power plant in Kallur

Village, ChincholiTaluk and GulburgaDist of Karnataka state and expected

to be commissioned in year 2012.

2011

1.4 ORGANISATION CHART

Executive Chairman

Chief Operating Manager

MD & CEO

DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR

DIRECTOR CUSTOMER

SUPPORT

MANAGER

HEAD PERSONAL

HEAD ADMINISTRATION

HEAD PRODUCTION

HEAD ACCOUNTS

HEAD PURCHASE

HEAD PURCHASE

WORKERS

HEAD CUSTOMER ASST.MANAGER ASST.MANAGER ASST.MANAGER MANAGER

WORKERS

CHAPTER 2

DEPARTMENT PROFILE

2.1 PRODUCTION DEPARTMENT

Chettinad Cement Corporation Ltd., (CCCL) initially the cement was manufactured in the

wet processing technology. Due to hike in the fuel price company went for expansion in the

year 1989 to produce with the least dry process technology

PRODUCTION PROCESS

Limestone is the basic raw material for producing cement. Limestone is received from the

quarry by tippers. The size of limestone is 1 cubic feet. The lime stones are crushed in the

limestone crusher and are brought to a size of 1 inch and below then that. The crushed

limestone is conveyed by and inclined belt conveyer to the raw mill hoppers. The active are

red mud and blue dust (around 2%) to get the required composition of kiln feed slurry.

The crushed lime stone with additives are grade in raw mills along with water to produced

slurry with around 30%-40% moisture cement. The slurry is pumped by slurry pumps to the

slurry silo. In the silo the compressed is pumped to mix the slurry well. The composition is

slurry is checked and pumped to slurry basis, if the composition is ok, if the slurry

composition is not ok high grade limestone is crushed ground in raw mills and pumped to the

same silo to the correct composition. The sludge is tipped into the wash mill; water is added

and availed well to produce sludge slurry. This is pumped to slurry silo as a sweetener.

The slurry from the basis is pumped to the kiln through variable speed slurry feeding

arrangement of the required rate determined by the kiln operators. The kiln feed slurry enters

the kiln, passé through drying, preheating zone. In this zone the kiln feed slurry gets tried and

pre heated to 8000 c. Now the material is in powder form and inters claiming zone where the

temperature will around 800-9000c. Now the materials enters burning zone where the

materials is treated to 1350-14500 c. Here the reaction takes place between Sio2, Cao, AI203,

and Fe203 to for di calcium silicate.C2S tri calcium, silicate C3S, tri calcium aluminate, terra

calcium, Aluminum Ferrite C4AF. The mixtures of product are called clinker.

RAW MATERIALS

Limestone

Iron ore

Bauxite

Gypsum

Fly ash

Slag

Coal

Raw lignite

Power

2.2 STORE DEPARTMENT

Store plays a vital role in the operations of a company. It is in direct contact with the user

department in it is day to day activities. The most important objective of store is to provide

uninterrupted supply of material section is located to production with to save material cost in

ash in an effective manner.

FUNCTIONS OF STORE DEPARTMENT

Management of receipts

Issue control on materials

Documentation received

Inspection of materials

Computerization of data received from user department.

Codification of materials.

Physical verification of stores

Stores vacation.

SECTION IN STORE DEPARTMENT

The store is divide d into three section and they are,

Receipt section. Issue section. Inventory section.

2.3 HUMAN RESOURCE DEPARTMENT

RECRUITMENT

In CCCL there is no recruitment policy. Recruitment is made based on the requirement of man power based on the nature of the requirement of man power. The company either goes for advertising in newspaper & considers unsolicited application experience is depends on the job nature.

TRAINING AND DEVELOPMENT

In CCCL there is short term process of training for non-managerial to learn the technical.

Training program is formulated personal department may unable to execute, the take more

care and on internal training program and external training program such as firefighting

safety and occupational work etc.

PROMOTION

Promotion is given for the experienced and qualified person this improves the status skills

and earning if the workman

SAFETY MEASURES

1. Personal safety

2. Industrial safety

3. Housekeeping safety

SAFETY POLICY

The company’s SAFETY FIRST DUTY NEXT

TOTAL STRENGTH

Workman - 172

Staffs - 56

Executives - 107

Contract Workers - 131

TOTAL = 466

HOURS WORKING IN FACTORY

1 shift 12.00 pm to 8.00 Am

2 shift 8.00 Am to 4.00 pm

3 shift 4.00pm to12.00 pm

WELFARE FACILITIES OF THE COMPANY

First aid Uniform and shoes Insurance scheme Drinking water

LOAN FACILITIES

Housing loans Society loans. Education loans.

ALLOWANCES

Housing rent allowances, Conveyance allowances, Dust impact reduction allowances, Washing out dirt allowances

2.4 MARKETING DEPARTMENT

MARKETING AND SALES DEPARTMENT

The sales area over in Tamil Nadu, Karnataka and Andhra Pradesh. This section includes

zonal manager officers and staff dealers and contractors. The order is for customer through

telephone and fax. The order bags dispatch through road and rail the cost includes transport

package and tax.

The enter in the lorry permit slip. It includes the party name designation serial number

distance date and time order number of tones type of product and package code. The order is

supplied through goods train to Kerala and Karnataka. The train per vegan capacity is 63

tones product price includes excise duty and sales tax.

PACKING AND DISPATCH

The cement is extracted from the silo bottom and are place in automatic packers. There

are four automatic packers which help to pack the cement in 50kg per bags and are

transported to destination by means of trucks.

MARKET VIEW

Chettinad is also looking at setting up a new plant and some split location grinding

and packing units. By 2012 they hope to reach 15 million tones and, if the market continues

to grow, 20 million in 2015.

2.5 FINANCIAL DEPARTMENT

Finance is necessary for survival and smooth running of business. The accounts are

computerized and maintained in Tally in Chettinad cement Corporation Limited, Puliyur.

Every year the company presents its financial performance in the form of an annual report

which is sent to the shareholders along with AGM notice.

PRORIT AND LOSS ACCOUNT

In the annual report the profit and loss account and the balance sheet which is authorized by

the auditor would be published in the report. Profit and loss account is prepared to determine

the net profit or net loss for a specified period, normally one year.

BALANCE SHEET

Balance sheet is a statement which shows the financial position of the business at the end of

the financial period. The financial position, solvency and liquidity can be evaluated with the

help of balance sheet.

LIST OF DOCUMENT AND RECORD MAINTAINED

o VOUCHER

o RECEPIT

o TRANSANCTION ENTRY BOOK

o LEDGER BOOK

o SALES INVOICE

o SUBSIDARY BOOK

o CREDIT BOOK

o DEBIT BOOK

o STOCK REGISTER

o DATABASE OF EMPLOYEE

o JOURNAL ENTRIES

o BALANCESHEET

o ANNUAL REPORT

o PURCHASE ORDER

o SALES INVOICE

o OTHER VALUABLE DOCUMENT

2.6 QUALITY DEPARTMENT

Quality control is process by which entities review the quality of all factors involve in

production. This approach places an emphasis on three aspects;

Element such as controls, job management, defined, and well managed

processes, performance and integrity criteria, and identification of controls.

Competence, such as knowledge, skills, experience, and qualifications.

Soft elements, such as personnel integrity, confidence, organizational culture,

motivation, team spirit, and quality relationship.

2.7 SCOPE OF THE STUDY

The study helps the management to improve its profitability through a

reduction in non- moving inventory.

It develops the policies for both continuous review of inventory management

system.

The study helps to show the level of the inventory in the organization. The

company will make the proper inventory methods from the suggestions of the

study.

2.8 LIMITATIONS OF THE STUDY

It is difficult to get information from management.

The study period covers for five years which restricts to know more about the Inventory

management of the company.

Only quantitative analysis is possible through the statistical tools are used.

CHAPTER 3 3.1 OBJECTIVES OF THE STUDY

To analyze the inventory to perform production and sales activities smoothly.

To identify the existing inventory management and its effectiveness.

To study the management of inventories efficiently and effectively in order to

avoid excess investment.

To analysis the performance of inventory management.

3.2 NEED OF STUDY:

To find out the Inventory level of the company.

To increase sale of the product

To avoid excess Investment in Inventory.

3.3 RESEARCH METHODOLOGY

Research Design

The Descriptive type of research has been applied in the study. This research the

researcher has no control over the variables. Only reports what has happened or what is

happening. The research can only discover causes but cannot control the variables.

Data collection

Primary data

Primary data relating to the inventory management of Chettinad Cement, Karur have been

collected through personal interviews hold with the officials of the selected concern under

study.

Secondary data

The necessary data calculated from annual report, books, journals and websites.

Period of study

This study covers a period of five years from 2006 – 2007 to 2010 – 2011. The

accounting year commenced from April and ending with March of the next year.

Area of study

This study was conducted in Chettinad cement corporation limited, Puliyur, Karur

District.

3.4 TOOLS FOR ANALYSIS

The following tools have been applied in the present study.

They are listed below

Ration analysis (inventory) and

EOQ analysis

Ratio Analysis (Inventory)

The percentage of a mutual fund or other investment vehicle's holdings that have

been "turned over" or replaced with other holdings in a given year. The type of mutual fund,

its investment objective and or the portfolio manager's investing style will play an important

role in determining its turnover ratio.

Economic Order Quantity (EOQ)

Economic order quantity is that level of inventory that minimizes the total of

inventory holding cost and ordering cost. The framework used to determine this order

quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in

1913.The most economical quantity of a product that should be purchased at one time. The

EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to

the size of the order which gives maximum economy in punches of materials.

EOQ =2AO

C

Where

A = Annualusageinunit

O = Orderingcost

C = Carriyingcost

3.5 REVIEW OF LITERATURE

Bharathipathak 1991 the bulk of the banking business in the country is in the public sector

comprising the state bank of India and its seven associated banks and twenty nationalized

commercial banks till 1991, the Indian banking industry was operating in a highly regulated

and protected regime. But with the acceptance of Norseman committee recommendation,

competition has been injected into the banking industry in two forms.

The study has been found that HDFC Bank emerged as a leader in this financial

analysis of the year ended 2000-01. It closest competitor was ICICI Bank. Financial

performance of the other three, no doubt, lagged behind them, but it by no means, depressing.

These Bank obviously, have to focus more improving parameters like credit quality and cost

control for emerge as the top performance.

R. Hamsalakshmi-M.Manicham 2000 “The study, it has been found the liquidity position

and working capital positions were favorable and good during period of study. Regarding

turnover ratio, efficiency in management of fixed assets and total assets must be increased.

Regarding return on investment and return on equity was proved that the overall profitability

position of the software companies had been increasing at a moderate way.

DrR.Dharmaraj 2003 ”The study article “positing in Indian management industry ’’ have

concluded that for the last five year, there has been proliferation of international and domestic

providence of mutual funds. He says that this increased growth is due to the increasing cash

flows among innovative young companies through India.

Bharathipathak, Finance India Dec 2003

R. Hamsalakshmi-M.Manicham, Finance India Sep2 2009

DrR.Dharmaraj Indian journal of finance volume4 Allen and Carolinian (2003)

Dr Harish kumar2008 A capital adequacy ratio was constant over a period of time. During

the study period it was observed that the return on net worth had negative correlation with the

debt equity ratio. Inters income to working funds also had a negative association with interest

coverage ratio and the non performing to net advance was negatively correlated with interest

coverage ratio.

J R Raiyani2009 During the periods of high inflation depending on conventional accounting

wisdom. May results in firm’s financial information losing its meaning and creation of

unrealistic expectation among information users.

Dr.KavithaChavvali 2009 Inventory analysis of gold exchange trade funds. Mathew T.Jones

and Maurice ousted (2007) revised and evaluated pre-world war ii current date for countries

by treating gold follows on a continuous basis. The historical data of saving and investment

was taken over a time period of 1850- 1945.

N.Prasanna 2009 Stock performance Aitkin 1997 the external effect foreign direct

investment on export with example of Bangladesh where entry of a koala multinational in

garment exports led establishment of a member of domestic export firms creating the

country’s largest export industry.

Awedh2005 defend that inflator does not have really an effect on the profitability measured

by return on equity of foreign banks exerting in Lebanon. In the same way, the author steers

that the level of inflation affect more than the return on assets of Lebanese bank than foreign

banks in Lebanon.

Dr Harish kumarsingle,Theicfai journal of inventory management (vol vii Feb. 2008)

J R Raiyani, The infancy’s university journal of inventory research (vol viii, No 2 Feb. 2009)

Dr.R.B.Bhatasna, Indian journal of inventory (vol 5 No: 2 Feb 2011)

CHAPTER 4

4.1 RATIO ANALYSIS (INVENTORY)

4.1.1- Table shows level of Inventory

INFERENCE

The inventory level was found to be increased trend from 2006-2007 to 2010-2011.

The raw material was increasing from 2007 -2008 to 2010-2011

The inventory level was not increasing subsequently in 2010-2011

S.No Particulars 2006-07 2007-08 2008-09 2009-10 2010-11

1

Raw materials

Lime stone

(stacker 60 Per cent)

Iron ore


Clay ash


3330.80

1387.83

832.70

5169.86

2154.11

1292.47

8392.21

3496.76

2098.05

11109.76

4629.10

2777.44

11265.50

4693.96

2816.40

TOTAL(clinker) 5551.33 8616.44 13937.02 18516.26 18775.86

2 Work in process 5386.48 8451.74 13822.02 18351.46 18611.09

3 Finished goods 6251.55 9316.59 14522.32 19216.54 19416.11

Total 17189.36 26384.77 42331.36 56084.26 56803.06

Qty in thousand tones

4.1.1- Chart shows level of inventory

0

5000

10000

15000

20000

25000

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

INVENTORY

YEAR

Raw materials

Work in process

Finished goods

INVENTORY LEVEL OF THE COMPANY(in thousand tons)

INVENTORY TURNOVER RARIO

. The inventory turnover ratio measures the number of times a company sells its

inventory during the year.

Inventoryturnoverratio =Costofsales

Averagestock

Costofsales = sales − Grossprofit

Averagestock =Openingstock + Closingstock

2

4.1.2 Table shows inventory turnover ratio

S.No Year Cost of goods sold

(`in lakhs) Average stock (in tones) Inventory turnover ratio

1 2006-07 2663028 487428 5.46 per cent

2 2007-08 2844494 503184 5.65 per cent

3 2008-09 3094850 819401.5 3.78 per cent

4 2009-10 4010580 945491.5 4.24 per cent

5 2010-11 4521886 822538.5 5.50 per cent

INFERENCE

The inventory turnover ratio was high in the year 2006-07 after that 2007-08 the inventory turnover ratio was decreased.

4.1.2- Chart shows inventory turnover ratio

5.4634284455.652989761

3.77696404

4.241793818

5.49747641

0

1

2

3

4

5

6

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

INVENTORY

TURNOVER

RATIO

YEAR

INVENTORY CONVERSION PERIOD

The inventory conversion period is the time required to obtain materials for a product,

manufactured it, sell it.

Inventoryconversionperiod =No. ofdaysintheyear

Inventoryturnoverratio

4.1.3- Table shows inventory conversion period

S.No Year No. of days Inventory turnover ratio Inventory conversion

period (in days)

1 2006-07 365 5.46 per cent 66

2 2007-08 366 5.65 per cent 64

3 2008-09 365 3.78 per cent 96

4 2009-10 365 4.24 per cent 86

5 2010-11 365 5.50 per cent 65

INFERENCE

The inventory conversion period is normally indicates the wealth of the company. The

company wants to concentrates with its inventory conversion period.

4.1.3 - Chart shows inventory conversion period

66 64

96

86

65

0

20

40

60

80

100

120

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

CONVERSION

PERIOD

YEAR

4.2 EOQ ANALYSIS

4.2.1 – Table shows EOQ analysis for the year 2006-2007

Item Annual requirement

O C P EOQ Total

investment with EOQ

Total investment

without EOQ

Saving inventory

cost

Iron Ore 31500 36 1.5 65 1230 81794 138615 56821

Lime

Stones 15000 40 1.25 144 980 142345 145225 2880

Clay Ash 14000 42 2 144 767 111982 135915 23933

Sulphur 13000 34.5 1.75 153 716 110801 133927 23136

Gypsum 13500 35 1.25 144 869 126223 130688 4465

Bauxite 11500 36.5 1.5 150 748 113322 116173 2851

INFERENCE

The company’s annual requirement for the year 2006-07 is 101000 tons of raw

materials. They using investment with EOQ spent ` 787168. When the same in without

investingEOQis882551. So the company saved ` 169432 in the year 2006-07.

4.2.1 – Chart shows EOQ analysis for the year 2006-2007

0

20000

40000

60000

80000

100000

120000

140000

160000

Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite

81794

142345

111982 110801

126223

113322

138615

145225

135915 133927130688

116173

INVESTMENT

RAW MATERIALS

Total investment with EOQ

Total investment without EOQ



O C P EOQ Total

investment with EOQ

Total investment

without EOQ

Saving inventory

cost

Iron Ore 33500 35 1.5 75 1250 95626 169675 74049

Lime Stones 13500 41 2 154 744 116064 140115 24051

Clay Ash 16500 55 1.55 154 1100 171050 171050 0

Sulphur 14000 35 1.5 163 808 132916 153304 20388

Gypsum 12500 36 2 154 671 104676 153304 20388

Bauxite 11000 37 2.5 160 571 92787 118752 25965

INFERENCE


materials. They using investment with EOQ spent ` 590000. When the same in without

investing EOQ is ` 921215. So the company saved ` 195739 in the year 2007-08.


0

20000

40000

60000

80000

100000

120000

140000

160000

180000


95626

116064

171050

132916

104676

92787

169675

140115

171050

153304 153304

118752




Item Annual

requirement O C P EOQ Total

investment with EOQ

Total investment

without EOQ

Saving inventory

cost

Iron Ore 13500 34 1.5 65 1260 83789 153905 7046

Lime Stones 13500 36 1.5 167 805 135642 151515 15873

Clay Ash 15000 38 1.75 165 807 134567 166445 13878

Sulphur 14000 37 1.75 164 769 127462 154384 26922

Gypsum 15000 35 2.5 165 648 108540 166775 58235

Bauxite 11200 36.5 1.75 170 684 117476 128191 10715

INFERENCE

The company’s annual requirement for the year 2008-09 is 98500 tons of raw materials. They

using investment with EOQ spent 68646. When the same in without investing EOQ is

800543. So the company saved 114076 in the year 2008-09.


0

20000

40000

60000

80000

100000

120000

140000

160000

180000


83789

135642 134567127462

108540117476

153905 151515

166445

154384

166775

128191

INVESTMENT

RAW MATERIALTotal investment with EOQ



Item Annual requirement O C P EOQ


Total investment

without EOQ

Saving inventory

cost

Iron Ore 34000 36 1.5 95 1271 123231 217605 94374

Lime Stones 12500 37 1.75 174 727 127770 146226 18456

Clay Ash 14000 40 1.5 175 864 152496 164575 12079

Sulphur 16000 38 1.75 174 834 146575 187161 40586

Gypsum 18000 36 2.75 175 686 121938 212190 90252

Bauxite 17000 37 1 180 1122 203082 205062 1980

INFERENCE


materials. They using investment with EOQ spent `875092. When the same in without

investing EOQ is 1132819. So the company saved `2577276 in the year 2009-10.


0

50000

100000

150000

200000

250000


123231 127770

152496 146575

121938

203082

217605

146226

164575

187161

212190 205062

INVESTMENT

RAW MATERIAL





O C P EOQ Total

investment with EOQ

Total investment

without EOQ

Saving inventory

cost

Iron Ore 38000 37 1.75 105 1268 135358 268736 133378

Lime Stones 13500 35 1.25 185 869 161852 167588 5736

Clay Ash 12000 38 3 195 551 109099 157770 48671

Sulphur 15000 40 3.25 185 608 114455 187225 72770

Gypsum 17000 40 1.25 194 1043 203646 221110 17464

Bauxite 18000 39 2.75 200 715 144965 242235 97270

INFERENCE


materials. They using investment with EOQ spent 869375. When the same in without

investing EOQ is 1244664. So the company saved 375289 in the year 2010-11.


135358

161852

109099 114455

203646

144965

268736

167588157770

187225

221110

242235

0

50000

100000

150000

200000

250000

300000


INVESTMENT

RAW MATERIALTotal investment with EOQ


CHAPTER 5

5.1FINDINGS

In inventory level of the company shows the increase of the raw materials, work-in-

process and finished goods in the year 2006-2009 but not increasing marginally in the

year of 2010-2011

In inventory turnover ratio the ratios of the year has been founded as low in the years of

2008-09 and 2009-10. After those periods the inventory turnover ratio has slightly

increased in the year 2010-11. Even though that level is quite low when compare with

2007-08.

In inventory conversion period is funded as good level. Even though they wants to keep

the inventory conversion period as low.

The company annual requirements of raw materials was increasing in 2006-2007, 2008-

2009, 2009-2010, 2010-2011. Even though annual requirements is quiet low in 2007-

2008.

The inventory level is affected when unqualified employees in charge of inventory it

creates impact on production, investment and profit.

They have a problem in maintaining the accounts regarding inventory management and

10 percent Computer assessment of inventory items for sale is inaccurate.

5.2 SUGGESTION

Chettinad Cement Corporation Limited sells the 75percent of the cements produced,

remaining 25 percent of cement used for own purpose and for sales to others they should

allowed more days as credit to their agent.

Chettinad Corporation should take steps to increase the level raw materials. To ensure

availability of raw material thorough increase the investment with help of EOQ.

Appointment of good employees to take in charge of inventory and ensure proper training

to employees this helps to make the effective inventory.

They should follow proper accounting system for inventory management and computer

assessment of inventory item for sale.

5.3 CONCLUSION

Chettinad cement is one of the leading cement manufacturers in Tamilnadu. They

produce high quality cement. The study covers the inventory management for

effective inventory control. Which helps to control the excess investment on

inventory? I have used a technique Economic Order Quantity Analysis named as EOQ

Analysis for find out the rate with EOQ and without EOQ investment for purchasing

of good in the manufacturing the cement in Chettinad Cement Corporation Limited.

BIBLIOGRAPHY

BOOKS

Khan MY Jain P.K – Management Accounting : Text, problems and cases 4th

Edition – Tata McGraw Hill – 2007

Pandikumar – Management Accounting – Excel Books – 2007

Ramachandran N Kakani Kumar Ram – Financial Acccounting For

Management – Tata McGraw Hill – 2006

S.N Maheswari S.K Maheswari – Accounting for Management – Vikas

Publishing – 2006

WEBSITES

www.chettinad.com

www.reportjunction.com

ANNEXTURE (Rs. in Crores)

PROFIT AND LOSS A/C OF CHETTINAD CORPORATION LTD

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 INCOME : Sales Turnover 1,720.31 1,522.68 1,321.48 1,107.20 840.47 584.17 Excise Duty 220.70 166.38 183.81 177.02 115.17 98.68 Net Sales 1,499.61 1,356.30 1,137.67 930.18 725.30 485.49 Other Income 101.53 13.94 6.14 5.80 50.40 45.03 Stock Adjustments -6.00 -9.94 25.09 14.94 -3.02 12.54 Total Income 1,595.14 1,360.30 1,168.90 950.92 772.68 543.06 EXPENDITURE : Raw Materials 209.71 172.17 158.90 157.66 110.26 83.79 Power & Fuel Cost 426.82 310.57 243.37 181.71 183.28 168.90 Employee Cost 80.00 64.54 37.70 41.32 28.74 19.16 Other Manufacturing Expenses

100.54 80.45 85.58 71.53 77.27 46.97

Selling and Administration Expenses

248.09 209.12 167.89 147.04 130.31 102.17

Miscellaneous Expenses 7.47 10.24 3.34 3.70 2.56 2.41 Less: Pre-operative Expenses Capitalized

0.00 0.00 0.00 0.00 0.00 0.00

Total Expenditure 1,072.63 847.09 696.78 602.96 532.42 423.40 Operating Profit 522.51 513.21 472.12 347.96 240.26 119.66 Interest 64.57 77.91 52.26 19.62 18.18 19.42 Gross Profit 457.94 435.30 419.86 328.34 222.08 100.24 Depreciation 362.87 308.08 429.00 81.50 53.17 36.09 Profit Before Tax 95.07 127.22 -9.14 246.84 168.91 64.15 Tax 19.50 30.80 51.25 92.62 58.32 0.98 Fringe Benefit tax 0.00 0.00 0.60 0.50 NA NA Deferred Tax 0.40 -0.21 -56.78 -10.05 -4.39 22.71 Reported Net Profit 75.17 96.63 -4.21 163.77 114.71 40.06 Extraordinary Items 43.03 0.00 0.00 0.00 0.00 0.02 Adjusted Net Profit 32.14 96.63 -4.21 163.77 114.71 40.04 Adjst. below Net Profit 0.00 11.91 1.39 0.00 0.00 0.00 P & L Balance brought forward

314.24 205.70 253.04 148.79 73.97 57.23

Statutory Appropriations

0.00 0.00 0.00 0.00 0.00 0.00

Appropriations 30.77 0.00 44.52 59.52 39.89 23.32 P & L Balance carried down

358.64 314.24 205.70 253.04 148.79 73.97

Dividend 19.10 0.00 29.50 29.50 22.13 14.75 Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00 Equity Dividend % 50.00 0.00 100.00 100.00 75.00 50.00 Earnings Per Share-Unit 18.85 32.76 0.00 53.81 37.61 12.88 Earnings Per 18.85 32.76 0.00 53.81 37.61 12.88

Share(Adj)-Unit Curr Book Value-Unit Curr 242.33 289.84 120.39 133.05 89.23 59.13

(Rs in crores)

BALANCE SHEET OF CHETTINAD CORPORATION LTD, KARUR

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 SOURCES OF FUNDS : Share Capital 38.20 38.20 29.50 29.50 29.50 29.50 Reserves Total 887.51 825.52 325.65 362.99 233.74 144.92 Total Shareholders’ Funds 925.71 863.72 355.15 392.49 263.24 174.42 Secured Loans 406.28 343.89 282.00 37.61 9.03 24.04 Unsecured Loans 489.78 414.98 715.03 398.58 222.33 280.87 Total Debt 896.06 758.87 997.03 436.19 231.36 304.91 Total Liabilities 1,821.77 1,622.59 1,352.18 828.68 494.60 479.33 APPLICATION OF FUNDS Gross Block 2,836.59 2,315.69 1,660.39 913.20 824.24 765.58 Less : Accumulated Depreciation

1,462.81 1,167.89 850.98 420.77 339.27 286.10

Less: Impairment of Assets 0.00 0.00 0.00 0.00 NA NA Net Block 1,373.78 1,147.80 809.41 492.43 NA NA Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00 Capital Work in Progress 233.54 95.46 313.16 353.65 38.47 2.80 Investments 0.58 0.58 0.58 0.58 0.58 3.61 Current Assets, Loans & Advances

Inventories 231.62 224.09 214.61 166.17 78.27 100.17 Sundry Debtors 106.57 72.51 38.70 14.87 16.99 17.44 Cash and Bank 20.73 73.07 42.99 25.85 28.25 21.49 Loans and Advances 341.67 381.76 329.84 197.80 94.38 40.76 Total Current Assets 700.59 751.43 626.14 404.69 217.89 179.86 Less : Current Liabilities and Provisions

Current Liabilities 214.19 143.24 146.20 156.40 74.57 77.59 Provisions 264.82 222.13 243.39 201.97 98.39 30.09 Total Current Liabilities 479.01 365.37 389.59 358.37 172.96 107.68 Net Current Assets 221.58 386.06 236.55 46.32 44.93 72.18 Miscellaneous Expenses not written off

0.00 0.00 0.00 0.00 0.00 0.00

Deferred Tax Assets 2.05 1.41 0.84 0.73 1.40 2.99 Deferred Tax Liability 9.76 8.72 8.36 65.03 75.75 81.73 Net Deferred Tax -7.71 -7.31 -7.52 -64.30 -74.35 -78.74 Total Assets 1,821.77 1,622.59 1,352.18 828.68 494.60 479.33 Contingent Liabilities 43.38 12.95 29.68 16.13 32.60 11.06

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