Professional Documents
Culture Documents
ON
INVENTORY MANAGEMENT
AT
SRM INSTITUTE OF
MODINAGAR
VIKAS KUMAR
Knowledge has two aspects - theoretical and practical and no theoretical concept is complete
without having knowledge of its practical application. A few weeks professional training
programme was introduced as a part of curriculum of M.B.A. This summer training programme
proves beneficial to the future managers as they are confronted with the problems of actual work
environment during their training period.
As per the curriculum requirement , I did 6 weeks training in INDIAN OIL CORPORATION LTD.
In INDIA, PANIPAT. Working in such a big concern, no matter for a very small period was really
a matter of pride. My area of work in that concern was confined to Finance department and
moreover it was not possible for me to cover all the areas of Finance department in such a short
period of time so I concentrated my working on the project assigned to me i.e. INVENTORY
MANAGEMENT. So the learning during the training in INDIAN OIL CORPORATION LTD., a
report of that is being presented in the following pages.
VIKAS KUMAR
Intention, dedication, concentration and work are very much essential to complete any
task.But still it needs lot of support, guidance, co-operation of people to make it
successful.
Heart full thanks to all the respective persons who support and guide me.
I have no words to express a deep sense of gratitude to the management of
INDIAN OIL CORPORATION LIMITED for giving me an opportunity to pursue my
internship.
I sincerely thank Mr. L.D. Batra (T&D Manager) for giving me more than just a training
place and an opportunity for understanding of what is “a good professional culture”
I express my deep sense of indebtness towards Mr. Rakesh Kumar Dubey (Finance
Manager, Panipat region) for providing me valuable information .
I would like to thank Mr.Siddhartha for guiding and helping me immensely throughout
my training.
I also offer my sincere thanks to DR. N K SINHA, H.O.D. of Master of Business
Administration, SRM Institute of Management & Technology, who gave me his
valuable suggestion for preparing this report. I also convey my regards to Ms.
CHANDRA, Faculty, who guides me during the completion of the project.
I also thank my parents and all my well wishers, who helped me directly or indirectly in
some way to make this project.
At last I also convey my regards to almighty for the blessing , without which virtually
this project would not have been possible.
VIKAS KUMAR
BIBLIOGRAPHY 66
A) COMPANY’S INTRODUCTION
The Indian Oil Corporation Ltd. operates as the largest company in India in terms of
turnover and is the only Indian company to rank in the Fortune "Global 500" listing. The
oil concern is administratively controlled by India's Ministry of Petroleum and Natural
Gas, a government entity that owns just over 90 percent of the firm. Since 1959, this
refining, marketing, and international trading company served the Indian state with the
important task of reducing India's dependence on foreign oil and thus conserving
valuable foreign exchange. That changed in April 2002, however, when the Indian
government deregulated its petroleum industry and ended Indian Oil's monopoly on
crude oil imports. The firm owns and operates seven of the 17 refineries in India,
controlling nearly 40 percent of the country's refining capacity.
1958
Indian Refineries Ltd. formed in August with Mr Feroze Gandhi as the Chairman.
1959
1960
Agreement for supply of Kerosene and Diesel signed with the then USSR.
1962
1963
Indian Oil Blending Ltd. (a 50:50 Joint Venture with Mobil) formed.
1964
Indian Refineries Ltd. merged with Indian Oil Company with effect from 1 st
September, 1964, and Indian Oil Company renamed as Indian Oil Corporation Ltd.
1965
1967
SRM INSTITUTE OF MANAGEMENT & TECHNOLOGY
MODINAGAR Page 9
Haldia Barauni product pipeline commissioned.Bitumen and marine bunkering
businesses commenced.
1968
1969
Acquired 60% majority shares of IBP Co. Ltd. The same was offloaded in favour
of the President of India in 1972.
1971
1972
1974
1975
1977
1978
1981
Digboi Refinery and Assam Oil Company's (AOC) marketing operations vested in
IndianOil and it became Assam Oil Division (AOD) of IndianOil.
1982
1984
1985
New office complex for Registered Office of the Corporation and HeadOffice of
Marketing Division in Mumbai completed.
1986
1989
1990
First LPG Bottling Plant of Assam Oil Division (AOD) commissioned at Silchar.
1991
1993
New era Micro-processor based Distributed Digital Control Systems replacing the
pneumatic instrumentations began in refineries.
1994
1995
1,443 km. long Kandla-Bhatinda product pipeline commissioned.
First lndane Home Shoppe launched.
1996
1997
1998
Panipat Refinery was commissioned.
Haldia, Barauni Crude Oil Pipeline (HBCPL) was completed.
The Administrative Pricing Mechanism (APM) was withdrawn from the Refining
Sector effective 1" April 1998. Phase-wise dismantling of APM began.
1999
Indian Hydrocarbon Vision -2025" was announced at PETROTECH-99,
organised by Indian Oil on behalf of the oil Industry.
Diesel Hydro-desulphurisation Units commissioned at Gujarat, Panipat, Mathura
and Haldia Refineries.
Manthan -- the IT re-engineering project was launched.
2000
Indian Oil crossed the turnover of the magical mark of Rs l ,00,000 Crore -- the
first Corporate in India to do so.
Indian Oil entered into Exploration & Production (E&P) with the award of two
exploration blocks to Indian Oil and ONGC consortium under NELP-1
Y2K compatibility achieved.
JNPT Terminal was commissioned.
2001
Digboi Refinery completed 100 years of continuous operation.
2002
APM dismantled. Pricing of Petroleum products decontrolled.
IBP Co. Ltd. was acquired with management control.
Barauni Refinery expansion project completed.
New generation auto fuels IOC Premium and Diesel Super introduced.
2003
Lanka IOC Pvt. Ltd. (LIOC) launched in Sri Lanka.
Retail operations began in Sri Lanka. Indian Oil became the first Indian Petroleum
Company to begin downstream marketing operations in overseas market. Lanka IOC
became an independent oil company in Sri Lanka
Gasahol, 5% ethanol blended petrol, was introduced in select states.
INDMAX unit at Guwahati Refinery commissioned.
2004
Indian Oil turned a Gas marketer by sale of regasified LNG.
Indian Oil Mauritius Ltd.’s 18 TMT state-of-the-art Oil Storage Terminal at Mer
Rouge commissioned
Lanka IOC Pvt. Ltd. (LIOC) launched in Sri Lanka.
Gasahol, 5% ethanol blended petrol, was introduced in select states.
INDMAX unit at Guwahati Refinery commissioned.
Foundation Stone of Panipat Refinery Expansion and PX/PTA projects laid.
Maiden LPG supplies to Port Blair.
2006
Panipat Refinery capacity enhanced from 9 to 12 MMTPA
World-scale Paraxylene/Purified Terephthalic Acid (PX/PTA) plant commissioned
at Panipat as mother plant for polyester industry
Chennai-Trichy-Madurai product pipeline dedicated to the nation.
2007
Marketing subsidiary IBP Co. Ltd. merged with parent company.
Concept of SERVOXpress Centres as one-stop shops for autocare services
launched.
Mundra-Panipat crude oil pipeline with facilities for handling heavy crude oil
commissioned.
Lanka IOC commissions Lube Blending Plant and laboratory for testing fuels and
lubricants at Trincomalee
Concept of ‘LNG at the doorstep’ launched for customers located away from gas
pipelines
2008
Indian Oil Corporation Ltd. (Indian Oil) was formed in 1964 through the merger of
Indian Oil Company Ltd. (Estd. 1959) and Indian Refineries Ltd. (Estd. 1958).
At Indian Oil, corporate social responsibility (CSR) has been the cornerstone of
success right from inception in the year 1964. The Corporation’s objectives in this key
performance area are enshrined in its Mission statement: "…to help enrich the quality of
life of the community and preserve ecological balance and heritage through a strong
environment conscience”
.From a fledgling company with a net worth of just Rs. 45.18 crore and sales of 1.38
million tonnes valued at Rs. 78 crore in the year 1965, Indian Oil has since grown over
3000 times.
Indian Oil Corporation Ltd. (Indian Oil) is India's largest commercial enterprise, with a
sales turnover of Rs. 2,47,479 crore (US $ 61.70 billion) and profits of Rs. 6,963 crore
(US $ 1.74 billion) for the year 2007-08.
Indian Oil is also the highest ranked Indian company in the prestigious Fortune 'Global
500' listing, having moved up 19 places to the 116th position in 2008. It is also the 18th
largest petroleum company in the world.
PRODUCTS
Indian Oil is not only the largest commercial enterprise in the country it is the flagship
corporate of the Indian Nation. Besides having a dominant market share, Indian Oil is
widely recognized as India’s dominant energy brand and customers perceive Indian Oil
as a reliable symbol for high quality products and services.
Benchmarking Quality, Quantity and Service to world-class standards is a philosophy
that Indian Oil adheres to so as to ensure that customers get a truly global experience in
India.
Indian Oil is a heritage and iconic brand at one level and a contemporary, global brand
at another level. While quality, reliability and service remains the core benefits to the
customers.
Autogas
Bitumen
MS / Gasoline
Petrochemicals
Special Products
Crude Oil
The Corporation's refineries surpassed 100% capacity utilisation and clocked the
highest ever throughput of 51.4 million tonnes. Breaching the 10,000 km mark in length,
the pipelines network registered the highest ever operational throughput of 59.5 million
tonnes of crude oil and petroleum products.
During the year 2008-09, IndianOil's sales volume registered a growth of 5.6% and went
up to an unprecedented 62.6 million tonnes of petroleum products as compared to
59.30 million tonnes during the previous year. Sales of natural gas also went up to 1.7
million tonnes in 2008-09. In addition, product exports rose to 3.64 million tonnes from
3.38 million tonnes in the previous year.
Among new businesses, Natural Gas marketing and Petrochemicals generated
revenues of Rs. 2425 crore and Rs. 2760 crore during the year 2008-09.
Core Performance
REFINERIES DIVISION
Indian Oil controls 10 of India’s 18 refineries – at Digboi, Guwahati, Barauni,
Koyali, Haldia, Mathura, Panipat, Chennai, Narimanam and Bongaigaon – with a
current combined rated capacity of 54.20 million metric tones per annum
(MMTPA)* (one million barrels per day). Indian Oil registered a record throughput
of 36.63 millions tones during the year 2004-05 with a capacity utility of 88.6%.
Indian Oil accounts for 42% of India’s total refining capacity. Overall Energy
consumption of Indian Oil refineries was lowest at 109 MBTU/BBL/NRGF against
earlier best of 111, achieved in 2003-04. Gross Refining Margin (GRM) rose by
Modernization project of this refinery has been completed and the refinery now
has an increased capacity of 0.65 MMTPA. The Digboi refinery produces
distillates, heavy ends and excellent quality wax from indigenous crude oil
produced at the Assam Oil fields. Petroleum products are supplied mainly to
northeastern India primarily through road and by rail wagons. A new Delayed
Coking Unit of 1,70,000 TPA capacity was commissioned in 1999. A new solvent
dewaxing unit for maximizing production of microcrystalline wax was installed
and commissioned in 2003. The refinery has also installed Hydrotreater to
improve the quality of diesel.
GUWAHATI REFINERY
The Guwahati Refinery in North East India – the first Public Sector refinery of the
country-was commissioned in 1962 with a capacity of 0.75 MMTPA which was
subsequently increased to 1.0 MMTPA through debottlenecking projects.The
refinery processing only indigenous crude oil from the Assam oil fields. It
supplies petroleum products to North-Eastern India and surplus products
onwards to Siliguri in West Bengal in 2003. Hydrotreater unit for improving the
SRM INSTITUTE OF MANAGEMENT & TECHNOLOGY
MODINAGAR Page 22
quality of diesel has been commissioned in 2002. In 2003, the refinery installed
an IndMax Unit a novel technology developed by Indianoil’s R & D center for
upgrading heavy ends into LPG, motor spirit and diesel oil.
BARAUNI REFINERY
The Barauni Refinery in Eastern India was commissioned in 1964 with a capacity
of 2.0 MMTPA. The refining capacity was increased to 3.0 MMTPA by 1969 and
further to its current capacity of 6.0 MMTPA through low cost revamping and
debottlenecking. Matching secondary processing facility such as RFCC (Resid
Fluidised Catalytic Cracker) and hydrotreater facilities for diesel quality
improvement have been added. With the commissioning of the 6.0 MMTPA
Haldia-Barauni crude oil pipeline, the refinery now received imported crude for
processing. A CRU (Catalytic Reformer Unit) was also added to the refinery in
1997 for production of unleaded motor spirit. Projects are also planned for
meeting future fuel quality requirements. Barauni refinery supplies distillate
products beside eastern India to northern India through a product pipeline to
Kanpur in Uttar Pradesh.
GUJARAT REFINERY
HALDIA REFINERY
Haldia Refinery, the fourth in the chain of seven operating refineries of IndianOil,
was commissioned in January 1975. It is situated 136 km downstream of
Kolkata in the district of East Midnapur, West Bengal, near the confluence of river
Hoogly and river Haldi. The refinery had an original crude oil processing capacity
of 2.5 MMTPA. Petroleum products from this refinery are supplied to eastern
India through two product pipelines as well as through Barges, tank wagons and
tank trucks.Products like MS, HSD and Bitumen are exported from this
refinery.Refinery was increased to 2.75 MMTPA through de-bottlenecking in
1989-90. Refining capacity was further increased to 3.75 MMTPA in 1997 with
the installation/commissioning of second Crude distillation unit of 1.0 MMTPA
capacity.Diesel Hydro Desulphurisation (DHDS) unit was commissioned in 1999,
for production of low sulphur content (0.25%wt.) High Speed Diesel. With
augmentation of this unit, refinery is producing BS-II and Euro-III equivalent HSD
at present.
MATHURA REFINERY
The Mathura Refinery was commissioned in 1982 with an original capacity of 6.0
MMTPA. The capacity was increased to 7.5 MMTPA by debottlenecking and
PANIPAT REFINERY
IndianOil’s seventh refinery, commissioned in 1998, is located at Panipat, 125
kms away from Delhi, the capital of India, in the state of Haryana in Northern
India. The main units are OHCU (Once-through-hydro cracker), RFCC, CCRU
(Continuous Catalytic Reformer unit) besides other secondary treatment units.
This 6 MMTPA refinery caters to the high demand centers of Northern India. The
product to increase the capacity of Panipat refinery to 15 MMTPA is already
under implementation, which also takes into account future fuel quality
requirements for 2005. The expansion project is expected to be completed in
2005.
MARKETING DIVISION
The Marketing Division of IOCL handles the responsibility of delivering petroleum
products to the customers. The Marketing Division has set up various marketing
terminals where storage tanks are built up to hold the products. The petroleum
products are transferred to the marketing terminals by the Pipelines Division,
which charges the Marketing Division for the same. Indian Oil caters to over
53.2% of India’s petroleum consumption.
Indian Oil’s Marketing Network is spread throughout the country with over 23,000
sales points (the largest in the country
The assets of the erstwhile Assam Oil Company were taken over by IOCL in the
year 1981. It is kept as a separate division in IOCL. Assam Oil Division owns
the Digboi refinery and is also into marketing. It owns one petrol pump on the
Delhi-Mathura Road.
MISSION
VISION
VALUES
OBLIGATIONS
Towards suppliers
To ensure prompt dealings with integrity, impartiality and courtesy and promote ancillary
industries.
Towards employees
Develop their capability and advancement through appropriate training and career
planning.
CORPORATE OBJECTIVES
To serve the national interests in the Oil and related sectors in accordance and
consistent with Government policies.
To ensure and maintain continuous and smooth supplies of petroleum products
by way of crude refining, transportation and marketing activities and to provide
appropriate assistance to the consumer to conserve and use petroleum products
efficiently.
To earn a reasonable rate of interest on investment.
FINANCIAL OBJECTIVES
To ensure adequate return on the capital employed and maintain a reasonable annual
Dividend on its equity capital.
To ensure maximum economy in expenditure.
To manage and operate the facilities in an efficient manner so as to generate adequate
internal resources to meet revenue cost and requirements for project investment,
without budgetary support.
PRINCIPAL SUBSIDIARIES
Indo Mobil Ltd. (50%); Avi-Oil Ltd. (25%); Indian Oil tanking Ltd. (25%); Petronet India
Ltd. (16%); Petronet VK Ltd. (26%); Petronet CTM Ltd. (26%); Petronet CIPL Ltd.
(12.5%); IndianOil Petronas Ltd. (50%); Indian Oil Panipat Power Consortium Ltd.
(26%); Indian Oil TCG Petrochem Ltd. (50%); Librizol India Pvt. Ltd. (50%).
PRINCIPAL COMPETITORS
SWOT ANALYSIS
STRENGTHS
IOCL has managed to significantly cut its borrowing cost due to high share of foreign
exchange debt. Its share of foreign exchange borrowings is increasing with foreign
As India's flagship national oil company, Indian Oil accounts for 56% petroleum
products market share, 42% national refining capacity and 67% downstream pipeline
throughput capacity.
Indian Oil is one of the leaders in providing engineering, construction and consultancy
services to the pipeline industry. Highly qualified professionals with vast experience
execute pipeline projects from concept to commissioning and provide services for
construction supervision and project management.
Indian Oil is strengthening its existing overseas marketing ventures and simultaneously
scouting new opportunities for marketing and export of petroleum products in foreign
markets. Two wholly owned subsidiaries are already operational in Sri Lanka and
Mauritius, and regional offices at Dubai and Kuala Lumpur are coordinating expansion
of business activities in Middle East and South East Asia regions. The Corporation has
launched eleven joint ventures (listed separately) in partnership with some of the most
respected corporate from India and abroad .
WEAKNESSES
Among the public sector oil companies, Indian Oil Corporation is the only one to follow a
weak marketing strategy. It in only in the recent years that the company has started to
market its products. However, still the efforts seem to be weak when compared with the
competitors like BPCL and HPCL.
PROMOTION POLICY
Most of the public sector companies seem to suffer from these lacunae. The employees
are promoted mainly on the basis of experience and not on the efforts and initiatives
displayed by the employee in his work. This results in demotivation and lack of interest
for their work on the part of the hardworking employees, who then tend to shift jobs to
satisfy their need for self-esteem.
TENDER PROCESS
The policy of selection of the lowest bidder tends to affect the quality of the
products/services on some occasions. A more simplistic procedure is also likely to
generate some savings for the company, since tendering process leads to expenses on
account of advertisement.
OPPORTUNITIES
THREATS
The opening up of the oil sector for private players poses a threat even for this well-
established company. With Indian players like Reliance and Essar and foreign players
like Shell planning their entry into the Indian scenario, the road seems to be tough for
Indian Oil.
Referred as one of India’s most modern refineries, Panipat Refinery was built using
global technologies from IFP France; Haldor-Topsoe, Denmark; UNOCAL/UOP, USA;
and Stone &Webster, USA. It processes a wide range of both indigenous and imported
grades of crude oil. It receives crude from Vadinar through the 1370 km long Salaya-
Mathura Pipeline which also supplies crude to Koyali and Mathura Refineries of
IndianOil.
Petroleum products are transported through various modes like rail, road as well as
environment-friendly pipelines. The Refinery caters to the high-consumption demand
centres in North-Western India including the States of Haryana, Punjab, J &K,
Himachal, Chandigarh, Uttaranchal, as well as parts of Rajasthan and Delhi.
The LPG produced from the refinery is pumped through a dedicated pipeline to
IndianOil’s Kohand Bottling plant where bottling and bulk despatches are done. Panipat
Refinery has also developed new products like 96 RON petrol, and sub Zero diesel for
the Indian army. It is already operating above 100% capacity for the last four years.
With the expansion of Panipat Refinery to 12.0 MMTPA total high speed diesel
produced from entire refinery will meet BS-II and BS-III Grade required for NCR. After
stabilisation of units, the high value product yield from the refinery will be further
improved by reducing the production of black oil like HPS and Bitumen. With state-of
LPG
NAPHTH
A
BITUMEN
MOTOR
SULPHUR
SPIRIT
ATF
HEAVY
PETROLEUM
STOCK
SKO
HSD
INTEGRATED POLICY
ON
QUALITY, SAFETY, HEALTH & ENVIRONMENT (QSHE)
INVENTORY MANAGEMENT
MEANING
TYPES OF INVENTORY
Work –In – Progress : An inventory of partially completed units allows the separation of
different phases of the production process.
Cash & Marketable Securities : Cash & Marketable Securities can be thought of as an
inventory of liquidity that allows separation of collection from disbursement.
Inventory of finished goods should be maintained at sufficient high level so that the demand
of customers may be fully satisfied .Similarly , inventory of raw – materials should also be
sufficient so that manufacturing process can be run smoothly. In case of inadequate
inventory of finished goods , there is always risk of being out – of – stock and in case of
MAIN OBJECTIVES
To ensure a continuous supply of raw material.
To maintain sufficient inventory of raw materials in periods of short supply.
To maintain sufficient inventory of finished goods so that the demand of the customers
are duly met.
To minimize the carrying costs of inventory namely cost of godown , insurance
expenses, cost of funds involved in inventory etc.
To arrange for sale of slow moving items.
To control investment in inventory & keep it at an optimum level.
COST OF INVENTORIES
Relevant inventory costs which change with the level of inventory are lister below :-
NEED OF INVENTORIES
Transactive Motive
Precautionary Motive
Speculative Motive
SRM INSTITUTE OF MANAGEMENT & TECHNOLOGY
MODINAGAR Page 42
ACCOUNTING OF STORES
The Authority for receipt, storage and issue of all materials is centralized in the
Materials Department subject to exception permitted in certain cases. The user
Departments shall not be permitted to have any stock of materials with them in the form
of sub-stores. However, in certain cases a nominal stock of a few urgent items can be
permitted for meeting emergencies. Items issued from stores to user . shall be charged
off from inventory. However, a list of items of Rs. One lakh and above is lying in sub
stores of plant as on 31st March shall be included in inventory in the financial ledger as
material at site account which shall be reversed in the next year.
Details procedure as prescribed in the Materials Management Manual is to be followed
for all functions of the stores section of the Materials . a general outline of the functions
is as under:
The section dealing with accounting of stores in the Finance. shall have following
functions:
a)Ordering Cost – These costs are associated with the purchasing or ordering of
materials. This cost of ordering includes :
Paper work cost , typing & dispatching
Order inspection cost , checking & handling.
b) Non - Ordering Cost - These are the costs for holding the inventories. This cost
involves:
Capital Cost.
Storage & handling cost.
Insurance.
Taxes.
The cost of funds invested in inventory.
4) A-B-C Analysis :-
The materials are divided into three categories viz , A, B & C
5) VED Analysis :-
The VED Analysis is used generally for spare parts. The requirements & urgency of spare
parts is different from that of materials. Spare parts are classified as:
Vital (V) , Essential (E) , Desirable (D)
Vital spare parts:
These are most for running the concern smoothly.
Essential spare parts:
Necessary but stock kept at low figures.
Desirable spare parts:
May be avoided at times.
6) HML Classification:
The HML( High, Medium, Low) Classification is similar to ABC Classification , but in this
case instead of the assumption value of the item , the unit value of the item is considered.
7) XYZ Classification:
The XYZ Classification has the value of inventory stored as the basis of differentiation. X
items are those whose inventory values are high while Z items are those whose value is
low.
In Indian Oil Corporation Limited A-B-C Analysis technique is used for inventory
management.
RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY
Main Objective
The objective of the study is to assess and analyze the inventory in Panipat refinery.
1) To study how sufficient large size of inventory is maintained in the Panipat Refinery
to meet the demand of finished goods & to meet the demand of raw material.
2) To study about the investment in inventories.
3) To study the continuous supply of raw material.
4) To know how the funds are utilized.
5) To extend the knowledge.
However the main objective of this study is to fill the gap between different aspect
of theoretical and practical knowledge of financial management and to develop the required
skill to take decision on sight for the best use of my theoretical knowledge.
RESEARCH DESIGN
Meaning of research
“Research in common parlance refers to a search for knowledge”. Research can be
explained as a movement, a movement from known to unknown. It is actually a voyage of
discovery.
Research always starts with a question or problem.
Research Design
“Research Design is the plan and structure of investigation so conceived as to
obtain answers to research questions.”
Nature of Research
Descriptive Research design is used for study.
Descriptive research as the name suggests is designed to describe something – for
example the characteristics of users of a given product ; the degree to which product use
varies with income, age, sex or other characteristics; or the number who saw a specific
television commercial.
To be of maximum benefit, a descriptive study must only collect data for a definite purpose.
Your objective and understanding should be clear and specific. It is a kind of survey
method.
This project study is related with the inventory management so the data is collected in this
regard only.
I studied the various types of inventory through out the training period.
This project is mainly based on the secondary data and information beside this primary
data is also used.
1) Primary data:- primary data are to be collected by the researcher , they are not
present in reports or journals etc. and can be collected through a number of method
which can be classified as follow
Primary data for my project : The primary data for my research is the dispatch registers
maintained by the company to know the purchase and stock of inventory in the
organization.
2) Secondary data:- Secondary data are the data collected for some purpose other than
the research situations; such data are available from the sources such as books, company
Internets.
Book and journals.
Company reports.
Census department.
Research work of others.
Secondary data for my project: Mainly the used in this project is secondary. The data is
the already maintained in the manuals.
SURVEY PERIOD
Survey period is 6 weeks from June 15th, 2009 to July 24th, 2009. It is not enough periods
for the study to get the accurate a specific result of the study.
ANALYSIS
&
INTERPRETATION
47994
50000
45000
40000
31823
35000
30000
21980
25000 AT REFINERY
20000 INTRANSIT
15000
10000 4693 3037 2471
5000
0
Analysis
Panipat refinery is a big processing plant which requires the materials, tools and other
required items on time because delay in availability of these materials may cause a big
loss to the company so by the year their manufacturing capacity is increasing their
demand is also increasing so they increase their capacity of materials in stores and also
give orders to their vendors so they also available the goods on time. Because vendors
also need time to manufacture the goods according to the need and order by the
company and supply to their place.
PROCESS CHEMICALS
PARTICULARS 2007-08 2008-09
18000
16000
14000
AT REFINERY
12000
10000 16139
8000
6000
4000 4172
2000
0
2007-08 2008-09
Analysis
As while refining and manufacturing of petroleum from crude oil there is need of some
chemicals which are highly acidic handle with great care and caution so this type of
chemicals refinery manufacture themselves so have their storage at refinery itself there
is no amount is in transit. They have sufficient capacity to produce and store at their
place itself.
25000
20000
16139 CHEMICALS
15000 STORES& SAPRES
12651
10000
5000
0
TARGET ACTUAL
Analysis
Due to increasing manufacturing capacity of plant, company set the target amount of
chemicals and stores & spares for the year 2007-2008 with a high amount of chemicals
out of which company used the actual amount of 4172.43 means company’s processing
is going on in a better direction they have sufficient amount to use further if they
required.
But in stores and spares company required material above the settled target because
stores & spares have no limitation they can be fail by using, breakdown while working,
or may get free or obsolete, so many reasons may cause their demand high of stores &
spares.
It is computed by dividing the cost of goods sold by the average inventory. Thus,
9.12
Analysis
As inventory turnover ratio indicates how fats inventory is sold. A high ratio is good from
the view point of the liquidity and vice versa. A low inventory turnover ratio signifies that
inventory does not sell fast and stays on the shelf or warehouse for a long time.
As the refinery having a high turnover ratio which signifies that inventory is not staying
in a shelf or warehouse for a long time they can be easily sold after manufacturing so it
means company have a good sales in comparison to the average inventory of the
refinery.
35000
30000
25000 A Segment
B Segment
20000 C Segment
15000
Analysis
Same process is followed in the refinery, as they have nearly 51000 items in their
inventory list so out of all the items they categories the items on the basis of their
number and investment in the A B C category because while using they required very
CHAPTER - 5
SRM INSTITUTE OF MANAGEMENT & TECHNOLOGY
MODINAGAR Page 62
CONCLUSION
CONCLUSION
After studying the inventory management of Panipat refinery and by seeing the last
year’s performance and records it has resulted that refinery has sufficient inventory
system due to which they have a good working status.
As we have seeing the data of stores & spares, oil in tanks and pipelines, chemicals
and A B C analysis from which we know that refinery has approx 51000 items in their
inventory and all they will be utilized on time, some of them stored in stores for the time
of emergency but after a time they also get change because of obsolesce.
As inventory storing, ordering and keeping all will be based on the capacity of the plant
and the Panipat refinery plant is one of the biggest plant out of the IOCL plants, so it
required a good amount of inventory to be stored in their stores to avoid the breakage of
the plant manufacturing process as breakdown of one day may cause a high loss of
earning for the plant as the reason due to which plant get stop is nearly about 5lakh-
20lakh but the profit ratio of one day is near 2crore-7crore so we should be alert and
attentive towards the inventory system of the plant. For example the plant requires the
air fin coolers for the plant which would be supplied from Gujarat by a vendor; they
required minimum time to manufacture them near 6-8 months so for that we have to
place the order before 8 months so we get on time.
Although the sales of IOCL are increasing and which has resulted in the increase in
income, still the company is not able to manage an increase in profits because of a
simultaneous increase in the amount of expenditure. The IOCL has earned handsome
amount of profits even the profits have been decreasing from past few years. But, this
state is temporary due to high price in world crude oil prices and another reason is that
the mostly amount of oil is imported from the outside which may also a reason of
reducing the profit ratio as comparison to the expectation and capacity of the company.
BIBLIOGRAPHY
WEB
www.google.com
www.iocltenderexpress.com
SRM INSTITUTE OF MANAGEMENT & TECHNOLOGY
MODINAGAR Page 65
www.iocl.com
www.investopedia.com
BOOKS
OTHERS
Company Generals