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Investment Management
Investment Management
Project title
A STUDY ON INVENTORY MANAGEMENT ON JHOTHYS TEXTILE WITH SPECIAL REFERENCE TO MADURAI CITY
INTERNAL EXAMINER
EXTERNAL EXAMINER
CONTENTS
CHAPTER
1
DESCRIPTION
1. 1. INTRODUCTION 1.2. OBJECTIVES 1.3. SCOPE 1.4. NEED OF THE STUDY 1.5. LIMITATIONS 1.6. LITERATURE REVIEW
PAGE NOS.
INDUSTRY PROFILE
COMPANY PROFILE RESEARCH METHODOLGY DATA ANALYSIS & INTERPRETATION FINDINGS SUGGESTION CONCLUSION BIBLIOGRAPHY APPENDIX
3 4
5 6 7 8 9 10
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LIST OF TABLES
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Table showing the raw material consumed and the sales Table showing the regression analysis taking two variables they are raw materials and Sales.
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Table showing average creditors and purchases Table showing the annual turnover of the Raw materials during the year 2008-09
Table showing the annual turnover of the Raw materials during the year 2009-10
Table showing the annual turnover of the Raw materials during the year 2010-11
Table showing the annual turnover of the Raw materials during the year 2011-12
Table showing the analysis of the profit from chudithaar materials for 4 years Table showing the analysis of the profit from shirts materials for 4 years
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Table showing the analysis of the profit from cotton saree materials for 4 years
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Table showing the analysis of the profit from silk saree materials for 4 years
S.NO
LIST OF CHARTS
PAGE.NO
Chart showing the sales and raw materials consumed for 4 years Chart Showing annual turnover of the Raw materials during the year 2008-09
Chart Showing annual turnover of the Raw materials during the year 2009-10
Chart Showing annual turnover of the Raw materials during the year 2010-11
Chart Showing annual turnover of the Raw materials during the year 2011-12
Chart
Chart showing the analysis of the profit from shirts materials for 4 years
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saree materials for 4 years Chart showing the analysis of the profit from silk saree materials for 4 years
Thus, that term inventory includes stock of Raw materials and components:- Raw materials are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions.
Work in process:- Work in process inventories are semi-manufactured products. They represent products that need more work before they become finished products for sale.
Finished goods:- Finished goods inventories are those completely manufactured products which are ready for sale. Stocks of raw materials and work-in-process facilitate production, while stock of finished goods is required for smooth marketing operations. Thus, inventories serve as a link between the production and consumption of goods.
The levels of three kinds of inventories for a firm depend on the nature of its business. A manufacturing firm will have substantially high level of all three kinds of inventories, while a retail or wholesale firm will have a very high level of finished goods inventories and no raw material and work-in-process inventories. Within manufacturing firms, there will be differences. Large heavy engineering companies produce long production cycle products; therefore, they carry large inventories. On the other hand, inventories of a consumer product company will not be large because of short production cycle and fast turnover Firm also maintain a fourth kind of inventory, supplies or stores and spares. Supplies include office and plant cleaning materials like soap, brooms, oil, fuel, light bulbs etc. These materials do not directly enter production, but are necessary for production process. Usually, these supplies are small part of the total inventory and do not involve significant investment. Therefore, a sophisticated system of inventory control may not be maintained for them.
Transaction motive emphasizes the need to maintain inventories to facilitate smooth production and sales operations.
Precautionary motive necessitates holding of inventories to guard against the risk of unpredictable The procurement of materials may be delayed because of such factors as strike,
transport disruption or short supply. Therefore, the firm should maintain sufficient stock of raw materials at a given time to streamline production. Work-in-process inventory builds up because of the production cycle. Production cycle is the time span between introduction of raw material into production and emergence of finished product at the completion of production cycle. Till production cycle completes, stock of work-in-process has to be maintained. Efficient firms constantly try to make production cycle smaller by improving their production techniques. Stock of finished goods has to be held because production and sales are not instantaneous. A firm cannot produce immediately when consumers demand goods. Therefore, to supply finished goods on a regular basis, their stock has to be maintained. Stock of finished goods has also to be maintained for sudden demand from customers. The level of finished goods inventories would depend upon the coordination between sales and production as well as on production time.
The firm should always avoid a situation of over investment or underinvestment in inventories. The major dangers of over investment are; a) Unnecessary tie-up of the firms fund and loss of profit, b) Excessive carrying costs, and c) Risk of liquidity. The excessive level of inventories consumes funds of the firm, which cannot be used for any other purpose, and thus, it involves an opportunity cost. The carrying costs, such as the costs of storage, handling, insurance, recording and inspection, also increase in proportion to the volume of inventory. These costs will impair the firms profitability further. Excessive inventories carried for long-period increase chances of loss of liquidity. It may not be possible to sell inventories in time and at full value. Raw materials are generally difficult to sell as the holding period increases. There are exceptional circumstances where it may pay to the company to hold stock of raw materials. Inadequate raw materials and work-in-process inventories will result in frequent production interruptions. Similarly, if finished goods inventories are not sufficient to meet the demand of customers regularly, they may shift to competitors, which will amount to a permanent loss to the firm. The aim of inventory management, thus, should be to avoid excessive and inadequate levels of inventories and to maintain sufficient inventory for the smooth production and sales operations. Efforts should be made to place an order at the right time with the right source to acquire the right quantity at the right price and quality. An effective inventory management should Ensure a continuous supply of raw materials to facilitate uninterrupted production, Maintain sufficient stocks of raw materials in period of short supply and anticipate price changes. Maintain sufficient finished goods inventory for smooth sales operation, and efficient customer service.
Minimise the carrying cost and time, and Control investment in inventories and keep it at an optimum level.
Inventory Systems
Records pertaining to quantity and value of inventory in- hand can be maintained according to any of the following two systems: Periodic Inventory system. Perpetual Inventory system.
In case of this system the stores ledger gives balance of raw materials, work-inprogress and finished goods on a continuing basis. The basic objective of this system is to make available details about the quantity and value of stock of each item at all times. The system, thus, provides a rigid control over stock of materials, as physical stock can regularly be verified with the stock records kept in the stores and the cost office.Since the perpetual inventory system requires perpetual auditing of the system, the cost of operating the system is higher. However, because of the computer facilities, cost advantage of periodic review system is withering away and many companies are resorting to the perpetual inventory system.
all times being the most recent purchases, when a requisition for a certain type of material is presented to the store keeper, he uses the cost price of the first lot of materials received which is still on hand. If the quantity required is greater than the units remaining the first lot, he uses the cost price of the second lot, than of the third and fourth until enough material is obtained to fill the requisition.
Advantages:The FIFO method has the following advantages: a) It values stock nearer to current market prices since stock is presumed to be consisting of the most recent prices. b) It is based on cost and, therefore, no unrealized profit enters into the financial accounts of the company. c) The method is realistic since it takes into account the normal processor for utilizing slash selling those materials/goods which have been longest in stock.
Disadvantages:
The method suffers from the following disadvantages a) It involves complicated calculation and hence increases the possibility of clerical errors b) Comparison between different jobs using the same type of materials becomes sometimes difficult. c) A job commenced a few minutes after another jobs may have to bear an entirely different charges of materials because the first job completely exhausted the supply of materials of particular lot. The FIFO method of valuation of inventories is particularly suitable in the following circumstances. a) The materials / goods are of a perishable nature b) The frequency of purchases is not large. c) There on only moderate fluctuations in the prices of materials or goods purchased. d) Materials are easily identifiable as belonging to a particular purchase lot.
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Advantages
The method has the following advantages 1) It takes into account the current market conditions while valuing the materials issued to different jobs or calculating the cost of goods sold. 2) The method is based on cost and, therefore, no unrealized profit or loss is made on account of use of this method.
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There are different methods of classifying the item for inventory control purposes, ABC Analysis (Always better control) Here annual values of consumption Of items are considered and are Classified as A, B and C class items HML Classification (High- medium-Low Price) . Here unit price of the materials are Considered.
FSN Classification (Fast, Slow, and Non- moving) Based on the materials issue from The stores, this analysis is carried Out.
FSN Analysis
This classification is based on the consumption pattern of the materials. i.e. movement analysis forms the basis. Here the items are classified into Fast moving, slow moving, and non- moving on the basis of frequency of transaction. FSN analysis is especially useful to combat obsolete items whether spare parts are raw materials or components. It helps in arrangement of stocks in stores and their distribution and handling methods. The main aim of this analysis is to control obsolescence of the inventories. If there is a rapid change in technology then this classification will have to be updated more often. FSN analysis is stock turnover ratio based analysis. Stock turnover ratio is defined as the ratio of annual consumption of a material divided by its average inventory i. e. The items can be classified into three categories viz
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FAST MOVING (F) Those items whose stock turnover ratio is greater than 3. SLOW MOVING(S) Those items whose stock turnover ratio is between 1 and 3. NON- MOVING (N) Those items whose stock turnover ratio is below 1.
VED ANALYSIS
VED Analysis can be defined as the analysis of maintenance spares in to V Items Items of vital importance, E Items Items of essential importance, D Items Items of desirable importance. Vital importance in the way of indicating the fact that machine cant run without V Item. Essential importance in the sense impart that machine can run but without parameters as such efficiency, noise reduction etc. Desirable importance in the way denotes machine can run but factor of safety,
industrial formalities cant be satisfied. Vital (V) spares are those whose non availability results in very high loss due to production down and a very high cost due to emergency purchases. Essential (E) spares are those non availability is expected to cause moderate production down time loss. Desirable (D) spares are those whose non availability does not result into any significant production down loss.
value, which is obtained by the multiplication on unit price by the annual consumption quantity. The ABC classification process is an analysis of a range of objects, such as finished products, items lying in inventory or customers into three categories. It's a system of categorization, with similarities to Pareto analysis, and the method usually categorizes inventory into three classes with each class having a different management control associated: A - Outstandingly important; B - of average importance; C - relatively unimportant as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and still less to C. Thus, applied in the context of inventory, it's a determination of the relative ratios between the number of items and the currency value of the items purchased / consumed on a repetitive basis: 10-20% of the items ('A' class) account for 70-80% of the consumption the next 15-25% ('B' class) account for 10-20% of the consumption and the balance 65-75% ('C' class) account for 5-10% of the consumption High value (A), Low value (C) , intermediary value (B) A,B & C , all have a purchasing / storage policy - "A", most critically reviewed , "B" little less while "C" still less with greater results. Inventory Control Application: The ABC classification system is to grouping items according to annual issue value, (in terms of money), in an attempt to identify the small number of items that will account for most of the issue value and that are the most important ones to control for effective inventory management. The emphasis is on putting effort where it will have the most effect. All the items of inventories are put in three categories, as below A Items : These Items are seen to be of high Rupee consumption volume. "A" items usually include 10-20% of all inventory items, and account for 50-60% of the total Rupee consumption volume. B Items : "B" items are those that are 30-40% of all inventory items, and account for 3040% of the total Rupee consumption volume of the inventory. These are important, but not critical, and don't pose sourcing difficulties.
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C Items : "C" items account for 40-50% of all inventory items, but only 5-10% of the total Rupee consumption volume.
Table 2.1. Table showing the suggested policy guidelines for A , B & C classes of items A(Items)(High cons Value Very strickt Cons Control Safety stock Phased delivery (Weekly) Weekly control report Maximum follow up As many sources as possible Accurate forecasts Central purchasing /storage Max.efforts to control LT To be handled by Sr.officers Middle level Can be delegated Moderate Min.clerical efforts Estimates on past data Combination purchasing Rough estimate Decentralised Monthly control report Periodic follow up Two or more reliable Quartely control report Exceptional Two reliable B (Items)Montrate Cons. value Moderate Control loose control Low safety stock Once in three months High Safety stock Once in 6 months C(Items) (low cons Value) No or very low
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The ABC analysis enables the materials manager to exercise selective control when he is confronted with a large number of items. Tighter and accurate procedures are essential for A value items relating to materials planning, forecasts, ordering, review, records, postings, revisions, lead time analysis, safety stock, materials consumption control, purchase budget, delivery schedule, Value analysis, follow- up, clerical efforts, physical stock verification, receipts, issues, stores accounting and inspection. The degree of control should rigorous for A items and should be minimum for C items. ABC analysis is also helpful to rationalize the number of orders and reduce the overall inventory. All in all, the objectives of ABC analysis can be summarized as follows: To restrict the control to and appreciable level. To concentrate on maximum degree of coverage of inventory value. Limitations of ABC Analysis ABC analysis, in order to be fully effective, should be carried out with standardization and codification. ABC analysis is based on grading the items according to the importance of performance of an item that is by V.E.D- Vital, essential and desirable analysis. Some items, though negligible in monetary value, may be vital for running the plant, and constant attention is needed. If the inventory position is analysed according to the value, commonly known as XYZ analysis, then results of ABC and XYZ analysis will be different, depending upon the nature of obsolete items. The results of ABC analysis have to be reviewed periodically and updated. However, ABC analysis is a powerful approach in the direction of cost reduction as it helps to control items with a selective approach. HML Analysis Since the annual usage is considered in case of ABC analysis, we may come across a few items which fall B category, although the unit cost i.e. (cost per piece or unit) is quite high. If controls are exercised on the basis of ABC only, the importance of these items will be
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much less then A or B items even though the inventory transaction of one unit of these items will mean quite a lot money. Therefore, it is necessary that unit cost is also considered
in order to find out the importance of the items on the basis of unit costs. This method resembles ABC classification except for the difference in the consumption value and unit value. Here the materials are classified according to their unit price as high cost items (H), medium cost items (M), and low cost items (L). This being similar to ABC analysis, usually, they are combined to arrive at a very effective satisfactory analysis. This is mainly used for controlling the purchase prices. HML analysis is the price bond analysis. This analysis is generally used for control of space. The criteria used are: HIGH(H)- Those items, which have unit price (say above rs.1000) MEDIUM (M) Those item that have moderate unit price (say between rs.100 and rs.1000). LOW(L)- Those items that have low unit price (say below rs.100)
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This is only the symptom of illness. The main causes are 1) The usage rates of spares are very low as compared to raw materials or as general stores. This causes their requirement to be highly fluctuating from period to period. 2) The range of spare rates is very large and their individual values, relatively small. Thus raise the problem of the level of control. Unfortunately, most spare parts inventory management is done at the lowest organizational level. 3) The usage rate itself is difficult to establish from past records- especially for the slow movers which form the bulk of the spare parts inventory. Little usage history is available and the material variability of usage causes over estimates of requirement.
Categories of spares
Spares can basically be classified into four categories: 1) Consumable spares 2) Replacement spares 3) Rotable spares 4) Insurance spares Consumable spares are those which due to normal wear and tear have
considerably short life and are required regularly either as replacement of parts which wear out, or as replacement of part after specified period of service.. Replacement spares are those parts or assemblies which are ordered on the basis of prior inspection against planned overhaul schedules. Rotable spares are those which are repaired after use and kept in stock to be used again. Insurance spares also called capital spares or emergency spares are those which do not wear and tear during the working life of the equipment yet they are stocked to safeguard high down time cost in the event of their breakdown.
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Ordering cost
The term ordering costs is used in case of raw materials (or supplies) and includes the entire costs of acquiring raw materials. They include cost incurred in the following activities: requisitioning, purchase ordering, transporting, receiving, inspecting and storing (store placement). Ordering costs increase in proportion to the number of orders placed. The clerical and staff costs, however, do not have to vary in proportion to the number of orders placed, and one view is that so long as they are committed costs, they need not be reckoned in computing ordering cost. Alternatively, it may be argued that as the number of orders increases, the clerical and staff costs tend to increase. If the number of orders are drastically reduced, the clerical and staff force released now can be used in other departments. Thus, these costs may be included in the ordering costs. It is more appropriate to include clerical and staff costs on a pro rata basis. Ordering cost increase with the number of orders, thus the more frequently inventory is acquired, the higher the firms ordering costs. On the other hand, if the firm maintains large inventory levels, there will be few orders placed and ordering costs will be relatively small. Thus, ordering costs decrease with increasing size of inventory.
Carrying costs
Costs incurred for maintaining given level of inventory are called carrying costs. They include storage, insurance, taxes, deterioration and obsolescence. The storage costs comprise cost of storage space (warehousing cost), stores handling costs and clerical and staff service costs (administrative costs) incurred in recording and providing special facilities such as fencing, lines, racks etc. EOQ is calculated by using the following formula EOQ =
Where, EOQ = A O = = Economic Order Quantity Annual consumption or annual requirement Ordering cost
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Carrying cost
Reorder Point
The problem, how much to order, is solved by determining the economic order quantity, yet the answer should be sought to the second problem, when to order. This is a problem of determining the reorder point. The reorder point is that inventory level at which an order should be placed to replenish the inventory. To determine the reorder point in certainty, we should know: a) Lead time b) Average usage, and c) Economic order quantity. Lead time is the time normally taken in replenishing inventory after order has been placed. By certainty we mean that usage and lead time do not fluctuate. Under such a situation, reorder point is simply that inventory level which will be maintained for consumption during the lead time. That is: Reorder point = Lead Average usage
Safety stock
The reorder point was computed under the assumption of certainty. It is difficult to predict usage and lead time accurately. The demand for material may fluctuate from day-to-day or from week-to-week. Similarly, the actual delivery time may be different from the normal lead time. If the actual usage increases or the delivery of inventory is delayed, the firm can face a problem of stock-out which can prove to be costly for the firm. Therefore, in order to guard against the stock-out, the firm may maintain a safetystocksome minimum or buffer inventory as cushion against expected increased usage and/or delay in delivery time
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1.2.
OBJECTIVES
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1.3.
don't have too little. Since there can be substantial costs involved in straying above and below the optimal range, careful inventory management can make a huge difference in the profitability of a business. Although the concept is simple, the process of getting the right balance can be quite a complex and time consuming task without the right technology. Inventory Management is very important for Reid and Taylor. It enables the business to meet or exceed expectations of the customer by making the product readily available. If managed properly, it can help the organization reduce its costs, achieve economies of scale and prepares the organization for uncertainty. The importance of proper management of materials need hardly be emphasized in a developing country like India considering the fact that crores together worth of materials and components enter into production process each year. In any manufacturing industry, nearly 60-70% of the total funds employed are tied up in current assets, of which inventory is the most significant component. In the cost structure of most of the products materials constitute 40-60% of the total cost again pointing to the need for proper budgeting and control of materials expenses. Firm also maintain a fourth kind of inventory, supplies or stores and spares. Supplies include office and plant cleaning materials like soap, brooms, oil, fuel, light bulbs etc. These materials do not directly enter production, but are necessary for production process. Usually, these supplies are small part of the total inventory and do not involve significant investment. Therefore, a sophisticated system of inventory control may not be maintained for them. In a competitive environment, no customer will be willing to pay the enhanced price and the manufacturer may well end up with losing his existing business. Company has its own limitation. Firstly marketing may find it difficult to improve sales due to stiff competition. Secondly production needs to be raised which in turn needs additional resources by way of capital man power etc. since capital is scarce, this is also not a practical solution to improve profits.
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That leaves only cost effective techniques such as Reduction in material cost by using superior design which needs less material or saves on labour Inventory reduction and control by stopping wastage or leakage by
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To maintain a large size of inventories of raw material and work iniprocess for efficient and smooth production and of finished goods for uninterrupted sales operations
To maintain a minimum investment in inventories are to maximize profitability Minimize the carrying cost and time Control investment in inventories and keep it an optimum level
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Detail study about all the materials was not possible because of time limit.
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1.6 REVIEW OF LITERATURE 1.M.Tawfic Mady, Both inventory investments and structure in a sample of 44 manufacturing companies representing five industry groups in Egypt are investigated. The study reveals that the type the type of industry is a determinant factor of both the inventory to total Assets Ratio (AIR) and the inventory structure at the firm level. AIR indicates significant positive correlation with the Materials Cost Ratio (MCR), the Finished Product Inventory Ratio (FPR), and the others Inventory Ratio (OTR), but a negative correlation with the Raw materials inventory Ratio (RMR). The study also shows a negative correlation between RMR and the companys Value Added (VAD). With more vertical integration a firm can reduce its RMR. The study confirms the effect of the type of production-inventory system on the companys work-in-process inventory Requirements (WPR). WPR was relatively low in both the engineering and food groups.
2.Rashid Ameer, This papers examines the role of a particular class of Institutional investors, domestic and foreign banks, in corporate decisions that have liquidity implications such as inventory and cash management, Using a sample of 256 nonfinancial listed firms in six Asian countries over the period of 2002-2005, this paper shows that foreign banks improve inventory and cash management practices, due to their superior monitoring of the managers. The disproportionate numbers of the institutional investors across industrial sectors in these Asian countries seem to suggest that some industrial sectors have stable demand of their products, such as in consumer goods sector, which is an attraction, for these institutional investors. Furthermore, the paper finds that forward-looking government policies are crucial to entry of these institutional investors in the developing countries. The research findings have implications for board structure and corporate governance standards. Hsu- Hua Lee, In this research, a cost benefit model is developed for supporting investment strategies about inventory and preventive maintenance in an imperfect production system. The effect of such investments on the return is expressed as a function of measurable variables. Using this model, the decision maker can decide
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whether investments in inventory are preventive maintenance are necessary and how much to invest. This investment model is developed for an imperfect production system with imperfect production system with imperfect product quality and supplied quantity. Investments in inventory and preventive maintenance increase service level for the customer and reduce the proportion of defective products, and hence affect stock out and backlog of supplied products and the delivery time to the customer. This model includes in its scope investment, inventory and preventive maintenance, manufacturing cost, inventory backlog cost stock out cost, and delay cost. This model can be used to evaluate the effects of investments on the financial cost/benefit and other relevant critical performance measures. This model can be solved by an iterative process using the sequential quadratic programming method. The optimal investment in inventory with respect to the proportion of defective items can be obtained first, and then other relevant costs can also be obtained. Stephen E.Bechtold and Donald A.Nast, This paper critically examines and compares the ROQ inventory model, which is based on a criterion of maximizing return on inventory, with the familiar EOQ inventory model, which results from the criterion of inventory. The EOQ model generally encourages a larger investment in inventory than the investment suggested by the ROQ model. It is shown that this additional investment always earns at a rate that is never less than the opportunity cost of capital, and therefore, maximizes shareholder wealth. It is also demonstrated that the ROQ may lead to unrealistically high order frequencies. The relationship between inventory investment and the real interest rate has been difficult to assess empirically. Recent work has proposed a linear-quadratic inventory model with time varying discount factor to identify the effects of the real interest on inventory investment. The authors show that this framework does not separately identify the effects of real interest rate on inventory investment from variables that determine the expected marginal cost of production. In other words, the model does not deliver a testable restriction on the impact of interest rates on inventory investment. The authors highlight the consequences for both short and long-run empirical analyses. They conclude that understanding the relationship between inventory investment and the real interest rate continues to be a theoretical and empirical challenge for macro economists.
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wheels, looms, and spinning processes changed clothing manufacture forever. rad trade , as it is referred to in the UK and Australia is the manufacture, trade and distribution of textiles. There were various stages-from a historical perspective- where the textile industry evolved from being a domestic small-scale industry, to the status so supremacy it currently holds. The cottage stage was the first stage in its history where textiles were produced on a domestic basis. During the Industrial Revolution, new machines such as spinning wheels and handlooms came into the picture. Making clothing material quickly became an organized industry- as compared to domesticated activity it had been associated with before. A number of new innovations led to the industrialization of the textile industry in Great Britain.
if
Rejection bay
Not Ok Ok
Holding Stores
Stores Procedure
To ensure 100% uptime of all manufacturing activity as related to stores function.
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check for purchase order on dc/invoice Unpack the material, check for quantity, specification, correctness of the material and acknowledge.
If found damaged/excess supplied/short supplied, generate discrepancy note and send a copy to purchase department for information and further action.
Prepared goods received note (GRN) and send it to the concerned department head for inspection.
If quality accepted, take concerned head of Department signature and store the material in pre-determined location.
If rejected based on concerned H.O.Ds remark prepare rejection report and arrange to send the material back to the supplier through non-returnable gate pass and inform purchase department and accounts for further action.
In case of materials unloaded at shop, stores put the tag materials for inspection/can have demarcated physical area for materials under inspection. And same procedure may be followed for regularization.
2.6 Inspection
Receiving inspection checks the material with respect to purchase order for specification and quality. If found ok, accepted sticker will be put on the material, prepare final stores document. Stores lift the material and storage will be made in predetermined area. If found not ok, a rejected sticker will be put on the material. Stores lift the material and keep it in rejected stores. A copy of rejection report will be given to purchase for further action. Inspection report may be prepared for vendor rating analysis
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2.9 Storage
Codification of materials. Put identification tags on material.
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Allot a particular area for storage of items and update the location in the system for easy traceability.
Separate stores should be made for shelf life items, paints, resin and hardeners, chemicals etc.,
Shelf life items should be periodically checked for its validity. Electronic/Electro static devises should be stored in specific recommended ESD area only-can be stored in electronic lab.
Storage racks, storage shelves/bins should be properly identified. Ensure proper handling and storing of materials in a dust free area. Maintain good housekeeping.
2.11 Passing
Receive inspection report
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If material is ok, check for identification tag, accepted sticker and quantity and move the material to holding stores.
If material is rejected, check for rejected sticker, rejection report, and quantity. Put rejected tag giving all the details like PO NO., date, quantity, and reason for rejection. Lift and store the material in rejected stores.
Purchase takes the responsibility of sending back the rejected material in coordination with stores for preparation of RGP/NRGP etc.,
Clear invoice/bill and pass it to accounts/ finance. Rejected materials can be replaced on one-one basis and can be regularized on the same invoice /bill.
In case of excise duty related materials, excise duty gate pass should be handed over to the concerned to avail the Modvat facility.
2.13 Reports
Stores must be able to generate all inventory-related reports as required by the management. Stores should ensure availability of right material in right place as per stock ledger during inventory checking by the statutory auditors.
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these stores records are valuable pieces of information that form the base for further reference some of the records are follow.
2.15 Bincard
This is a card, which is attached to each bin, rack, shelf, or other container for stores. A record of all materials entering or leaving the bin and balance of materials in hand is kept in this card. The storekeeper enters these cards and only the quantities are recorded. These should tally with the quantities of materials as shown in the relevant account in the stores ledger. This will enable the storekeeper ascertain the quantity of materials in stock and remind him to send requisition of fresh stock, when the minimum stock has been reached. In some factories duplicate bin cards are being used. In such cases one card is attached to the bin and the storekeeper on his table for ready reference keeps the duplicate. The inspectors check bin cards from time to time and they put their initials and take down their discrepancies.
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S.NO
COMPANY DETAILS
INFORMATION
YEAR OF STARTING
2008
MANAGING DIRECTOR
3 4 5
TEXTILE TRADING CONCERN 500000(EACH PERSON INVESTED 100000) JHOTHYS 246,THENI MAIN ROAD KALAVASAL MADURAI-625016.
TEXTILE ADDRESS
Jhothys textile is one of the leading textile in Madurai city it was started by Mr.Muniyandi with his four sons 1.m.jothyvel 2.m.thirupathi 3.Balachander 4.manikandan each person invested 100000 rs for their business. previously they run G-FIX tailoring after that in 2004 they started FASHION PARK it is also textile in
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2008 they expand fashion park in the name of JHOTHYS they relaunch their textile in the name of jhothys. In 2008 there are 30 employees are worked in jhothys textile after that it was increasd mearly 70 employees. They have lot of collection in dress materials they purchase material in various places like Chennai.madurai,Bangalore,Mumbai.calcutta etc. Products Suits Jackets Trousers Shirts T-Shirts golfing Sarees Chudithar Casual wears
They also entered into export business also they are exporting food products to foreign countries they spend minimum amount for promotional expenses compare then material they have maximum stock in readymade materials they concentrated readymade.
To provide every opportunity to our business associates and employees to realize their potential to the fullest extent.
3.2. Objectives
To be Indias leading textile group and a world class entity. To continue and expand the leadership position in uniforms/ workday materials. To consolidate and expand in the household material sector. To reinforce and expand the position in shirting and prints. To enter made-ups and value added products. To expand exports to 20% of group activity. To enter retailing of apparel and soft goods country-wide in a big way. To become a global player in textiles.
Wool Linen & Wool Silk Polyester Blends Polyester Viscose Blends Polyester Viscose worsted Value added Polyester Viscose blends
Apparel
In the ready to wear segment, jothys has launched Suits Jackets Trousers Shirts T-Shirts golfing
Opportunities
Expand core business(es). Widen product range. Expand into foreign markets. Seek fast market growth. Support from banks and financial institutions. Investors. Overcome barriers to entry. Enlarge corporate portfolio.
Threats
Increases in domestic competition. Increase in foreign competition. Changes in economic factors. Downturn in economy.
CHAPTER-4
RESEARCH METHODOLOGY
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Research methodology is a way to systematically analyse the research subject and it may understood as a science of study how research is done scientifically.
Analytical research
Researcher has adopted analytical research in this study. Analytical research is to use facts or information already available and analyze these to make a critical evaluation of the problem. 4.2 Source of Data Collection
Secondary data
This was collected from the annual reports, balance sheets, organization records.
Secondary data
Secondary data collected from past records. Secondary data collected from company annual report. Secondary data collected from company website.
Regression
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Concept The term regression literally means a backward movement. Francis Gal ton first used the term in the late nineteenth century. He studied the relationship between the height of parents and that of children. Galton observed that although tall parents had tall children and similarly short parents had short children in a statistical sense, but in general the children's height tended towards an average value. In other words, the children's height moved backward or regressed to the average. However, now the term regression in statistics has nothing to do with its earlier connotation of a backward movement. Regression analysis can be described as the study of the dependence of one variable on another or more variables. In other words, we can use it for examining the relationship that may exist among certain variables. For example, we may be interested in issues like how the aggregate demand for money depends upon the aggregate income level in an economy. We may employ regression technique to examine this. Here, Aggregate demand for money is called the dependent variable and aggregate income level is called the independent variable. Consequently, we have a simple demand for money function. In this context, we present the following table to show some of the terms
that are also used in the literature in place of dependent variable and independent variable.
Anova
In statistics, analysis of variance (ANOVA) is a collection of statistical models, and their associated procedures, in which the observed variance in a particular variable is partitioned into components attributable to different sources of variation. In its simplest form, ANOVA provides a statistical test of whether or not the means of several groups are all equal, and therefore generalizes t-test to more than two groups. Doing multiple two-sample t-tests would result in an increased chance of committing a type I error. For this reason, ANOVAs are useful in comparing two, three, or more means. One-way Analysis of Variance Test (ANOVA) It is useful for inter-unit comparisons.
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Null Hypothesis for Financial Efficiency Analysis 1. There is no any significant difference between the gross profit ratios of textiles companies. 2. There is no any significant difference between the operating ratios of textiles companies. 3. There is no any significant difference between net profit ratios of textiles companies. 4. There is no any significant difference between the Return on gross capital employed ratio of textiles companies. 5. There is no any significant difference between the Return on net capital employed ratios of textiles companies. 6. There is no any significant difference between the earning per share ratios of textiles companies.
Chi-square Test
Chi-square test is useful for inter comparison. For establishing casual relationship regression line of variable Y on variable x has been calculated and with the help of regression equation of Y on X value of YC has been computed for appropriate variables as per the statement of Null Hypothesis (Ho) There is no difference between actual and computed variables on the regression line in selected textiles companies of India. If the calculated value of Chisquare (X 2) is higher than the table value of Chisquare, The arising differences are significant and hence Null Hypothesis is rejected otherwise accepted. Alternative hypothesis (Ha): The statement of alternative hypothesis describe, as there is significant difference in actual and computed variables if the null hypothesis is accepted, the alternative hypothesis will be rejected or vice versa.
contrast, the rejection of the null hypothesis will reveal that there is significant difference between the productivity ratios of the units, suggesting the usefulness of comparisons the level of significance used in this case was at 5 percent, while degree of freedom was (total no. of units 1) or (7-1=6) in the present study. As per empirical study the selfexistent assumptions are as under: 1. The data of industry by the postulate. However it is possible to sketch conclusions of the individual company. 2. There are such areas where the performance can be improved by the effective management of resources. These areas include production, productivity, financial efficiency and liquidity position. 3. There are certain controllable and uncontrollable factors which are effective to the profit of the companies. It is hypothesized and by controlling the controllable factors, the company can justify their profit performance 4. The selected units faced problems during the study period and presently also. If the problems are tackled properly the performance of liquidity, productivity, and financial efficiency stand and will be improved as per determined.
Definition of 'T-Test'
A statistical examination of two population means. A two-sample t-test examines whether two samples are different and is commonly used when the variances of two normal distributions are unknown and when an experiment uses a small sample size. For example, a t-test could be used to compare the average floor routine score of the U.S. women's Olympic gymnastic team to the average floor routine score of China's womens team.
T TEST
A t-test is any statistical hypothesis test in which the test statistic follows a Student's t distribution if the null hypothesis is supported. It is most commonly applied when the test statistic would follow a normal distribution if the value of a scaling term in the test statistic were known. When the scaling term is unknown and is replaced by an estimate based on the data, the test statistic (under certain conditions) follows a Student's t distribution.
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Correlation
Concept In the introduction to this chapter, we have already referred to a mathematical model of some real-world observable economic phenomenon. In general, a model consists of some functional relationships, some equations, some identities and some constraints. Once, a model like this is formulated, the next issue is to examine how this model works in the real-world situation, for example, in India. This is what is known as the estimation of an econometric model. It may be mentioned here that Lawrence Klein did some pioneering work in the formulation and estimation of such models. In fact, many complex econometric models consisting of hundreds of functions, equations, identities and constraints have been constructed and estimated for different economies of the world, including India, by using empirical data. The estimation of such complete macro-econometric models, however, involves certain issues that are beyond our scope. As a result, we shall abstract from such kind of a model and focus on a single equation economic relationship and consider its empirical verificatioa For example, in the Keynesian model of income determination, consumption function play's a pivotal role. The essence of this relationship is that consumption depends on income. We may specify a simple consumption function in the form of a linear equation with two constraints: one, autonomous part of consumption being positive and two, marginal propensity to consume being more than zero but less than one.
Ratio analysis
Introduction The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios (quantitative relationship between figures and groups of figures). It is with the help of ratios that the financial statements can be analyzed more clearly and decisions made from such analysis.
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Meaning of Ratio A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to Accountants Head book by Wixon, Kell and Bedford, a ratio is an expression of the quantitative relationship between two numbers.
Activity ratios
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Funds of creditors and owners are invested in various assets to generate sales and profits. The better the management of assets, the large amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales.
Inventory turnover
Inventory turnover indicates the efficiency of the firm in producing and selling its product. It is calculated by dividing the cost of goods sold by the average inventory: Inventory turnover = cost of goods sold
Average inventory
The average inventory is average of opening and closing balances of inventory. In a manufacturing company inventory of finished goods is used to calculate inventory turnover.
Debtors turnover
A firm sells goods for cash and credit. Credit is used as a marketing tool by a number of companies. When the firm extends credits to its customers, debtors are created in the firms accounts. Debtors are convertible into cash over a short period and, therefore, are included in current assets. The liquidity position of the firm depends on the quality of the debtors to a great extent. Financial analysts apply three ratios to judge the quality or liquidity of debtors: a. Debtors turnover = credit sales/Average debtors b. Collection period = 360 days/ Debtor turnover ratio
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SL NO
YEAR
RAWMATERIAL
SALES
1 2 3 4
Chart 5.1. Chart showing the sales and raw materials consumed for 4 years
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53
Analysis Study on raw material consumption and sales have been carried out from 2008 to 2012. Interpretation Percentages of raw materials on sales for 4 years are as follows Year 2008-09 2009-10 2010-11 2011-12 Percentage 50.76 34.69 14.8 65.77
From this we can find out that the percentage of raw materials consumption decreases in the year 2009-10 and increases in 2011-12. It shows that in these years cost has increased in the organization.
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Table 5.2. Table showing the regression analysis taking two variables they are raw materials and Sales.
SALES(x) RAWMATERIAL(y) dx=xA(622.69) 322.19 380.49 622.69 329.02 163.55 132.78 92.16 198.47 -300.5 -242.2 0 -293.67 90300.25 58660.84 0 86242.0689 dx2 Dy=YA(92.16) 71.39 40.62 0 106.31
X=413.5975
Y=146.74
dx=209.0925
dx2=235203.1589
dy=54.58
dy2=4512.08315
dxdy=-15627.729175
-73923.18535
=-1.0787 Analysis: Regression analysis has been carried out taking sales and raw material consumption into consideration for 4 years.
Inference Regression analysis is a powerful statistical tool used to know the relationship between two variables in any field. From this analysis regression of 1.0787 shows the positive relationship between sales and raw materials. From this it shows that there is proper relationship between cost and income of the organization. It shows that company consuming good proportion of raw materials every year.
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Table 5.2.1 Table showing average creditors and purchases for 4years
SL.NO 1 2 3 4 YEAR 2008-2009 2009-2010 2010-2011 2011-2012 PURCHASES 163.55 132.78 92.16 198.47 AVERAGE CREDITORS 27.579 19.091 12.253 24.611
Calculation of Creditors Turnover Ratio And Credit Payment Period Creditors Turnover Ratio = CTR for 2008-2009 CTR for 2009-2010 Net Purchases/Average creditors
CTR for 2010-2011 = 92.16/12.253=7.521423324900024 Times CTR for 2011-2012 = 198.47/24.611 = 8.064280199910609 Times
Calculation of Credit Payment Period Credit Payment Period = 360 days/ Creditors Turnover Ratio
CPP For 2008-2009 = 360 days/5.930236774357301 = 60.70583919290737 Days CPP For 2009-2010 = 360 days/6.955109737572678 = 52.48181746 Days CPP For 2010-2011 =360 days/7.521423324900024 = 48.50445465 Days CPP For 2011-2012 = 360 days/8.064280199910609 = 45.26245289 Days
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Analysis Creditors turnover ratio and credit payment period has been calculated for 4 years from 2008-09 to 2011-12.
Interpretation From the study we can say that companys creditors turnover ratio is neither low nor high. It taking advantages of credit and its average credit payment period is 45 to 50 days.
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TABLE 5.3 Table showing the annual turnover of the Raw materials during the year 2008-09 Materials Chudithaar Shirts Cotton Sarees Silk Sarees TOTAL Source: Secondary Data Collection Turnover (Rs) 860000 540000 690000 450000 2540000 Percentage of turnover 33 21 27 19 100
Inference:
From the above table 5.3, it is cleared that 33% of the turnover from chudithaar, 21% of the turnover from shirts, 27% of the turnover from cotton sarees, 19% of the turnover from silk sarees. From this analysis it is inferred that majority of the turnover is come from chudithaar materials in the year 2008-09.
Chart-5.3
Chart Showing annual turnover of the Raw materials during the year 2008-09
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TABLE 5.4
Table showing the annual turnover of the Raw materials during the year 2009-10 Materials chudithaar shirts Cotton sarees Silk sarees TOTAL Source: Secondary Data Collection Turnover (Rs) 910000 610000 1080000 540000 3140000 Percentage of turnover 29 19 35 17 100
Inference:
From the above table 5.4, it is cleared that 29% of the turnover from chudithaar, 19% of the turnover from shirts, 35% of the turnover from cotton sarees, 17% of the turnover from silk sarees. From this analysis it is inferred that majority of the turnover is come from cotton sarees materials in the year 2009-10. Chart-5.4 Chart Showing annual turnover of the Raw materials during the year 2009-10
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TABLE 5.5 Table showing the annual turnover of the Raw materials during the year 2010-11 Materials chudithaar shirts Cotton sarees Silk sarees TOTAL Source: Secondary Data Collection Turnover (Rs) 1190000 760000 1050000 680000 3680000 Percentage of turnover 32 21 29 18 100
Inference:
From the above table 5.5, it is cleared that 32% of the turnover from chudithaar, 21% of the turnover from shirts, 29% of the turnover from cotton sarees, 18% of the turnover from silk sarees. From this analysis it is inferred that majority of the turnover is come from chudithaar materials in the year 2010-11. Chart-5.5 Chart Showing annual turnover of the Raw materials during the year 2010-11
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TABLE 5.6 Table showing the annual turnover of the Raw materials during the year 2011-12 Materials chudithaar shirts Cotton sarees Silk sarees TOTAL Source: secondary Data Collection Turnover (Rs) 1250000 910000 1230000 790000 4180000 Percentage of turnover 30 22 29 19 100
Inference:
From the above table 5.6, it is cleared that 30% of the turnover from chudithaar, 22% of the turnover from shirts, 29% of the turnover from cotton sarees, 19% of the turnover from silk sarees. From this analysis it is inferred that majority of the turnover is come from chudithaar materials in the year 2011-12. Chart-5.6 Chart Showing annual turnover of the Raw materials during the year 2011-12
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TABLE 5.7
Table showing the analysis of the profit from chudithaar materials for 4 years Year 2008-2009 2009-2010 2010-2011 2011-2012 TOTAL profit 160000 110000 250000 330000 850000 Material consumption 700000 800000 940000 920000 3360000 Percentage of profit 23 14 27 36 100
Inference:
From the above table 5.7, it is cleared that 23% of the profit during the year 2008-09, 14% of the profit during the year 2009-10, 27% of the profit during the year 2010-11, 36% of the profit during the year 2011-12. From this analysis it is inferred that majority of the profit is come from chudithaar materials in the year 2010-12. Chart-5.7 Chart showing the analysis of the profit from chudithaar materials for 4 years
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TABLE 5.8 Table showing the analysis of the profit from shirts materials for 4 years
Year 2008-2009 2009-2010 2010-2011 2011-2012 TOTAL profit 140000 135000 160000 210000 645000 Material consumption 400000 475000 600000 700000 2175000 Percentage of profit 35 28 27 30 100
Inference:
From the above table 5.8, it is cleared that 35% of the profit during the year 2008-09, 28% of the profit during the year 2009-10, 27% of the profit during the year 2010-11, 30% of the profit during the year 2011-12. From this analysis it is inferred that majority of the profit is come from shirt materials in the year 2008-09.
Chart-5.8 Chart showing the analysis of the profit from shirts materials for 4 years
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TABLE 5.9
Table showing the analysis of the profit from cotton saree materials for 4 years Year 2008-2009 2009-2010 2010-2011 2011-2012 TOTAL profit 190000 180000 160000 230000 760000 Material consumption 500000 900000 890000 1000000 3390000 Percentage of profit 38 20 18 24 100
Inference:
From the above table 4.9, it is cleared that 38% of the profit during the year 2008-09, 20% of the profit during the year 2009-10, 18% of the profit during the year 2010-11, 24% of the profit during the year 2011-12. From this analysis it is inferred that majority of the profit is come from cotton saree materials in the year 2008-09. Chart-5.9 Chart showing the analysis of the profit from cotton saree materials for 4 years
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TABLE 5.10
Table showing the analysis of the profit from silk saree materials for 4 years
Year 2008-2009 2009-2010 2010-2011 2011-2012 TOTAL profit 110000 90000 100000 190000 490000 Material consumption 340000 450000 580000 600000 1970000 Percentage of profit 32 20 17 31 100
Inference:
From the above table 5.10, it is cleared that 32% of the profit during the year 2008-09, 20% of the profit during the year 2009-10, 17% of the profit during the year 2010-11, 31% of the profit during the year 2011-12. From this analysis it is inferred that majority of the profit is come from silk saree materials in the year 2008-09. Chart-5.10
Chart showing the analysis of the profit from silk saree materials for 4 years
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OBSERVED FREQUENCEY Factors/ rank Monetary details Promotion Progression Suspension dismissal
Total
Totally Agree
Agree
Disagree
Totally Disagree
Total
0 1 1 0 0
1 2 1 0 0
13 8 4 0 0
1 2 5 0 0
22 15 13 0 0
50
11
25
EXPECTED FREQUENCY
Totally Agree Neither Agree or Disagree 4.60 4.20 2.20 0.00 0.00 11 Totally Disagree
Agree
Disagree
Total
22 15 13 0 0 50
Calculated value = 12.08 Degree of Freedom [d.f] = (r-1) (c-1) = (5-1) (5 1) = 4* 4 = 16 Level of significance = 0.05 Table value [T.V] = 25.32
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INFERENCE
Calculated value is lesser than the table value. Hence H1 is accepted (i.e.) there is a relationship between performance strategy in organization and the goals of the organization. Observed Frequency (O) 0 1 1 0 0 1 2 1 0 0 7 2 2 0 0 13 8 4 0 0 1 2 5 0 Expected Frequency (E) 0.32 1.42 0.26 0.00 0.00 1.25 1.68 1.07 0.00 0.00 4.60 4.20 2.20 0.00 0.00 12.34 5.64 7.02 0.00 0.00 3.36 2.56 2.08 0.00
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(Oi-Ei)2 0.18 0.46 0.07 0.00 0.00 0.46 0.52 0.00 0.00 0.00 3.24 1.44 0.36 0.00 0.00 2.76 0.13 4.08 0.00 0.00 5.57 0.31 8.53 0.00
(Oi-Ei)2/Ei 0.42 1.45 0.26 0 0 0.28 0.41 0.00 0 0 0.77 0.45 0.14 0 0 0.24 0.02 0.58 0 0 1.66 0.12 4.10 0
0 TOTAL
0.00 50.00
0.00 28.10
0 10.89
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We want to know: is current turnover and past turnover related according to this data, and if they are related, how can I use the current turnover GPA to predict the past turnover GPA? There are two answers to give:
first, are they related, and Second, how are they related
We will first discuss how to compute and interpret the so-called correlation coefficient to help decide whether two numeric variables are related or not. In other words, it can answer our first question. We will answer the second question in later sections. First, let's define the correlation coefficient mathematically
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Definition of the Correlation Coefficient If your data is given in (x,y) pairs, then compute the following quantities:
Please find below the calculation of Pearson's coefficient along with all the working
1. Create a table of the variable scores and the product of the two scores.
Score X 2 8 10 25 5 50
Score Y 5 8 13 20 4 50
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3.
Substitute the values obtained from the table into the equation: 50 x 50 724 5
502 ) 5
4.
(818
(674
224
(318 )
(174 )
224
5533 2
224 235.227
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5.13. T TEST
A t-test is any statistical hypothesis test in which the test statistic follows a Student's t distribution if the null hypothesis is supported. It is most commonly applied when the test statistic would follow a normal distribution if the value of a scaling term in the test statistic were known. When the scaling term is unknown and is replaced by an estimate based on the data, the test statistic (under certain conditions) follows a Student's t distribution. Please find below the calculation of the dependent t-test along with all the working: 1. Create a table of the variable scores and the product of the two scores.
X1 2 8 10 25 5
X2 5 8 13 20 4
d (X2 X1) 3 0 3 -5 -1 0
d2 9 0 9 25 1 44
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3. Substitute the values obtained from the table into the equation: 0 5(44) (0)2 51
0 220 0 4
0 5 5
0 7.41 6
75
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4. Consult a t-distribution table to discover whether your t-value indicates a statistically significant difference:
Sig. Level (Two-tailed) df 3 0.10 -2.045 P > 0.10 0.05 -2.876 P > 0.05 0.01 -4.634 P > 0.01 0.001 -7.89 critical t-values
The difference between means is not significantly different at the above significance levels.
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CHAPTER-6 6. FINDINGS
Study has been conducted on sales and consumption of raw materials from 200809 to 2011-12 and the graph has been plough for the same. The percentage of raw materials consumed on sales has been calculated. The result of the study is as follows Year 2008-09 2009-10 2010-11 2011-12 Percentage 50.76 34.69 14.8 65.77
From this we can find out that raw material consumption has come down in the year 2008-09 and 2010-11. But in the year 2011-2012 percentage of raw materials consumed increased respectively. Technique adopted in company for inventory control is ABC analysis, FIFO method, EOQ Technique There is adequate space for storing various types of material in stores department. There is adequate recording all the transactions in the stores department. After receiving materials they codifying materials and alpha numeric method which helps for easy identification of the materials The Textile is large manufacturers of suitings they are maintaining good inventory control systems in the organization to get competitive advantages in the market. They are taking proper method of inventory management to cope up with production and consumer preferences.
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Most of the times higher management will take decision regarding level of inventories to be maintained and ordering quantity based on external and internal factors.
In this Textiles some of the inventories are maintained only minimum level due to rare consumption of such materials
In raw materials like Polyester and wool dyes the maintenance of safety stocks and maximum level varies from theoretical aspects to practical maintenance.
CHAPTER-7 7 SUGGESTIONS
This textile is a largest manufacturing company in Madurai it should set standard or benchmark with global competitors. This textile can use Just in time for some of the materials which they can procure Very easily from nearest city like switches, bulbs etc. It is a largest manufacturer of worsted suiting they should use special ERP packages available to increase its efficiency in material handling They can use SAP ERP packages for effectiveness of their material handling. In materials like Polyester dyes and wool dyes they are maintaining high level of safety stock than actual requirement. So they can reduce the safety stock level by that can reduce their idle investments in materials and they can invest the same in profitable investment opportunities. They exist a positive relationship with sales and raw materials consumed. The same has to be maintained in future also. To be competitive in the market and to increase the market share they have to concentrate on cost reduction. management. The company should concentrate on non moving materials. So they can reduce inventory cost. This is possible through proper inventory
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The company should concentrate on selling goods at low cost with best quality by reducing cost to get competitive advantage in the market.
Company can use material turnover ratio to find whether raw materials were too much, adequate or inadequate by using following formula
CHAPTER-8 8 CONCLUSION
Inventory management is one of the basic important functions of every business. An average manufacturing organization in India has more than 60% of its current assets invested in inventories. Therefore, by following proper efficient inventory management principles, the company can certainty reduces the cost of inventory and can improve its bottom line and thereby becoming competitive. It is a Largest Manufacturing company and it consumes huge raw materials which cost crores of rupees. So it should take effective control over inventories not only for raw materials but also for finished goods as well. In any manufacturing company cost reduction can be possible only by effective inventory control. So to reduce the cost and to be competitive in the market inventory management and inventory control is necessary for this company.
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This concern maintained a systematic raw material stores which is very near to production departments. It has adopted very good inventory control techniques, to achieve the effective production
Production and Inventory Control Handbook by James H. Greene World Class Production and Inventory Management, 2nd Edition by Darryl V. Landvater
Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times by Rajan Suri
Websites
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CHAPTER-10 APPENDIX
JHOTHYS. 246. THENI MAIN ROAD, KALAVASAL, MADURAI 625 016.
Income
Operating income 349.79 238.50 26.84 15.95 14.30 4.11 299.70 50.10 1.54 51.64 20.48 219.69 140.03 21.77 14.24 8.94 3.71 188.69 31.00 0.87 31.87 20.19
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171.04 117.26 19.83 12.30 8.84 3.65 161.88 9.16 1.12 10.27 18.84
157.87 95.60 18.45 9.83 9.23 3.06 136.17 21.70 1.27 22.97 12.90
143.03 82.67 15.76 7.79 9.06 3.19 118.47 24.56 0.88 25.44 8.82
Expenses
Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses
Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 11.34 11.02 10.53 8.01 5.76 19.82 0.66 -19.09 2.06 10.85 6.38 0.16 -5.24 1.74 4.43 13.45 0.50 -13.85 0.31 6.42 0.56 -0.19 0.26 2.90 0.66 -0.46 -0.04 0.09 -0.08 -0.27 13.55 0.27 -13.49 3.13 6.80 27.71 14.15 13.88 27.51 24.86 1.98 0.12 0.41 0.33 0.02 0.07 25.40 14.15 13.88 27.37 24.38
Balance sheet
Sources of funds
Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus 19.82 80.88 230.01 330.71 7.31 6.45 24.35 201.65 239.77 5.87 1.80 22.12 155.17 184.96 5.87 35.66 144.35 1.69 187.58 5.87 31.72 86.32 25.07 148.98
Loan funds
Secured loans Unsecured loans Total
Uses of funds
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block 236.99 83.83 153.16
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Mar ' 12 Mar ' 11 Capital work-in-progress Investments 8.36 0.03 269.32 100.16 169.16 330.71 0.03 43.37 3.52 144.64 69.78 74.86 239.77 31.55
Mar 1 Mar ' 09 Mar ' 08 0 4.71 4.21 62.97 89.99 74.45 15.54 0.27 184.96 14.81 58.70 85.58 67.20 18.38 0.35 187.58 16.30 58.70 61.24 51.36 9.88 148.98 27.48 58.70
Notes:
Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares out standing (Lacs)
1982.00 731.00
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