NILE LTD.

ABC ANALYSIS
[Type the document subtitle]

Submitted to: Prof. ALOK KUMAR Submitted by: Nikita Khanduja FMG 22B 220177

ABC Analysis
ABC analysis is a technique of exercising selective control also known as management by exception; over inventory items. The technique is based on the assumption that a firm should not exercise the same degree of control on items which are more costly as composed to those items which are less costly. According to this approach the inventory items are divided into three categories i.e., A, B and C. Category A may include more costly items, while category B may consists of less costly items and category C of the least costly items. Therefore, ABC analysis concentrates on important items hence also known as Control by Importance and Exception (CIE). This approach is also known as Proportional Value Analysis (PVA). There is no definite procedure for classifying the inventories as A, B and C categories. The method usually adopted is, 1. The quantity of each material expected to be used is estimated. 2. The value of each of the above material is found out by multiplying quantity with price. 3. The items are arranged in the descending order of their value irrespective of their quantities and give the ranks. 4. Express the value for each item as a percentage of the aggregate usage value and obtain the cumulative percentage of annual usage values. 5. Obtain the percentage value for each of the items. For n items, each item shall represent 100/n percent. Also obtain the cumulative values of the percentages. 6. Plot the curve using the cumulative computed in step 4 and step 5 on x and y axes respectively. 7. Determine appropriate divisions for the A, B and C categories.

In general, normal inventory item possess the following distribution pattern. There are no fixed threshold for each class, different proportion can be applied based on objective and criteria. ABC Analysis is similar to the Pareto principle in that the 'A' items will typically account for a large proportion of the overall value but a small percentage of number of items. Example of ABC class are A items 20% of the items accounts for 70% of the annual consumption value of the items. B items - 30% of the items accounts for 25% of the annual consumption value of the items. C items - 50% of the items accounts for 5% of the annual consumption value of the items. Another recommended breakdown of ABC classes: 1. "A" approximately 10% of items or 66.6% of value 2. "B" approximately 20% of items or 23.3% of value 3. "C" approximately 70% of items or 10.1% of value

Profile Of The Company

Introduction to NILE LTD: Nile Limited was originally incorporated as a private limited company with the name Navabharat Industrial Linings and Equipment Private Limited on May 18, 1984 and was later converted to a public limited company with the name Navabharat Industrial Linings and Equipment Limited. The name of the Company was changed to its present name of NILE ltd. vide a fresh certificate of incorporation dated September 16, 1994. Nile is a Public limited company and its shares are listed on the Bombay Stock Exchange (BSE). Nile has emerged as a leader in glass lining by achieving customer satisfaction by delivering quality products, with a fervent desire to convert every customer relationship into a prospective partnership. Nile's Glass Lining and pressure vessel division is located at Industrial estate, Nacharam, Hyderabad with a covered area of 8700 sq.m. The totally integrated fabrication, machining and glass lining facilities ensure timely delivery of quality products. Nile's two Non-Ferrous plants are located One near Hyderabad, and another near Tirupati. The combined capacity of these two plants is 32000 tons per annum. Niles 2 MW Wind Farm is located at Ramagiri, Ananthapur district. The state-of-the-art CAD facilities and experienced engineers not only automate the day-to-day engineering drawing requirements, but also innovate and improve the versatility of the product. In addition to standard equipment, Nile designs and manufactures equipment for specific customer applications or process performance improvement. A Company with a difference - setting benchmarks: Nile is an ISO 9001 certified Company manufacturing world class Glass Lined Equipment, Pressure Vessels, Lead and Lead Alloys.

Product range of the company includes: Reactors Reactors with Conical bottom Reactor with Insulation Receivers (Jacketed &Unjacketed)/ Storage Tanks Conical Dryer Agitated Nutsche Filters Heat Exchangers /Condensers Columns

Lead products Pure Lead 99.97% purity Lead Antimonial alloys Lead Selenium alloys Lead Calcium alloys Lead Tin alloys

ABC Analysis Of NILE

In the year 2011-2012 the total annual value of material is Rs. 201278053. The materials are divided into A category, B category and C category according to annual consumption. The ABC Analysis table is as follows

no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

material description steel plates(12,14,18,20,25)mm steel plates(8,16,22,32)mm steel plates(6,10,36,40,45,50,63,65)mm rods(80,100,122)dia Chemicals mechanical seal(60,80,100)mm rods(50,180,240,250)dia gear box(as-55,60,35,RR210DNC,110DNC) motors(3,7,5,10)hp accuators and variable frequency drive mildsteel seemless pipes electrodes(E7018) forgings(flanges) Rods packaging material standguard and stand drive mechanical seal(50,125)mm hardware paints gearbox(AS-80,90F) motors(5,15,20)hp forgings(nozzles) teflon items(gaskets) electrodes(E7018-1) mechanical seal(40mm) others in boughtout(sight and light glasses,hoses) abbressive material(grit) imported general stores(ceramic crucibles) teflon items(dippipes/sparges) castings(valve bodies) others from general stores(oils, greases, hotmill jars, handgloves,nosemasks, glasses,cap) gearbox(RR310DNC,510DNC) motors 25hp stainless steel seemless pipes castings(rods and plates)

cost annual per Annual consumption unit Value 1002 44334 44444448 702 44319 31111113 301 44296 13333334 233 49496 11515178 59770 119 7087018 240 27116 6584928 127 49456 6281006 23 23730 5600280 251 21376 5365376 98 49773 4877724 3680 955 3514400 10716 320 3429120 102 31756 3239112 63 49397 3112011 10738 286 3071068 85 33474 2845339 80 34296 2743680 121943 20 2438862 17043 137 2334891 34 67388 2291192 81 27577 2233737 752 2892 2174784 1529 1200 1834803 4286 400 1714418 108 15125 1633500 270985 6 1625908 36 43000 1548000 29 53364 1547556 240 6354 1524960 425 3570 1517250 97289 90 28 768 3392 15 15581 46704 1525 322 1459335 1402345 1307712 1171200 1092224

36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71

electrodes(E316,316L,6013) tantalum teflon items(bushes/nozzles) electrical items imported chemicals oxygen gas flux wires castings(nozzles) teflon items(gasket sheets) diesel imported tantalum job bearing castings(sleeves) bearings LPG teflon items(spray ball) shafts teflon items(spacers/seperators) teflon items(tapes/'o' rings) screws and rods material handling grinding machines abbressive material(sand) grinding wheels other in maintence(low value spares, lubricants) hoses and pipes indegnous grind wheels and belts blasting accessories elements seperators tool bit argon gas imported boughtout(gear box) measuring tapesand scales wind mill spares others in tools(spanners,lowvalue jigggs,fixtures) cutting accessories

385 27 950 5414 1515 6644 7620 885 500 13606 12 812 40 1166 131 17 20 3072 7702 42 347 12 30 48 1056 159 1981 52 6 33 61 1 103 4 1226 28

1500 37516 1040 176 610 123 90 770 1350 37 38560 500 9500 250 2221 16256 10412 56 22 3718 435 10115 4000 2284 98 523 42 1502 12147 2025 950 41764 365 4637 22 574

1027500 1012932 988000 952864 924150 817212 685800 681450 675000 503422 462720 406000 380000 291500 290951 276352 208240 172032 169444 156156 150945 121380 120000 109632 103488 83157 83202 78104 72882 66825 57950 41764 37595 18548 26972 16072

A Occupies 70% of Annual consumption, i.e., 70% of 201078053 = 140894637. B- Occupies 20% of Annual consumption, i.e., 20% of 201078053 = 40255610.

C- Occupies 10% of Annual consumption, i.e., 10% of 201078053 = 20107805

The following table shows the A items

annual cost annual consumption per unit value 1002 44334 44444448 702 44319 31111113 301 44296 13333334 233 49496 11515178 59770 119 7087018 240 27116 6584928 127 49456 6281006 23 251 98 3680 23730 21376 49773 955 5600280 5365376 4877724 3514400

no. 1 2 3 4 5 6 7 8 9 10 11

material description steel plates(12,14,18,20,25)mm steel plates(8,16,22,32)mm steel plates(6,10,36,40,45,50,63,65)mm rods(80,100,122)dia chemicals mechanical seal(60,80,100)mm rods(50,180,240,250)dia gear box(as55,60,35,RR210DNC,110DNC) motors(3,7,5,10)hp accuators and variable frequency drive mildsteel seemless pipes

The following shows B items

cost annual per annual consumption unit value 10716 320 3429120 102 31756 3239112 63 49397 3112011 10738 286 3071068 85 33474 2845339 80 34296 2743680 121943 20 2438862 17043 137 2334891 34 67388 2291192 81 27577 2233737 752 2892 2174784 1529 1200 1834803 4286 400 1714418 108 15125 1633500 270985 36 29 240 6 43000 53364 6354 1625908 1548000 1547556 1524960 41342941

no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

material description electrodes(E7018) forgings(flanges) rods packaging material standguard and stand drive mechanical seal(50,125)mm hardware paints gearbox(AS-80,90F) motors(5,15,20)hp forgings(nozzles) teflon items(gaskets) electrodes(E7018-1) mechanical seal(40mm) others in boughtout(sight and light glasses,hoses) abbressive material(grit) imported general stores(ceramic crucibles) teflon items(dippipes/sparges)

The following table shows the C items

no.

material description 1 castings(valve bodies) others from general stores(oils, greases, hotmill jars, 2 handgloves,nosemasks, glasses,cap) 3 gearbox(RR310DNC,510DNC) 4 motors 25hp 5 stainless steel seemless pipes 6 castings(rods and plates) 7 electrodes(E316,316L,6013) 8 tantalum 9 teflon items(bushes/nozzles) 10 electrical items 11 imported chemicals 12 oxygen gas 13 flux wires 14 castings(nozzles) 15 teflon items(gasket sheets) 16 diesel 17 imported tantalum 18 job bearing castings(sleeves) bearings LPG teflon items(spray ball) shafts teflon items(spacers/seperators) teflon items(tapes/'o' rings) screws and rods material handling grinding machines abbressive material(sand) grinding wheels other in maintence(low value spares, lubricants) hoses and pipes indegnous grind wheels and belts blasting accessories

cost annual per annual consumption unit value 425 3570 1517250 97289 90 28 768 3392 385 27 950 5414 1515 6644 7620 885 500 13606 12 812 40 1166 131 17 20 3072 7702 42 347 12 30 48 1056 159 1981 52 15 15581 46704 1525 322 1500 37516 1040 176 610 123 90 770 1350 37 38560 500 9500 250 2221 16256 10412 56 22 3718 435 10115 4000 2284 98 523 42 1502 1459335 1402345 1307712 1171200 1092224 1027500 1012932 988000 952864 924150 817212 685800 681450 675000 503422 462720 406000 380000 291500 290951 276352 208240 172032 169444 156156 150945 121380 120000 109632 103488 83157 83202 78104

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

35 36 37 38 39 40 41 42

elements seperators tool bit argon gas imported boughtout(gear box) measuring tapesand scales wind mill spares others in tools(spanners,lowvalue jigggs,fixtures) cutting accessories

6 33 61 1 103 4 1226 28

12147 2025 950 41764 365 4637 22 574

72882 66825 57950 41764 37595 18548 26972 16072

The

Following shows the share of the listed items in the total annual output.

Share in total annual output

A Items B Items C Items

The properties of the ABC Analysis which are following are proved through the ABC Analysis. A items 20% of the items accounts for 70% of the annual consumption value of the items. B items - 30% of the items accounts for 25% of the annual consumption value of the items. C items - 50% of the items accounts for 5% of the annual consumption value of the items.

The ABC analysis can be plotted as follows:

100 90 80 70 60 50 40 30 20 10 0

ABC Analysis

Cumulative 5.633802817 11.26760563 16.90140845 22.53521127 28.16901408 33.8028169 39.43661972 45.07042254 50.70422535 56.33802817 61.97183099 67.6056338 73.23943662 78.87323944 84.50704225 90.14084507 95.77464789

Cumulative (%)

Thus the above constitutes of the overall ABC analysis of Nile.