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CHAPTER-I 1.1 industry introduction


1.1.1 About the industry India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. India textile industry currently generates employment to more than 35 million people. It is also estimated that, the industry will generate 12 million new jobs by the year 2010. VARIOUS CATEGORIES Indian textile industry can be divided into several segments, some of which can be listed as below: 1. Cotton Textiles 2. Silk Textiles 3. Woolen Textiles 4. Readymade Garments 5. Hand-crafted Textiles 6. Jute and Coir

2 7. The Industry India textile industry is one of the leading in the world. Currently it is estimated to be around US$ 52 billion and is also projected to be around US$ 115 billion by the year 2012. The current domestic market of textile in India is expected to be increased to US$ 60 billion by 2012 from the current US$ 34.6 billion. The textile export of the country was around US$ 19.14 billion in 2006-07, which saw a stiff rise to reach US$ 22.13 in 2007-08. The share of exports is also expected to increase from 4% to 7% within 2012. Following are area, production and productivity of cotton in India during the last six decades:

Year

Area in lakh hectares

Production in lakh bales of 170 kgs 30.62 56.41 47.63 78.60 117.00 140.00 158.00 136.00 179.00 243.00 244.00 280.00 315.00 290.00

Yield kgs per hectare 92 124 106 170 267 278 308 302 399 470 478 521 567 526

1950-51 56.48 1960-61 76.78 1970-71 76.05 1980-81 78.24 1990-91 74.39 2000-01 85.76 2001-02 87.30 2002-03 76.67 2003-04 76.30 2004-05 87.86 2005-06 86.77 2006-07 91.44 2007-08 94.39 2008-09 93.73

Though during the year 2008-09, the industry had to face adverse agro-climatic conditions, it succeeded in producing 290 lakh bales of cotton comparing to 315 lakh bales last year, yet managed to retain its position as world's second highest cotton producer.India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. India textile industry

3 currently generates employment to more than 35 million people. It is also estimated that, the industry will generate 12 million new jobs by the year 2010. Cotton Exports from India Year 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Year 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Quantity (in lakh bales of 170 kgs) 16.82 3.50 1.01 0.65 0.60 0.50 0.83 12.11 9.14 47.00 58.00 85.00 50.00 Quantity (in lakh bales of 170 kgs.) 0.30 4.13 7.87 22.01 22.13 25.26 17.67 7.21 12.17 5.00 5.53 6.50 7.00 Value (in Rs./Crores) 1655.00 313.62 86.72 52.15 51.43 44.40 66.31 1089.15 657.34 3951.35 5267.08 8365.98 N.A. Value (Rs./Crores) 56.42 497.93 772.64 1967.92 2029.18 2150.01 1789.92 880.10 1338.04 695.77 752.29 986.33 N.A.

CURRENT FACTS ON INDIA TEXTILE INDUSTRY 1. India retained its position as worlds second highest cotton producer. 2. Acreage under cotton reduced about 1% during 2008-09. 3. The productivity of cotton which was growing up over the years has decreased in 200809. 4. Substantial increase of Minimum Support Prices (MSPs).

4 5. Cotton exports couldn't pick up owing to disparity in domestic and international cotton prices. 6. Imports of cotton were limited to shortage in supply of Extra Long staple cottons.

1.2 Introduction of the study


1.2.1 Introduction Everything has a price; nothing in this world is for free. These statements talks about the goods and services available to consumers and customers alike throughout the globe. The hospital industry is no way an exception to this statement, rather fact. Origins of The Word Inventory: The word inventory was first recorded in 1601. The French term inventories, or detailed list of goods, dates back to1415. Business Inventory: The inventory management system that control of process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers Inventory management and the activities of inventory control do not make decisions or manager operations; the provide the information to managers who make more accurate and timely decisions to manage their operations. The emphases on each area will vary depending on the company and how it operates, and what requirements are placed on it due to market demands. Each of the areas above will need to be addressed in some form or another to have a successful program of inventory management and control.

5 Inventories consistent the most significant part of current assists of the large majority of company in India. On average, approximately 60 percentages of current assets in companies in India. Because of the large size of inventories maintained by firm, a considerable amount of funds is required to be committed them. A firm neglecting the management of inventories will be jeopardizing its long-run profitability and may fail ultimately. It is a possible a company to reduce its level o0f inventories to a considerable degree, e.g., 10 to 20 percent without any adverse effect on production and sales by using simple inventory planning and control techniques. The reduction in excessive inventories carries a favorable impact on a companys profitability. Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. supply delay is longer than delivery delay ,and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. effective and efficient management of inventories helps in minimizing holding inventories, risk and losses due to stock out and keeping the investment in inventories at a reasonable level. Nature of inventories: Inventories are stock of the product of a company in manufacturing for a sale and component that make up the product. The various forms of inventories. Raw materials Work-in progress Finished goods Spare parts.

Raw materials are those basic inputs that are converted into finished products through the manufacturing process. Inventories are raw materials are those units, which have been purchased and stored for future productions

6 Work-in progress inventories are semi-manufactured products. the represent products that need more work before they become finished products for sale. Finished goods inventories are those completely manufactured products, which are ready for sale. Stocks of raw materials and work in progress facilitate production, while stock of finished goods required for smooth marketing operation. Spare parts include office and plant cleaning materials like soap, brooms, oil, fuel, light bulbs. These materials do not directly involved production, but are necessary for production process. The Reasons for Keeping Stock: There are three basic reasons for keeping an inventory: Time - the time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amount of inventory to use in this lead time. Uncertainty inventories are maintained as buffers to meet uncertainties in demand, supply and movements of goods. Economies of scale-ideal condition of one unit at a time at a place where user needs it, when he needs it principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory. Objective of Inventory Management: The purpose of inventory is to reduce materials materials holding cost that is inventory carrying cost and the ordering costs. This helps the companys to save their cost of capital and utilize their resources for a better investment opportunity. To maintain a large size of inventories of raw materials and work in progress for efficient and smooth production and of finished goods for uninterrupted sales operation. To maintain a minimum investment in inventories to maximize profitability. To avoid the both over stocking and under stocking of inventory. To keeping material cost under control so they contribute in reducing cost of production and overall costs. To ensure a right quantity goods at reasonable time

7 Benefits of Inventory Control: Keeps down investment Eliminates duplication Better utilization of available stock Minimizes stock out situations Re-sale of obsolete inventory. Adequate supply of materials

Cost Associated With Inventories: The effective management of inventory involves a trade off between having too little and too much inventory. In achieving this trade off , the finance manager should realize that costs may be closely related. Ordering costs Carrying inventory costs

Ordering Costs: The term ordering costs is used in case of raw materials and includes the entire costs of acquiring raw material. Any manufacturing organization has to purchase materials. Ordering costs refer to the cost associated with the preparation of requisition forms by the user department, set up costs to be incurred by the manufacturing department and transport, inspection at the user department. By and large, ordering costs remain more or less constant irrespective of the size of the order although transportation and inspection cost may vary to a certain extent depending upon order size. But this is not going to significantly affect the behavior of ordering costs. As ordering costs are considered invariant to the order size, the total ordering costs can be reduced by increasing the size of the orders

8 Carrying Inventory Costs: These are the expenses of storing goods. Once the goods have been accepted, they become part of the firms inventories. These costs include insurance, rent/depreciation of warehouse, and salaries of storekeeper, his assistants and security personnel, financing cost of money locked up in inventories, obsolescences, spoilage and taxes. By and large, carrying costs are considered to be given percentage of the value of inventory held in warehouse, despite some of the fixed elements of costs that comprise only a small portion of total carrying costs. Approximately, carrying costs are considered to be around 25 percentage of the value of the inventory held in storage. The greater the investment in inventory, the greater the carrying costs.

Ordering costs Requisitioning Order placing Transportation Receiving, inspecting Clerical and staff

Carrying costs Warehousing Handling Clerical and staff Insurance

1.2.2 OBJECTIVES OF THE STUDY:


PRIMARY OBJECTIVES:

The Primary Objectives of this Study is to examine the Inventory Management System in Classic Knits, Tirupur. SECONDARY OBJECTIVES: 1. To analyze the work flow mechanism of Procuring. Storing, Issuing and other procedures followed for maintaining Inventory in the organization.

9 2. 3. To analyze the data with different techniques to find out the ideal cost. To suggest suitable measures for further improvement in inventory management.

1.2.3 SCOPE OF THE STUDY: The data over a period of 9 years (2002 03 to 2009 10) is taken for the study. To maintain the minimum investment in inventories to maximize profitability. To study is under gone to know about and to Analysis the functions in CLASSIC KNITS, Tirupur. The study analyses the area to ensure a continuous supply of Raw materials to facilitate uninterrupted in periods of short supply and anticipated price charges and to control investment in inventories and keep it at an optimum level. To take the managing level & inventory, primarily task is operation, purchase, raw materials and etc., So the present study have enhancement to do the future research.

1.2.4 LIMITATIONS OF THE STUDY:


This study is limited o the consumption pattern of the various user This study is limited to 9 years only. This study is purely concentrating only on analyzing the inventory here To data connected for computation has been in quantitative term rather

department.

it would not help in taking other financial decision. than qualitative as it involves cost aspect. 1.3 RESEARCH METHODOLOGY : Research methodology is a way to systematically solve the research problem it may be understood as a science of new research is done scientifically. 1.3.1 Period of study: The period of study is 12 weeks starting from march 2011 to june 2011

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1.3.2 Research Design: A research design is the arrangement of condition and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The study was contain of descriptive research design. Descriptive Research Design : It includes surveys and fact-finding enquiries of different kinds. The main characteristic of this method is that the researcher has no control over the variables; it can report only what has happened or what is happening. 1.3.3 DATA COLLECTION METHOD: The study contain base on secondary source of data. Secondary Data: The secondary data are those which have already been collected by some one else and which already been passed through the statistical process. Information for this study has been collected from the secondary data. like, Annual report Balance sheet Company website Books Company files

1.3.4 TOOLS USED FOR ANALYZING DATA: The following tools used for this study Economic Order Quantity

11 ABC analysis Ratio analysis

ABC Analysis: ABC analysis is a business term used to define an inventory categorization technique often used in materials management. ABC analysis provides a mechanism for identifying items which will have a significant impact on overall inventory cost whilst also providing a mechanism for identifying different categories of stock that will require different management and controls. When carrying out an ABC analysis, inventory items are valued (item cost multiplied by quantity issued/consumed in period) with the results then ranked. The results are the grouped typically into three bands. These bands are called ABC codes. Formula: Total Value = Total Quantity x Cost Per Order Value of single Item Consumption Value (0) Percentage = x 100 Total Value of Item ABC codes: 1. A class inventory will typically contain items that account for high consumption of total value. 2. B class inventory will have around moderate consumption of total value 3. C class inventory will account for the remaining low consumption of total value ECONOMIC ORDER QUANTITY: Economic order quantity is that level of inventory that minimizes the total of inventory holding cost and ordering cost. The framework used to determine the order quantity is also known as Wilson EOQ Model. The model was developed by F.W. Harris in 1913. The most economical quantity of a product that should be purchased at one time. The EOQ is based on

12 all associated costs for ordering and maintaining the product. EOQ refers to the size of the order which give maximum economy in punches of materials. FORMULA: 2Ao EOQ = C1 Where A O C1 = = = Annual usage in unit Ordering cost Carrying cost

INVENTORY TURNOVER RATIO: This ratio shows how many times in one accounting period the company turnover in its inventory. It is valuable for spotting under-stockings, overstocking and obsolescence. Faster turnover of inventory shows positive trend and negative trend is when inventory is obsolete. Inventory turnover ratio shows increase in cash flow by keeping a track of sales over the year. Inventory turnover reduces warehousing and other related costs. FORMULA: cost of goods sold (or) sales Inventory turnover ratio = Average Inventory opening stock + closing stock Average Inventory = 2

13 CHAPTER- II REVIEW OF LITERATURE Logistics / SCM research Group, Department of Business Studies, Aarhus School of Business, university of Aarhus, Fuglesangs Alle 4, DK-8120 Aarhus V,Denmark Received on 12 January 2007 accepted on 3 October 2007 We describe the development of a framework to compute the optimal inventory policy for a large spare parts distribution centre operation in the refrigeration and air conditioning (RA) division of the danfoss group in Denmark. The RA division distributes spare parts worldwide for cooling and air-conditioning systems. The warehouse logistics operation is highly automated. However, the procedures for estimating demands and the policies for the inventory control system that were in use at the beginning of the project did not fully match the sophisticated technological standard of the physical system. During the initial phase of the project development, we focused on the fitting of suitable demand distributions for spare parts and on the estimation of demand parameters. Demand distributions were chosen form a class of compound renewal distributions. In the next phase, we designed models and algorithmic procedures for determining suitable inventory control variables based on the demand distributions and a service level requirement stated in terms of an order fill rate. Finally, we validated the results of our models against the procedures that had been in use in the company. It was concluded that the new procedures provided a better fit with the demand processes and were more consistent with the stated objectives for the distributions centre. We also initiated the implementation and integration of the new procedures into the companys inventory management system. Anders Thorstenson: Keywords : base-stock policy; compound distribution; fill rate; inventory control; logistics; stochastics processes. Study (1998) on inventory turnover in the fortune 500 industrial companies for the years of 1986 through 1995 revealed that although inventory turnover ratios have increased by an average of 14.7% the extent of changes in inventory turnover ratios were significantly different among industries. The oil and gas extraction industry performed best with a 44% increase in the ratio, while the textile mill products industry had a 12% decrease. Vergin (1998)

14 also suggested that the dramatic improvement reported in previous studies. Through a case study method in a certain company are industry may not be true to another company or industry. These results from a few studies on one inventory metric indicate that more empirical studies with companies are industries, of various characteristics, are needed to generalize the findings. Vollman, Berry and Whybark (1997) noted that a key management issue is determining the inventory control systems performance. They also indicated in manufacturing industry performance is measured by such factors as inventory carrying costs and inventory turnover. Roberboute: Catholic University of leuven (KUL) Various inventory studies have been published in the last decades. Some studies emphasize the importance of low inventories, other examine the evolution of inventories overtime and especially focused on the impact of the just-in-time (JIT) revolution. The aim of this paper is to investigate the level of inventories held by Belgian companies at one moment in time, namely may 2004. First we examine differences in inventory ratios between manufacturing industry sectors as well as between wholesale and retail. Finally we find the inventory ratio have more chance to be bad financial performers. Author keywords : logistics / distribution; MIS / Operations interface; empirical research methods; structural modeling. Over he past decades, manufacturing firms have implemented enterprise-wide information systems in order to improve their performance. In many cases, the achieved results have been much less than anticipated. Previous research suggests that in order to realize maximum performance improvements it is necessary to access timely and informative customer demand data. While enterprise-wide information systems may contribute to the realization of this objective, operational process, such as inventory management and mass customization may also be effective in improving the firms inventory performance the results indicate that performance is measured by inventory speculation, lead times, and turnover ratios.

CHAPTER-III

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COMPANY PROFILE The CLASSIC KNITS, a $70.5 million, 100% vertically integrated textile major has been at the fore front of quality and innovation since its inception four decades ago and it has its customers across the world. CLASSIC KNITS is one of the few completely backward integrated entities in the garments industry with cotton cultivation to ginning, spinning and knitting to dyeing, finishing and garments infrastructure. This infrastructure aids CLASSIC KNITS in maintaining quality control processes and self-reliance within the vertical, providing them with ample scope for further expansions. As performance bars got raised to new heights and requirements started becoming more demanding in nature, CLASSIC KNITS realized that operational efficiencies was the key to acquire the all important competitive edge. The group, then methodically spread its roots to all the areas which it believed was critical for growth, and once this was done. They made sure that the roots work as a single unit with the singular objective of helping the organization achieves its goals. CLASSIC KNITS now deals with all kind of textiles such as 100% cotton, 100% mercerized, Poly/cotton blended, cotton/rayon blended, linen/cotton blended, spandex, hydrotec, polyester, micro fabric and premium knits such as micro cross, waffles, square structures, Interlock knit and so on. More than 3500 well trained employees take care of the capacity requirements. VISION CLASSIC KNITS core values are centered on maintaining the highest standards of ethics and business practices in order to achieve the overall objective of being a global player through the relentless pursuit of perfection. INFRASTRUCTURE Innovations in manufacturing of garments occur in our production facilities very often. Our specialization reflects in the quality of the goods delivered, as the workers, executives and machinery are trained and tuned for that purpose. Cotton Farming Ginning & Pressing

16 Spinning Knitting Garmenting Cotton Farming More than 50% of the garments around the are made using cotton. RCG jointly has covered 5000 acres of wet land on Contract Farming. By providing the best seeds and timely maturing, is getting an average productivity of 10 Quintals/hectare, which is much higher from conventional Cotton Farming. RCG is assuring the minimum guaranteed price for the farmers and hence apart from the finest quality produce harvested, RCG enjoys a corporate social responsibility by enlightening about 2000 families involved in Cotton Farming. Constant workshops and seminars are conducted at fields to educate the farmers for a contamination free plucking and safe transportation methods. The present area is planned to go up to 70,000 acres in next 3 years. Hand Picked cotton is used for production Modern Ginning & Pressing From Kappas Cotton, this unit segregates the Cotton seeds and good quality cotton (Lint) and this operation is done with the least number of workers and totally under a pneumatic drive system ensuring least human contacts. Ginning capacity is currently 200 bales/day with an average weight of 170 Kgs/bale and as the cultivation improves can reach up to 400 bales/day. RCG world about Yarn Dyeing & Finishing Captive Power Plan

Spinning

17 The ginned cotton is converted into spun yarn in this unit with the following state-of-the-art latest machineries. Yarn The company deals in 100% cotton yarn, 100% polyester yarn, all types of blended yarn, 100% gassed mercerized yarn, twisted yarn, various mlange yarn etc. Our spacious stock yard stores every type of yarn for supply to the regional factories, apart from our own knitwear factories. Advanced yarn testing facility is an added advantage. Yarn can be tested both at the source point of the spinning mill and locally, which ensures best quality of yarn. Knitting Our knitting department has an array of latest, computer controlled knitting machines from reputed international brands. The in-house facility, which includes a Knitting Design Studio, is one of the best in the knitwear industry. There are 46 circular knitting machines that can knit jacquards, interlocks, ribs and jerseys in any pattern or structure as needed. The capacity is 10 tones per day. There are 9 flat knitting machines that can knit jacquards, plain, stripes and self-designs with a capacity of 8500 pieces per day. Our circular machinery includes: (All brand new MAYER & CIE Machines) Dyeing & Finishing Our modern soft flow dyeing plant with Effluent Treatment Plant (ETP) has a processing capacity of 10 tones per day. The soft flow dyeing plant has 7 vessels imported from Taiwan. Supported by computerized color prediction, measurement and matching systems from Data Color International, USA (Spectra Flash SF600) the plant can deliver evenly colored fabrics, streaks free.

Garmenting

18 .The completely integrated facilities is topped by our garmenting division with skilled pattern masters, cutting masters, tailors and supporting workmen who are well trained in the specialized activity of making Briefs, Vests, T-shirts and Polo shirts. The product specialization gives an excellent finish to the garments we make. The entire production wing is housed under one roof with scientific work systems and quality control systems. Captive Power Plant Presently we have installed 4 Windmills of total 3.0 MW capacity which is currently taking care of the entire power requirements of the group. The company is planning to add couple of more machines to take care of the future needs. Solar Pannel The New Solar Heating Plant has been deployed at our Dyeing division as the replacement of exiting Fire Wood with the Capcity of 10000 Ltrs / Day at 90D & 20000 Ltrs/ Day at 80 D It has replace the usage of 10 tons of Firewood / Day. In-turn we are saving almost 1000 Trees a Day Deployment of STP (Sewage Treatment plant) With the help of this, RCG is purifying 1 Lac Liters of Sewage water every day and that is used for Agriculture Purposes Beyond Business Social Commitment After abiding all the statuary laws of country, Still RCG strives hard to deliver its best capable solution for the needy General Public. Few of them are: 1. Plantation of 5000 trees in the year 2002 2. Construction of school class rooms for Village panchayat school in year 2003 3. Establishment of factory in most backward / deprived village whereby creating job opportunity of about 500 women folks

19 4. Plantation of 10000 trees in year 2005 & maintaining it for next 3 years 5. Construction of School Class rooms for the Iduvamplayam Village Panchayat school in the year 2008 6. Installation of Solar Panel for the Dyeing Plant 7. Flying on the Wings of Fire Documentary Film Released about our Former President Dr. A.P.J Abdul Kalam RCG has combined with Minvelli Media Works and released the documentary film about our Former President Dr. A.P.J. Abdul Kalam Organization Chart

Managing Director

AGM Admin

DGM-HRD

GM

VP Account

Security Officer

AAO

Officer - HRD

Production Manager

Quality Assurance Manager

Accounts officer

Security Guards

Asst - Admin

Asst - HRD

Production Supervisors

Quality Controllers

Accounts Assistants

Employees

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CHAPTER-IV DATA ANALYSIS AND INTERPRETATION


TABLE NO-4.1 ABC ANALYSIS FOR THE YEAR ENDED 2002 03

Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE Quantity per Year 100000 300000 180000 90000 150000 300000 150000 150000 300000 15000 182000 9000

Cost Per Unit 4.00 1.25 2.00 9 0.60 0.20 0.30 0.70 0.20 12 0.30 15

Total Value 400000 375000 360000 810000 90000 60000 45000 105000 60000 180000 54600 135000

Consumption Value (%) 14.95 14.02 13.45 30.28 3.36 2.24 1.68 3.92 2.24 6.73 2.04 5.047

Category B B B A C C C C C C C C

From the above table Printing item has highest value of Rs.8,10,000 and its equality consumption value is 30.28%, so it is categorized as A item. Spinning Yarn, Knitting and Dyeing moderate value, so all these three items are categorized as B item, and all other items has very low value, so remaining all items categorized as C item.

CHART NO-4.1

21 ABC ANALYSIS FOR THE YEAR ENDED 2002 03

35 3 0.28 30 25 20 14 .9 5 1 4.02 1 3 .45 15 6 .7 3 10 5.0 4 7 3 .3 6 2 .2 4 1 .6 8 3.9 2 2.24 2 .0 4 5 0 KNITTING ELASTIC TAG DYEING PRINTING SPINNING YARN HANGER EMBROIDERING POLYBAGS SATEEN LABELS BULLET

PERCENTAGE

I T EM

22 TABLE NO-4.2 ABC ANALYSIS FOR THE YEAR ENDED 2003 04


Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Printing and Hanger items has highest value of Rs.12,26,400 and its equality consumption value is 29.3%, so it is categorised as A item Spinning Yarn, Knitting, Dyeing and Labels moderate value, so all these four items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 384000 288000 182000 100000 144000 288000 1152000 1152000 288000 14400 144000 750 Cost Per Unit 0.5 1.40 2.20 4.20 0.50 0.20 0.30 0.70 0.20 11 0.20 14

Total Value 192000 403200 400400 420000 72000 57600 345600 806400 57600 158400 28800 10500

Consumption Value (%) 4.45 9.63 9.57 10.03 1.72 1.38 8.23 19.27 1.38 3.78 0.689 0.251

Category B B B A C C B A C C C C

23 CHART NO-4.2 ABC ANALYSIS FOR THE YEAR ENDED 2003 04

25 20 PERCENTAGE 15 10 5 0 KNITTING DYEING ELASTIC 4 .4 5 9 .6 3 9 .5 7 1 0 .0 3 1 .7 2 1 .3 8 8 .2 3

1 9 .2 7

1 .3 8

3 .7 8

0.6 8 9 0 .2 5 1 SATEEN BULLET

PRINTING

SPINNING YARN

LABELS

HANGER

EMBROIDERING

IT E M

POLYBAGS

TAG

24 TABLE NO-4.3 ABC ANALYSIS FOR THE YEAR ENDED 2004 05


Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Printing item has highest value of Rs.16,00,000 and its equality consumption value is 37.12%, so it is categorised as A item. Embroidering, Sateen and Bullet moderate value, so all these three items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 192000 192000 9600 160000 144000 750 192000 691200 384000 192000 384000 224000 Cost Per Unit 0.75 0.4 15 10 4.35 14 0.4 0.2 0.2 0.75 1.75 2.45

Total Value 144000 76800 14400 1600000 626400 10500 76800 138240 76800 144000 672000 548800

Consumption Value (%) 3.34 1.78 0.334 37.12 14.53 0.251 1.78 3.20 1.78 3.35 12.73 14.53

Category C C C A B C C C C C B B

25 CHART NO-4.3 ABC ANALYSIS FOR THE YEAR ENDED 2004 05

40 35 PERCENTAGE 30 25 20 15 10 5 0 3.34 1.78 0.334 DYEING

37.12

1 4 .5 3 3.2 3.35

12.73 1.78 1.78

14.53

0 .2 5 1 ELASTIC PRINTING

KNITTING

TAG

SPINNING YARN

HANGER

EMBROIDERING

IT EM

POLYBAGS

SATEEN

LABELS

BULLET

26 TABLE NO-4.4 ABC ANALYSIS FOR THE YEAR ENDED 2005 06


Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Dyeing item has highest value of Rs.19,44,000 and its equality consumption value is 25.5%, so it is categorised as A item. Elastic, Labels and Hanger moderate value, so all these three items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 432000 216000 216000 9600 216000 162000 432000 252000 432000 777600 216000 1080 Cost Per Unit 0.60 0.5 9 15 0.85 4.7 2.5 2.7 0.30 0.25 0.5 17

Total Value 259200 108000 1944000 14400 183600 761400 1080000 680400 129600 194400 108000 18360

Consumption Value (%) 3.40 1.42 25.5 0.334 2.40 9.98 14.16 8.92 1.69 2.55 1.42 0.240

Category C C A C C B B B C C C C

27 CHART NO-4.4 ABC ANALYSIS FOR THE YEAR ENDED 2005 06

30 25 PERCENTAGE 20 15 10 5 0 KNITTING 3 .4 1 .4 2

2 5 .5

1 4 .1 6 9 .9 8 2 .4 8 .9 2 1 .6 9 2 .5 5 1 .4 2 0 .2 4 BULLET

0 .3 3 4 DYEING PRINTING

ELASTIC

TAG

SPINNING YARN

HANGER

EMBROIDERING

IT E M

POLYBAGS

SATEEN

LABELS

28 TABLE NO-4.5 ABC ANALYSIS FOR THE YEAR ENDED 2006 07


Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Knitting and Dyeing items has highest value of Rs.41,84,000 and its equality consumption value is 54.9%, so it is categorised as A item. Spinning Yarn, Embroidering and Hanger moderate value, so all these three items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 180000 480000 200000 240000 280000 480000 240000 864000 480000 24000 2400000 1200 Cost Per Unit 4.7 3.3 13 0.85 2.7 0.6 0.5 0.75 0.4 10 0.5 21

Total Value 846000 1584000 2600000 204000 756000 288000 120000 648000 192000 240000 120000 25200

Consumption Value (%) 11.10 20.80 34.1 2.68 9.92 3.78 1.57 8.50 2.52 3.15 1.57 0.33

Category B A A C B C C B C C C C

29 CHART NO-4.5 ABC ANALYSIS FOR THE YEAR ENDED 2006 07

40 35 PERCENTAGE 30 25 20 15 10 5 0 KNITTING 20 .8 1 1.1

3 4.1

9.92 2.6 8 3 .78 1.5 7

8.5 2 .52 3 .15 1 .57 0.3 3 BULLET

ELASTIC

DYEING

TAG

PRINTING

SPINNING YARN

HANGER

EMBROIDERING

IT EM

POLYBAGS

SATEEN

LABELS

30 TABLE NO: 4.6 ABC ANALYSIS FOR THE YEAR ENDED 2007 08
Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Printing item has highest value of Rs.12,80,000/- and its equality consumption value is 30%, so it is categorised as A item. Spinning Yarn, Dyeing and Polybags moderate value, so all these three items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 300000 150000 182000 256000 24000 160000 354000 422000 288000 140000 20000 5000 Cost Per Unit 2.00 1.5 2.3 5.00 10 0.55 0.45 0.3 1.3 0.2 1.00 15.00

Total Value 600000 225000 418600 1280000 240000 88000 159300 126600 374400 28000 20000 75000

Consumption Value (%) 14.00 5.20 9.80 30.00 3.15 2.00 3.70 2.90 8.70 0.60 0.46 1.76

Category B C B A C C C C B C C C

31 CHART NO-4.6 ABC ANALYSIS FOR THE YEAR ENDED 2007 08

35 30 PERCENTAGE 25 20 15 10 5 0 KNITTING 14 9.8 5.2

30

8.7 3.15 2 3.7 2.9 0.6 TAG POLYBAGS 0.46 SATEEN 1.76 BULLET

SPINNING YARN

PRINTING

ELASTIC

DYEING

LABELS IT EM

EMBROIDERING

HANGER

32 TABLE NO-4.7 ABC ANALYSIS FOR THE YEAR ENDED 2008 09


Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Printing item has highest value of Rs.15,84,000 and its equality consumption value is 20.80%, so it is categorised as A item. Knitting, Embroidering, Polybags and Tag moderate value, so all these four items are categorised as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 160000 864000 216000 480000 162000 150000 300000 150000 1152000 162000 14400 144000 Cost Per Unit 0.55 0.75 0.85 3.3 4.7 0.60 0.20 0.30 0.30 4.7 11 0.20

Total Value 88000 648000 183600 1584000 761400 90000 60000 45000 345600 761400 158400 28800

Consumption Value (%) 2.00 8.50 2.40 20.80 9.98 3.36 2.24 1.68 8.23 9.98 3.78 0.689

Category C B C A B C C C B B C C

33 CHART NO-4.7 ABC ANALYSIS FOR THE YEAR ENDED 2008 09

25 20 PERCENTAGE 15 10 5 0 KNITTING 2 8.5 2.4

20.8

9.98 3.36

8.23 2.24 1.68

9.98 3.78 0.689 TAG SATEEN BULLET

SPINNING YARN

PRINTING

ELASTIC

DYEING

LABELS

HANGER

EMBROIDERING

IT EM

POLYBAGS

34 TABLE NO- 4.8 ABC ANALYSIS FOR THE YEAR ENDED 2009 10
Total Item SPINNING YARN KNITTING DYEING PRINTING EMBROIDERING ELASTIC LABELS HANGER POLYBAGS TAG SATEEN BULLET Source : Secondary Data INFERENCE From the above table Printing item has highest value of Rs.26,00,000 and its equality consumption value is 34.1%, so it is categorized as A item. Dyeing and Labels moderate value, so all these two items are categorized as B item, and all other items has very low value, so remaining all items categorized as C item. Quantity per Year 150000 300000 288000 200000 432000 216000 182000 150000 777600 9600 192000 9600 Cost Per Unit 0.60 0.20 1.3 13 0.60 0.5 2.3 1.5 0.25 15 0.4 15

Total Value 90000 60000 374400 2600000 259200 108000 418600 225000 194400 14400 76800 14400

Consumption Value (%) 3.36 2.24 8.70 34.1 3.40 1.42 9.80 5.20 2.55 0.334 1.78 0.334

Category C C B A C C B C C C C C

35
CHART NO- 4.8 ABC ANALYSIS FOR THE YEAR ENDED 2009 10

40 35 PERCENTAGE 30 25 20 15 10 5 0 3.3 6 2.2 4

3 4 .1

8.7 3 .4 1 .4 2 ELASTIC

9.8 5.2 2 .5 5 0.33 4 TAG 1 .78 0 .3 34 BULLET

KNITTING

DYEING

PRINTING

SPINNING YARN

HANGER

EMBROIDERING

IT EM

POLYBAGS

SATEEN

LABELS

36 TABLE NO- 4.9 EOQ ANALYSIS FOR THE YEAR 2002 03


Actual Order 1150 650 790 900 600 550 700 715 550 1040 1500

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE HALF WHITE PURE WHITE Source : Secondary Data INFERENCE

A 7200 7200 16920 14040 13320 9360 10080 15840 8640 12240 13320

O 42 40 34 40 36 37 38 43 42 32 40

C 0.50 1.50 2.00 1.50 3.00 2.50 1.75 3.00 3.75 0.75 0.5

EOQ 1099 619 758 865 565 526 661 673 439 1021 1459

From the above table the Pure White value is High 1459 but the Pure Mellange EOQ Value is compare to actual order. The actual order value is high. So that that Pure Mellange Purchasing high level inventory cost.

37 CHART NO- 4.9 EOQ ANALYSIS FOR THE YEAR 2002 03

1600 1400 1200 QUANTITY 1000 800 600 400 200 0 GREY MELLANGE WHITE MELLANGE BLACK MELLANGE RED MELLANGE NAVY BLUE PURE MELLANGE OLIVE GREEN MERUN 619 1099 758 865 565 661 526 673 439 1021

1459

ITEM

PURE WHITE

HALF WHITE

PINK

38 TABLE NO- 4.10 EOQ ANALYSIS FOR THE YEAR 2003 04


Actual Order 580 600 1210 560 790 1195 300 596 615 355 1480

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE HALF WHITE PURE WHITE Source : Secondary Data INFERENCE

A 6400 6400 15040 12480 11840 8320 896 14080 7680 11840 11840

O 41 40 48 33 50 42 34 34.5 36.5 36 44

C 2 1.5 1 1.5 2 0.5 2.5 3.25 1.75 2.5 0.5

EOQ 512 584 1201 549 769 1182 156 546 566 340 1442

From the above table the Pure White value is High 1442 but the Navy Blue EOQ Value is compare to actual order. The actual order value is high. So that that Navy Blue Purchasing high level inventory cost.

39 CHART NO- 4.10 EOQ ANALYSIS FOR THE YEAR 2003 04

1600 1400 1200 QUANITTY 1000 800 600 400 200 0 NAVY BLUE GREY MELLANGE BLACK MELLANGE WHITE MELLANGE RED MELLANGE PURE MELLANGE MERUN OLIVE GREEN 512 584 549 156 1201 1182

1442

769 546 566 340

ITEM

PURE WHITE

HALF WHITE

PINK

40 TABLE NO- 4.11 EOQ ANALYSIS FOR THE YEAR 2004 05


Actual Order 3050 2460 2700 640 2230 4600 2030 3990 2820

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE Source : Secondary Data INFERENCE

A 120000 85000 85000 85000 125000 125000 85000 120000 85000

O 38 32 34 40 44 42 36 33 35

C 1 0.9 0.8 1.75 2.25 0.5 1.5 0.5 0.75

EOQ 3019 2458 2687 545 2211 4582 2019 3980 2816

From the above table the Red Mellange value is High 4582 but the Merun EOQ Value is compare to actual order. The actual order value is high. So that that Merun Purchasing high level inventory cost.

41 CHART NO- 4.11 EOQ ANALYSIS FOR THE YEAR 2004 05

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0

4582 3980 3019 2458 2816 2211 2019

QUANITTY

2687

545

GREY MELLANGE

MERUN

OLIVE GREEN

NAVY BLUE

WHITE MELLANGE

BLACK MELLANGE

RED MELLANGE

PINK

ITEM

PURE MELLANGE

42 TABLE NO- 4.12 EOQ ANALYSIS FOR THE YEAR 2005 06


Actual Order 560 1060 500 650 300 1030 600 790 460

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE Source : Secondary Data INFERENCE

A 10000 8500 8500 10000 850 12500 8500 12500 8500

O 38 32 34 44 40 42 36 33 35

C 2.5 0.5 3.25 2.25 1.75 0.75 2 1.5 3

EOQ 551 1043 421 625 197 1024 552 741 445

From the above table the White Mellange value is High 1043 but the Olive Green EOQ Value is compare to actual order. The actual order value is high. So that that Olive Green Purchasing high level inventory cost.

43 CHART NO- 4.12 EOQ ANALYSIS FOR THE YEAR 2005 065

1200 1000 QUANITTY 800 600 400 200 0 551

1043

1024 741 625 421 197 552 445

OLIVE GREEN

GREY MELLANGE

MERUN

BLACK MELLANGE

NAVY BLUE

PINK

ITEM

PURE MELLANGE

WHITE MELLANGE

RED MELLANGE

44
TABLE NO- 4.13 EOQ ANALYSIS FOR THE YEAR 2006 07 Actual Order 650 1200 3190 1200 1100 700 710 740 2700 660 1600

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE HALF WHITE PURE WHITE Source : Secondary Data INFERENCE

A 8000 8000 18800 15600 14800 10400 11200 17600 96000 14800 13600

O 32 44 40 35 38 42 38 36 34 32 40

C 1.5 0.5 0.75 0.8 1 2 1.75 2.5 0.9 2.25 0.5

EOQ 584 1186 3166 1168 1060 660 697 711 2693 648 1475

From the above table the Olive Green value is High 3166 but the Grey Mellange EOQ Value is compare to actual order. The actual value order is high. So that that Grey Mellange Purchasing high level inventory cost.

45 CHART NO- 4.13 EOQ ANALYSIS FOR THE YEAR 2006 07

3500 3000 2500 QUANTITY 2000 1500 1000 500 0 584 1186

3166 2693

1475 1168 1060 660 697 711 648

PINK

HALF WHITE

OLIVE GREEN

WHITE MELLANGE

MERUN

BLACK MELLANGE

RED MELLANGE

ITEM

NAVY BLUE

PURE MELLANGE

GREY MELLANGE

PURE WHITE

46 TABLE NO-4.14 EOQ ANALYSIS FOR THE YEAR 2007 08


Actual Order 730 550 680 640 540 750 500 2820 2699 650 1050

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE HALF WHITE PURE WHITE Source : Secondary Data INFERENCE

A 17600 9360 10080 7680 11840 12500 8500 85000 96000 10000 12500

O 36 37 38 36.5 36 33 35 35 34 44 42

C 2.5 2.50 1.75 1.75 2.5 1.5 3 0.75 0.9 2.25 0.75

EOQ 711 526 661 566 340 741 445 2816 2693 625 1024

From the above table the Pink value is High 2816 but the Black Mellange EOQ Value is compare to actual order. The actual value order is high. So that that Black Mellange Purchasing high level inventory cost.

47 CHART NO- 4.14 EOQ ANALYSIS FOR THE YEAR 2007 08

3000 2500 QUANTITY 2000 1500

2816

2693

1024 1000 500 0 HALF WHITE OLIVE GREEN MERUN BLACK MELLANGE NAVY BLUE PURE MELLANGE GREY MELLANGE WHITE MELLANGE RED MELLANGE PURE WHITE PINK 711 526 661 566 741 340 445 625

ITEM

48 TABLE NO- 4.15 EOQ ANALYSIS FOR THE YEAR 2008 09


Actual Order 2090 590 450 1450 1900 1000 1400 3070 300

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE Source : Secondary Data INFERENCE

A 7500 3750 2500 6047 15000 12500 10700 60630 1875

O 29 21 35 42 36 26 56 46 33

C 0.1 0.5 10 0.25 0.3 0.75 0.65 0.6 5

EOQ 2085 561 418 1425 1897 930 1357 3049 157

From the above table the Pink value is High 3049 but the Pure Mellange EOQ Value is compare to actual order. The actual value order is high. So that that Pure Mellange Purchasing high level inventory cost.

49 CHART NO- 4.15 EOQ ANALYSIS FOR THE YEAR 2008 09

3500 3000 QUANTITY 2500 2000 1500 1000 500 0 OLIVE GREEN GREY MELLANGE WHITE MELLANGE MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE 561 418 1425 930 2085 1897 1357

3049

157 PINK PURE MELLANGE

ITEM

50 TABLE NO- 4.16 EOQ ANALYSIS FOR THE YEAR 2009 10


Actual Order 600 1400 790 500 600 1050 2699 2700 1500

Item GREY MELLANGE WHITE MELLANGE OLIVE GREEN MERUN BLACK MELLANGE RED MELLANGE NAVY BLUE PINK PURE MELLANGE Source : Secondary Data INFERENCE

A 12480 10700 12500 8500 8640 12240 96000 85000 13600

O 33 56 33 35 42 32 34 34 40

C 1.5 0.65 1.5 3 3.75 0.75 0.9 0.8 0.5

EOQ 549 1357 741 445 439 1021 2693 2687 1475

From the above table the Navy Blue value is High 2693 but the Black Mellange EOQ Value is compare to actual order. The actual value order is high. So that that Black Mellange Purchasing high level inventory cost.

51 CHART NO- 4.16 EOQ ANALYSIS FOR THE YEAR 2009 10

3000 2500 QUANTITY 2000 1500 1000 500 0 OLIVE GREEN MERUN 549 1357 1021 741 445 439

2693

2687

1475

NAVY BLUE

GREY MELLANGE

WHITE MELLANGE

BLACK MELLANGE

RED MELLANGE

PINK

ITEM

PURE MELLANGE

52 TABLE NO- 4.17 INVENTORY TURNOVER RATIO YEAR 2002-10

YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

SALES 2000000 1400000 1448000 12960000 13500000 21060000 19440000 2100000

AVERAGE INVENTORY 1200000 1200000 1280000 7560000 8820000 11520000 13500000 13680000

RATIO (In %) 1.67 1.17 1.13 1.71 1.53 1.83 1.44 1.59

Source : Secondary Data INTERPRETATION : The table shows the inventory turnover ratio. The ratio was high in 2007 08 (1.83), medium 2002 03 (1.67) and this ratio was low in 2004 05 (1.13). It is observed that variation in the ratio is due to change in sales. Average stock show a steady growth during the period of 8 years. So the company is using inventory effectively.

53 CHART NO- 4.17 INVENTORY TURNOVER RATIO YEAR 2009-10

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

54

CHAPTER -V FINDINGS SUGGESTION CONCLUSTION 5.1

FINDINGS:
Inventory control techniques like ABC analysis and EOQ analysis, Ratio analysis are very significant in tunic fashion apparels, in order to have a good control and management over the large number of inventories kept in the stores. In ABC analysis (2001 02) to (2003 04) First three years printing item is highest value. So its categorize as a A item. In ABC analysis (2004 05) to (2005 06) After two years dyeing, knitting items is highest value. So its categorize as a A item and other items are B and C categorized. In ABC analysis (2006 07) to (2008 09) Last three years again printing item is highest value. So its categorize as a A item and other items are B and C categorized. The company inventory cost for the printing high compare to the other Raw Materials The company not follows EOQ technique and purchasing high level inventory cost. The inventory turnover ratio was high in 2006 07 (1.83) and this ratio was low in 2003 04 (1.13). It indicates the efficient management of inventory.

55

5.2 SUGGESTIONS:
The company close control is required for A class items and routine controls should be adequate. The company EOQ technique and purchasing item economic level inventory. So that the total inventory cost will be reduce. The company now concentrates the contract basis for their production. It will also introduce a regular basis for their production for increasing them profit. The company shall regulate the further procurement of inputs. System in the inventory should be standardized. Procurement in small lots to avoid heavy fluctuation in the input price.

5.3 CONCLUSION:
Managing and controlling of inventories, i.e., say raw materials, components spare parts, and finished goods is very dispensable in any organization, since it forms 80% to 90% of the working capital of the company. It is therefore, necessary for the officer familiar with ways to control inventories effectively, so that here can be efficient allocation of funds and it leads to reduce investment in inventories to the optimum level and leave sufficient funds for more profitable channels which will ultimately result in maximization of shareholders wealth. The techniques of inventory management help in the determining the optimum level of inventory as well as how much should be ordered and when it should be ordered. All these techniques are helpful in efficient management of inventories and balancing the advantages of holding additional inventory against the cost of carrying inventory. By keeping inventory management cost down is crucial to competitive advantage.

56 5.4 BIBLIOGRAPY BOOKS M.Y.Khan & P.K.Jain Financial Management, 4th Edition 2004, Tata Mcgrawhill Publishing Company Limited. M.Y.Khan & P.K.Jain Management Accounting, 3rd Edition 2000, Tata Mcgraw-hill Publishing Company Limited. Dr.S.N.Maheswari Principles of Management Accounting, 10th Edition 1995, Sultan Chand & Company Limited. I.M.Pandy Financial Management, 9th Edition 2004, Vikas Publishing House Pvt., Limited. WEBSITE www.fresco.com www.classic knits.com M.A. Sahaf Management Accounting, Vikas Publishing House Pvt., Limited.