You are on page 1of 62

1 CARLTON BUSINESS SCHOOL

1

A STUDY ON INVENTORY MANAGEMENT IN ZUARI
CEMENT PVT. LTD, KADAPA
Project Report submitted in partial fulfillment of the
Requirement for the Award of
Post Graduate Diploma
In
Management
By
BHASKAR NAIDU. M
(CB12HPGDM017)
Under the guidance of
Syed Ali Luqman Hussaini,
Visiting Professor and Trainer in PMA and Leadership




2014



2 CARLTON BUSINESS SCHOOL
2



Certificate

This is to certify that A STUDY ON INVENTORY MANAGEMENT IN
ZUARI CEMENT PVT. LTD, KADAPA is the bonafide work and has been
submitted by BHASKAR NAIDU .M (CB12HPGDM017) in partial fulfillment
of the requirements for the award of PGDM (International Business), for the
academic year 2012-2014.
The project work has not been submitted to any other University or Institute for the
award of any degree, diploma etc.


Internal Guide Dean of academics


External Examiner




3 CARLTON BUSINESS SCHOOL
3
Acknowledgement
I would like to express my gratitude to Sri D. Vittal Rao Chairman and Sri D. Satish,
CEO-Carlton Business School, Hyderabad for giving me an opportunity and facility to complete
this project.
I owe my boundless gratitude to my faculty guide, Syed Ali Luqman Hussaini
Professor of PGDM Department, for his guidance and supervision of this project for successful
completion.
I sincerely thank Mr Ravi Shankar, Production manager, ZuariCement Pvt. limited,
Kadapa for giving me permission to do this project at their concern.
I express my sincere thanks to my beloved parents, friends and the staff members and
those who encouraged and supported the completion of this project report.

BHASKAR NAIDU.M












4 CARLTON BUSINESS SCHOOL
4
TABLE OF CONTENTS
CHAPTER NO DESCRIPTION PAGE NO

TITLE 1
CERTIFICATE 2
ACKNOWLEDGEMENT 3
TABLE OF CONTENTS 4
ABSTRACT 7


I

INTRODUCTION
1.1 ABOUT THE STUDY

8
9
1.2 SCOPE OF THE STUDY 10
1.3 STATEMENT OF THE PROBLEM 10
1.4 OBJECTIVES OF THE STUDY 10
1.5 RESEARCH METHODOLOGY
1.5.1 RESEARCH DESIGN
1.5.2 DATA COLLECTION
1.5.3 PERIOD OF STUDY
1.5.4 AREA OF STUDY
1.5.5 TOOLS FOR ANALYSIS
1.5.5.1 RATIO ANALYSIS (INVENTORY)
1.5.5.2 ECONOMIC ORDER QUANTITY (EOQ)
11
11
11
11
11
11
11
12
II

INDUSTRY AND COMPANY PROFILE
2.1 INDUSTRY PROFILE
2.1.1 CEMENT INDUSTRY IN GLOBAL
2.1.2 CEMENT INDUSTRY IN INDIA

13
14
16
18
2.2 COMPANY PROFILE
2.2.1 THE COMPANY
2.2.2 PROMOTER OF THE COMPANY
2.2.3 FINANCIAL SUPPORT
2.2.4 TECHNOLOGY ADOPTED
2.2.5 EXPANSION OF CAPACITY
2.2.6 QUALITY CUSTOMER SERVICE
2.2.7 DEVELOPMENT ACTIVITIES
2.2.8 ITALCEMENTI GROUP
2.2.9 COMPETITORS FOR ZUARI CEMENT LIMITED
2.2.10 LOCATION OF THE PLANT
2.2.11 PRODUCTION
2.2.12 RAW MATERIALS
2.2.13 POWER
20
20
20
20
20
20
21
21
21
21
22
23
23
23
24






5 CARLTON BUSINESS SCHOOL
5
2.2.14 WATER
2.2.15 TRANSPORT
2.2.16 MAN POWER
2.2.17 QUARRY
2.2.18 A WIDE RANGE TO ADDRESS EVERY NEED
2.2.19 QUALITY CUSTOMER SERVICE
2.2.20 PRODUCTS
2.2.21 PROCESS TECHNOLOGY, THE SOLID
FOUNDATION
2.2.21.1 THE PROCESS TECHNOLOGY
ADVANTAGES
2.2.21.2 VENTOMATIC ELECTRONIC PACKING
2.2.21.3 ENVIRONMENT-FRIENDLY TECHNOLOGY
2.2.22 BOARD OF DIRECTORS

24
24
25
25
25
25
26
26

27

28
29

30

III

CONCEPTUAL AND THEORETICAL FRAME
WORK
3.1 CONCEPTUAL AND THEORETICAL FRAME
WORK OF INVENTORY MANAGEMENT
3.1.1 OBJECTIVES OF INVENTORY TURNOVER
ANALYSIS, EOQ ANALYSIS
3.1.2 USES OF INVENTORY TURNOVER
ANALYSIS, EOQ ANALYSIS
3.1.3 INVENTORY TURNOVER RATIOS
3.1.3.1 INVENTORY TURNOVER RATIO
3.1.3.2 INVENTORY TURNOVER PERIOD
3.1.4 ECONOMIC ORDER QUANTITY

31

32

32

32

33
33
33
33

3.2 REVIEW OF LITERATURE

3.2.1 MEANING AND NATURE OF INVENTORY
3.2.2 BENEFITS OF HOLDING INVENTORIES
3.2.3 OBJECTS OF INVENTORY MANAGEMENT
3.2.4 TOOLS AND TECHNIQUES OF INVENTORY
MANAGEMENT
3.2.4.1 DETERMINATION OF STOCK LEVELS
3.2.4.2 DETERMINATION OF SAFETY STOCKS
3.2.4.3 ECONOMIC ORDER QUANTITY (EOQ)
3.2.4.4 A B C ANALYSIS: (ALWAYS BETTER
CONTROL ANALYSIS)
3.2.4.5 VED ANALYSIS: (VITALLY ESSENTIAL
DESIRE)
3.2.4.6 INVENTORY TURNOVER RATIO
3.2.4.7 CLASSIFICATION AND CODIFICATION

34

34
35
35
36

36
38
38
39

39

39
40



6 CARLTON BUSINESS SCHOOL
6
OF INVENTORIES
3.2.4.8 VALUATION OF INVENTORIES
METHOD OF VALUATION
3.2.4.8.1 THE FIFO METHOD (FIRST IN FIRST
OUT METHOD)
3.2.4.8.2 THE LIFO METHOD (LAST IN FIRST
OUT METHOD)
3.2.4.8.3 BASE STOCK METHOD
3.2.4.8.4 WEIGHTED AVERAGE PRICE METHOD


40

41

42

42
42
IV
ANALYSIS OF INVENTORY MANAGEMENT

4.1 ANALYSIS PART-1 RATIO
ANALYSIS(INVENTORY)
4.1.1 LEVEL OF INVENTORY
4.1.2 INVENTORY TURNOVER RATIO
4.1.3 INVENTORY CONVERSION PERIOD

43

44

45
46
46

4.2 ANALYSIS PART-2 EOQ ANALYSIS
4.2.1 EOQ ANALYSIS FOR THE YEAR 2009-10 (TABLE)
4.2.2 EOQ ANALYSIS FOR THE YEAR 2009-10 (CHART)
4.2.3 EOQ ANALYSIS FOR THE YEAR 2010-11(TABLE)
4.2.4 EOQ ANALYSIS FOR THE YEAR 2010-11(CHART)
4.2.5 EOQ ANALYSIS FOR THE YEAR 2011-12 (TABLE)
4.2.6 EOQ ANALYSIS FOR THE YEAR 2011-12(CHART)
4.2.7 EOQ ANALYSIS FOR THE YEAR 2012-13 (TABLE)
4.2.8 EOQ ANALYSIS FOR THE YEAR 2012-13 (CHART)
4.2.9 EOQ ANALYSIS FOR THE YEAR 2013-14 (TABLE)
4.2.10EOQ ANALYSIS FOR THE YEAR 2013-14 (CHART)


47
49
50
51
52
53
54
55
56
57
58

V
SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION
5.1 FINDINGS
5.1.1 RATIO ANALYSIS (INVENTORY)
5.1.2 EOQ ANALYSIS

59

60
60

60
5.2 SUGGESTIONS
5.2.1 RATIO ANALYSIS (INVENTORY)

61
61
5.3 CONCLUSION 61

BIBLIOGRAPHY 62




7 CARLTON BUSINESS SCHOOL
7


ABSTRACT

The purpose of inventory management is to ensure availability of raw material in
sufficient qualities as and when required and also minimize investment in inventories. This is
essential to manage inventories efficiently and effectively in order to avoid excess investment. It
is possible for a company to reduce the level of inventories to a considerable extent without any
adverse effect on production and sales by using simple inventory planning and control
techniques. The reduction of excessive inventories will create a favorable impact on the company
profitability. Inventory turnover ratio, inventory conversion period are very helpful to know how
effectively inventory plays a role in the organization. The use of EOQ analysis is very effective
and is useful tool for classifying, monitoring and controlling of the inventories.












8 CARLTON BUSINESS SCHOOL
8







CHAPTER-I
INRODUCTION











9 CARLTON BUSINESS SCHOOL
9


1.1 ABOUT THE STUDY
Inventory management is primarily about specifying the size and placement of stocked
goods. Inventory management is recurred at different locations within a facility or within
multiple locations of a supply or network to protect the regular and planned course of production
against the random disturbance of running out of materials or goods. The scope of Inventory
management also concerns the fine lines between replenishment lead time, carrying costs of
inventory, asset management, Inventory forecasting, physical inventory, available physical space
for Inventory, quality management, returns and defective goods and demand and forecasting.
Types of inventory
Normally the inventory has divided into two types. These,
1. Merchandising inventory,
2. Manufacturing inventory.
The manufacturing inventory has been subdivided into three types. These,
1. Raw materials,
2. Work in process,
3. Finished goods.
Raw materials: Everything the crafter buys to make the product is classified as raw
materials. That includes leather, dyes, snaps and grommets. The raw material inventory
only includes items that have not yet been put into the production process.
Work in process: This includes all the leather raw materials that are in various stages of
development. For the leather crafting business, it would include leather pieces cut and in
the process of being sewn together and the leather belts and purse etc. that are partially
constructed.
In addition to the raw materials, the work in process inventory includes the cost of the
labor directly doing the work and manufacturing overhead. Manufacturing overhead is a



10 CARLTON BUSINESS SCHOOL
10
catchall phrase for any other expenses the leather crafting business has that indirectly
relate to making the products. A good example is depreciation of leather making fixed
assets.
Finished goods: When the leather items are completely ready to sell at craft shows or
other venues, they are finished goods. The finished goods inventory also consists of the
cost of raw materials, labor and manufacturing overhead, now for the entire product.
1.2 SCOPE OF THE STUDY
The study helps the management to improve its profitability through a reduction in non-
moving inventory.
It develops the policies for both continuous review of inventory management system.
The study helps to show the level of the inventory in the organization. The company will
make the proper inventory methods from the suggestions of the study.
1.3 STATEMENT OF THE PROBLEM
The research problem statement for the project is How far EOQ (Economic Order
Quantity) Analysis is useful for effective inventory management at Zuari Cement
Pvt. Limited?

1.4 OBJECTIVES OF THE STUDY
To study the inventory management followed in Zuari cement.
To identify the existing inventory management and its effectiveness.
To calculate analysis for their performance in inventory management.



11 CARLTON BUSINESS SCHOOL
11

1.5 RESEARCH METHODOLOGY
1.5.1 RESEARCH DESIGN
The Descriptive type of research has been applied in the study. In this research the
researcher has no control over the variables. He only reports what has happened or what is
happening. The research can only discover causes but cannot control the variables.
1.5.2 DATA COLLECTION
This study purely based on secondary sources of information. The necessary data
calculated from annual report, books, journals and websites.
1.5.3 PERIOD OF STUDY
This study covers a period of five years from 2009 2010 to 2013 2014. The
accounting year commenced from April and ending with March of the next year.
1.5.4 AREA OF STUDY
This study was conducted in Zuari cement pvt.ltd Yerraguntla, Kadapa District.

1.5.5 TOOLS FOR ANALYSIS
The following tools have been applied in the present study.
They are listed below
Ration analysis (inventory) and
EOQ analysis





12 CARLTON BUSINESS SCHOOL
12
1.5.5.1 RATIO ANALYSIS (INVENTORY)

The percentage of a mutual fund or other investment vehicle's holdings that have been "turned
over" or replaced with other holdings in a given year. The type of mutual fund, its investment
objective and/or the portfolio manager's investing style will play an important role in
determining its turnover ratio.

1.5.5.2 ECONOMIC ORDER QUANTITY (EOQ)
Economic order quantity is that level of inventory that minimizes the total of
inventory holding cost and ordering cost. The framework used to determine this order quantity is
also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913.The most
economical quantity of a product that should be purchased at one time. The EOQ is based on all
associated costs for ordering and maintaining the product. EOQ refers to the size of the order
which gives maximum economy in punches of materials.


Where










13 CARLTON BUSINESS SCHOOL
13









CHAPTER-II
INDUSTRY AND COMPANY PROFILE








14 CARLTON BUSINESS SCHOOL
14

2.1 INDUSTRY PROFILE
History of the origin of cement
It is uncertain where it was first discovered that a combination of hydrate non-hydraulic limeade
a pozzolanproduces a hydraulic mixture, but concrete made from such mixture was first used on
large scale by roman engineers. They used both natural pozzolans (tress or pumice) and artificial
pozzolans in the concretes. Many excellent examples of structures made from these concretes are
still standing. Notably the huge monolithic dome of the pantheon in Rome and the massive Bath
of Caracalla. The vast system of roman aqueducts also made extensive use of hydraulic cement.
The use of structural concrete disappeared in medieval Europe. Although weak pozzolanic
concretes continued to be used as a core fills in stone walls and columns.
Modern cement
Modern hydraulic cement began to be developed from the start of the industrial Revolution
(around 1800) ,driven by three main needs: Hydraulic renders for finishing brick buildings in wet
climates Hydraulic mortars for masonry construction of harbor works etc. , in contact with sea
water.
Varieties of the cement
There are some varieties in cement that always find good demand in the market. To know their
characteristics and in which area they are most required, it will be better to take a look at some of
the details given below.
.
Sulphate resisting Portland Cement (SRPC)
This cement is beneficial in the areas where concrete has an exposure to seacoast or sea water or
soil or ground water. Under any such instances, the concrete is vulnerable to sulphates attack in
large amounts and can damage to the structure. Hence, by using this cement one can reduce the
impact of damage to the structure. This cement has high these cement one can reduce the impact
of damage to the structure. This cement has high demand in India.



15 CARLTON BUSINESS SCHOOL
15
Rapid hardening Portland Cement (RHPC)
The texture of this cement type is quite to that OPC. But, it is bit more fine than OPC and
possesses immense compressible strength, which makes casting work easy.
Ordinary Portland Cement (OPC)
Also referred to as grey cement or OPC, it is of much use in ordinary concrete construction. In
the production of this type of cement in India, Iron (fe2O3), Magnesium (MgO), Silica (SiO2),
and Sulphur, trioxide (SO3) components are used.
Portland Pozolona Cement (PPC)
As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The rate of
hydration heat is lower in this cement type. Coal waste or waste or burnt clay is used in the
production of this category of cement. It can be availed at low cost in comparison to OPC.
Oil Well Cement (OWC)
Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing or fixing
oil wells. This is applied on both the off-shore and on-shore of the wells.
Clinker Cement (CC)
Produced at the temperature of about 1400 to 14560 degree Celsius, Clinker cement is needed in
the construction work of complexes, houses and bridges. The ingredients for this cement
comprise iron, quartz, clay, limestone and bauxite.
A part from these, some of the other types of cement that are available in India can be classified
as:
Low heat cement,
High early strength cement,
Hydrophobic cement,
High aluminum cement and
Masonry cement.




16 CARLTON BUSINESS SCHOOL
16
2.1.1 Cement Industry in Global
Cement is a basic ingredient for the construction industry. It is estimated there are 1500
integrated cement production plants in the world. Although the players such a Lafarge or
CEMEX, the share of the four largest firms account only for 23% of the overall demand.
Demand
World cement demand was 2,283MT in 2005, with China accounting for 1,064MT (47% of
total). The expected demand for 2010 is estimated at 2,836 MT. China willpower increase its
demand by 250MT during the period, an increase higher than the total yearly European demand.
The Demand of Cement
Demand for cement in MT 2005 2010 Growth rate
North America 170 200 2.9%
Western Europe 208 236 2.2%
Asia/Pacific 1500 1900 5.2%
Other regions 405 500 4.7%
World cement demand 2283 2836 4.7%
Source: www.cementhistory.com, www.google.com




17 CARLTON BUSINESS SCHOOL
17
S.NO Name of the Company Name of the
Country
1. Aditya Birla Group-Grasim India
2. Al-Ghurair Group Dubai
3. Ambuja Cements Limited India
4. Anhui Conch Cement Company China
5. Arabian Cement Company Egypt
6. Ararat Cement Co. South Africa
7. Cement Cruz Azul Cement Co. Armenia
8. CEMEX Co. U.S.A
9. China National Cement Materials Group Corporation China
10. Cimpor Cement corp. China
11. Companhia Siderurgical National S.A Brazil
12. Concrete Casting Cement Company Pacific Alloy
13. CRH plc. America
14. Eagle Materials Inc. U.S.A
15. Heidelberg Cement Company Germany
16. James Hardier Cements U.S.A
17. Lafarge India
18. Libyan Cement Company Libya
19. Monarch Cement Ltd. U.S.A, California
20. Noricum Germany
21. Pretoria Portland Cement Company South Africa
22. Ready Mix Inc. India
23. Rinker Group Australia
24. Semapa Group Europe
25. Smith-Midland Cement Company U.S.A, Milford



18 CARLTON BUSINESS SCHOOL
18
Top 25 Cement companies in the world
2.1.2 Cement Industry in India
The cement industry in India has undergone a major shift over the last 6 years. The Indian
cement industry is the second largest producer of quality cement. Indian cement industry is
engaged in the production of several varieties of cement such as, ordinary Portland cement
(OPC), Portland pozzoland cement (PPC), Portland blast furnace slag Portland cement
(PBFSPC), sulfate resistance Portland cement (SRPC), white cement, etc.,. They are produce
strictly as per the Bureau of Indian standards (BIS) specifications and their quality is comparable
with the best in the world.
The industry occupies an important place in the national economy because of its strong linkage
to other sectors such as, construction, transportation, coal and power. The cement industry is also
one of the major contributors to the exchequer by way of indirect taxes.
Cement Companies in India
ACC Limited
Ambuja Cements Limited
Andhra Cements Ltd
Barak Valley Cements Ltd
Binani Cement Ltd
Birla Corporation Limited
Chettinad Cement Corporation Limited
Dalmia Cement (Bharat) Limited
Deccan Cements Ltd.
Everest Industries Ltd
Grasim Industries Limited
Gujarat Sidhee Cement Ltd
Heidelberg Cement India Ltd



19 CARLTON BUSINESS SCHOOL
19
Hyderabad Industries Ltd
Indian Hume Pipe Company Ltd
J. K. Cement Limited
JK Lakshmi Cement Ltd
Kalyanpur Cements Ltd.
Katwa Cements Ltd
Kesoram Industries Ltd.
Madras Cements Limited
Mangalam Cement Ltd.
Panyam Cements & Mineral Inds . Ltd
Prism Cement Ltd
Rose Zinc Ltd
Saurashtra Cement Ltd.
Shiva Cement Ltd
Shree Digvijay Cement Company Ltd.
Somani Cement Company Ltd
Sri Vasavi Inds . Ltd
Srichakra Cements Ltd
Stresscrete India Ltd
The India Cements Limited
Udaipur Cement Works Ltd
UltraTech Cement Limited
Vinay Cements Ltd




20 CARLTON BUSINESS SCHOOL
20
2.2 COMPANY PROFILE
2.2.1 THE COMPANY
The Zuari cement was started in 1994 to operate the cement plant of Texaco ltd.,
under a working arrangement. Subsequently Texacos cement business was taken over by
the company in 1995. Today Zuari Cements manufacturing facility at yerraguntla in
Andhra Pradesh is one of the largest in South India.
In the year 2000 Zuari enters in to a joint venture with the italcementi group the second largest
cement produce in Europe and Zuari Ltd. Lived off of a separate company.
The Zuari Cement is strategically located at Yerraguntla. The plant location existence of
6km from Yerraguntla. It is connected to the railway station on by a railway track of 7km length
and is having an exchange plant inside the factory. Plant is connected to the nearest highway by
0.2km land private road.
2.2.2 PROMOTER OF THE COMPANY
This investment was initially made through a 50:50 joint venture with the KK Birla group
in Zuari Cement Ltd., but subsequently in May 2006. Italicement group acquired the full central
of the company.
Now Company is under joint venture having rated capacity of 17 Lakhs per annum company for
that diversified that production of the cement making EPC along with OPC.
2.2.3 FINANCIAL SUPPORT
The required finances for the cement co., are provided by several financial institutions
like S.B.I BNP Paribas, Andhra Bank, Standard Charted Bank.
2.2.4 TECHNOLOGY ADOPTED
The technology adopted in the plant is an open pre-blending stockpiles system for
limestone and clinker. This is a special feature compared to the conventional system of storage
which has its own weakness on the case of the failure of cranes.





21 CARLTON BUSINESS SCHOOL
21
2.2.5 EXPANSION OF CAPACITY
The expansion of clinker capacity at Yerraguntla by way of new line with a capacity of 5500
tons per day and new grinding unit at Chennai with a capacity of 0.8 million have been finalized
with an estimate capital outlay of MINR 6760. Major permits and clearness requires for the
projects have been obtained and the supply contract for main equipment for Yerraguntla new line
are finalized with M/s F.L.Smith Limited. M/s Claudius Peter Technologies, M/s Maag Gear AG
and M/s Honeywell Automation India Limited. For Chennai grinding unit main equipment are
finalized with M/s Walchandnagar Industries limited, including contracts for erection and
commissioning. On implementation of these projects the total capacity of the company will
increase to 5 million tons.
2.2.6 QUALITY CUSTOMER SERVICE
In an effort to reach out to customers better, Zuari cement had setup a technical cell named Zuari
home partner. This cell gives guidance in the field of building.
Technology, architecture, housing finance and economical usage of the high quality cement.
Technology experts provide the assistance according to individual requirements. So that
customers get the best value for the investment they have made.
2.2.7 DEVELOPMENT ACTIVITIES
The plant in Yerraguntla had adopted four nearby villages as part of its program of
corporate social responsibility towards the local community. These villages are Thumallapalli,
Yalasapalli, Koduru and Peddanapadu, part of the Kadapa district of Andhra Pradesh State. In
particular, the planet intends to contribute to the improvement of living standards of the people in
the surrounding villages. The strategy focuses on three basis areas: health and hygiene, education
and sustainable livelihoods.
2.2.8 ITALCEMENTI GROUP
Italcemanti Group, with a production capacity of approximately 70 million tons of
cement annually, is the fifth largest cement producer in the world with leadership in the
Mediterranean area. Italcementi, one of the 10 largest Italian industries companies is included in
S&P/MIB Index of Italian Stock Exchange.



22 CARLTON BUSINESS SCHOOL
22
The core business cement (over 65% of sales) is combined with the production of ready mixed
concrete and aggregates, Italcementi Group, with 2007 annual sales amounting to 5,854 million
Euro and a net income of 651 million Euro, combines the expertise, knows how and cultures of
19 countries. With over 22,850 employees, the Group boasts, as at 31 December 2007, an
industrial network of 62 cement plants, 15 grinding centers, 3 terminals, 152 aggregate quarries
and 588 concrete, batching units Italcement group in India
Italcement group made its debut in India in January 2001, through the partial acquisition of the
2.1 Mint Yerragunta Cement plant, located in the southern part of Andhra Pradesh State. The
plant supplies material to south India that accounts for one fourth of the entire population of the
country. The plant is strategically located to cater to the major markets of Bangalore and Chennai
In January 2002, Zuari cement took over another company, Sri Vishnu Cement Limited (SVCL)
whose 1.3 Mint plant is situated at Sitapuram, Andhra Pradesh State, near the capital,
Hyderabad, 3
rd
highest consumption center of the South.
Until now, Italcement group has invested around 200 million euro in India, the Group actually
counts on 3.4 Mint production capacity, with net sales of about 116 million euro in 2006.
2.2.9 COMPETITORS FOR ZUARI CEMENT LIMITED
Coramandal cement
Penna cement
Ultra tech cement
Priya cement
Maha cement
Nagarjuna cement
Lanco cement
Bharathi cement



23 CARLTON BUSINESS SCHOOL
23
2.2.10 LOCATION OF THE PLANT
Cement and its raw materials namely coal and lime stone, are all bulky that make
transportation difficult and uneconomical. Given this, cement plants are located close to both
sources of raw materials and markets.
Location of the plant at this place is having the following advantages. Location in
industrial belt of Rayalaseema with sophisticated facilities like water.
Present of best suited limestone proved scientifically for cement.
Low free limestone to ensure reduce surface cracks.
Low heat of hydration from better soundness.
Low magnesia content to ensure reduced tensile cracks.
Specially designed setting time to suit Indian working conditions.
2.2.11 PRODUCTION
Cement production during the period has also increased from about 72.23 million tons
about 90 million tons in 2006-2007 excluding the contribution of mini cement plants.
2.2.12 RAW MATERIALS
The actual requirements of raw material at 100% capacity utilization would be;
12.5 million tons of limestone per annum.
70000 tons of Gypsum per annum.
39000 tons of Bauxite per annum.
20000 tons of Iron ore per annum.




24 CARLTON BUSINESS SCHOOL
24
The limestone is major component required for the plant is net from the mines located
adjacent to the proposed site.
Gypsum is procured from fertilizer factories at Madras and Cochin.
Iron is soured partly from mini steel plants located at Tirupathi and partially from
Bellary.
Bauxite is procured from Goa, Karnataka and Maharashtra.
2.2.13 POWER
Maximum estimated power demand is 45 M.V. The company has an existing contract 50 M.V
demands APSEB, the plant presents has D.G sets with an aggregate general capacity of 12.6
M.V.
2.2.14 WATER
Water is required for seeds of consumption make for plant and machinery for general
need in plant. Company has a pumping station and underground bore wells near Hanuman Gutty
village at Penna River to tap the undergrounds water in riverbed.
2.2.15 TRANSPORT
The factory is when connected to different part of the country through rail and road
facilities is near to Yerraguntla railway station and has a railway lint to the factory with an extern
point within the factory premises 605 of the cement is dispatched by rail gal is received through
rail. The plant is connected to the nearest state highway to Bangalore, Hyderabad and Chennai.




25 CARLTON BUSINESS SCHOOL
25
2.2.16 MAN POWER
Existing plant has a total of 500 employees. After and addition of employees may be
required.
2.2.17 QUARRY
It is situated adjacent to the factory. It constituted limestone, one of the major materials for
cement industry. The quarry has a mining base area of 1027.56 acres.
2.2.18 A WIDE RANGE TO ADDRESS EVERY NEED:
Residential, commercial, multistoried buildings and complex.
Mass concreting-dams, canals, spillways
Construction and repair of pavements, roads, flyovers and runways.
Spun pipes and poles manufacturing
Cold weather concreting
Pre-fabricated elements such a pipes, sleepers, windows, door frames etc.
2.2.19 QUALITY CUSTOMER SERVICE
In an effort to reach out to customers better, Zuari cement as set up a technical cell named
Zuari home partner. This cell gives guidance in the field of building. Technology, architecture,
housing finance and economical usage of the high quality. Technical experts provide the
assistance according to the individual requirements. So that customers get the best value for the
investment they have made.



26 CARLTON BUSINESS SCHOOL
26
2.2.20 PRODUCTS
Zuari Cement manufactures and distributes its own main product lines of cement .Its aim
is to optimize production across all of our markets, providing a complete solution for customer's
needs at the lowest possible cost, an approach and it is called as strategic integration of activities.
Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are crushed
and ground to provide the "raw meal, a pale, flour-like powder. Heated to around 1450 C
(2642 F) in rotating kilns, the meal undergoes complex chemical changes and is transformed
into clinker.



2.2.21 PROCESS TECHNOLOGY, THE SOLID FOUNDATION
The culture of quality that has always prevailed in Zuari Cement's manufacturing
facilities is best exemplified in the process technology employed. Advanced technology
methods are used to ensure that a high level of quality is attained and sustained right through the
manufacturing process. Yet, these high standards are constantly improved upon by an
experienced and dedicated R&D team to attain performance oriented cement.



27 CARLTON BUSINESS SCHOOL
27

Centralized On-line Process Control
2.2.21.1 THE PROCESS TECHNOLOGY ADVANTAGES
Complete homogenization of limestone is achieved by stacking the limestone in stock-
plies with the use of stackers and reclaiming it through recliners.
The optimum ratio of raw mix is attained by the use of X-ray analyzer and automatic
weigh feeder which are linked to the centralized computers control room.
Reduced variability in kiln feed and complete homogenization of raw meal is attained
through Continuous Flow Silo. This ensures that every grain of cement is of consistent
quality.

Online X-ray Analyzer Stacker and Reclaimed



28 CARLTON BUSINESS SCHOOL
28

Vertical Raw Mill Continuous Fluidized Silo
The totally computerized monitoring system enables quality clinkerisation. It dictates the
optimum retention time in the proclaimer and the kiln.
Equipped with a six stage double stream pre-heater cyclone system, the proclaimer only
adds to the quality.
The modern closed grinding units have a high efficiency separator that produces finer
particles of cement. This yields cement matrix with a lower pore diameter. This in turn
gives concrete of higher density and lower permeability.
2.2.21.2 VENTOMATIC ELECTRONIC PACKING
Zuari Cement employs Ventomatic packers to ensure that the customer gets exactly 50
kgs per bag. To minimize damages during transport, advanced loading techniques are used.
These steps reflect Zuari Cement's commitment to offer the best quality and correct quality to its
customers.




29 CARLTON BUSINESS SCHOOL
29

2.2.21.3 ENVIRONMENT-FRIENDLY TECHNOLOGY
To minimize dust emission, Zuari Cement has installed the latest pollution control
equipment such as electrostatic precipitators in the kiln, raw mills, coal mills and cement mills.
this environmental friendly aspect of Zuari's process technology has resulted in abundance of
greenery and clean air in the factory premises.



30 CARLTON BUSINESS SCHOOL
30
2.2.22 BOARD OF DIRECTORS

DIRECTORS Saroj Kumar Poddar, Chairman
Rodolfo Danielle (Alternate Mrs.
Regina Bouille)
Yves Rene Nanto (Alternate Giorgio Bodo)
Goran L.Seifert (Alternate Philippe Marchat
) Maurizio Caneppele, Managing Director
V. Raghunathan

EXECUTIVES Director Marketing : Krishna Srinivatava
Sr. Vice President works : L. Srivastava
Chief Finance Officer : Gabreil Morin

COMPANY SECRETARY L.R. Neelakanta

BANKERS State Bank of India
BNP Paribad
Andhra Bank






31 CARLTON BUSINESS SCHOOL
31





CHAPTER-III
CONCEPTUAL AND THEORITICAL FRAME
WORK












32 CARLTON BUSINESS SCHOOL
32
3.1. CONCEPTUAL AND THEORITICAL FRAME WORK OF
INVENTORY MANAGMENT
Inventory management is a process of evaluating and controlling method for inventory or stock
level of the company. The purpose of inventory management is to diagnose the information
contained in the stock book of the company, so as to judge the stock level and control methods of
the firm. The analysis and interpretation of inventory management is essential to bring out the
stock needed. The inventory management is an attempt to determine the stock and meaning of
the stock book statement data so that forecast may be made of the future cost control of the
company. The stock evaluation helps to understand how best the organization is functioning with
good stock control.
The analytical tools generally available to an analyst for this purpose are as follows,
Inventory turnover analysis
EOQ analysis

3.1.1 OBJECTIVES OF INVENTORY TURNOVER ANALYSIS, EOQ
ANALYSIS
The objectives of inventory turnover analysis EOQ analysis is to provide information
about the stock level and control when purchase of raw materials of an enterprise that is useful to
a wide range of purchasing power of raw materials. We have discussed in the previous
paragraphs the utility of the components of inventory turnover and EOQ. Later we will us
discussing how they are made use of by stock department
o To study the stock book of the company
o To evaluate the stock position of the company.
o To find out the efficiency in utilization of stock materials to produce the goods.






33 CARLTON BUSINESS SCHOOL
33
3.1.2 USES OF INVENTORY TURNOVER ANALYSIS, EOQ ANALYSIS
It is helpful in assessing the stock position and productivity position of a concern. The
main objectives of an inventory turnover analysis are to assess
The present and future stock capacity of a concern.
To give corrective solution for the inventory problem.
To differentiates the investment with EOQ and invest without EOQ for purchasing of the
raw material
3.1.3 INVENTORY TURNOVER RATIOS
3.1.3.1 INVENTORY TURNOVER RATIO
A ratio showing how many times a company's inventory is sold and replaced over a period.
3.1.3.2 INVENTORY TURNOVER PERIOD
How often interest is calculated and added on to your investment? If you have two conversion
periods, it means that interest is calculated every six months. The inventory conversion period
for calculate the interest for credit sales to their agents
3.1.4 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 this order quantity is
also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913.The most
economical quantity of a product that should be purchased at one time. The EOQ is based on all
associated costs for ordering and maintaining the product. EOQ refers to the size of the order
which gives maximum economy in punches of materials.


Where





34 CARLTON BUSINESS SCHOOL
34


3.2 REVIEW OF LITERATURE
The investment in inventories constitutes the most significant part of current assets / working capital in
most of the undertakings. Thus, it is very essential to have proper control and management of inventories.
The purpose of inventory management is to ensure availability of materials in sufficient quantity
as and when required and also to minimize investment in inventories.
3.2.1 MEANING AND NATURE OF INVENTORY
In accounting language, inventory may mean the stock of finished goods only. In a manufacturing
concern, it may include raw materials, work- in progress and stores etc.
Inventory includes the following things:
a) Raw Material: Raw material from a major input into the organization. They are required to
carry out production activities uninterruptedly. The quantity of raw materials required will be
determined by the rate of consumption and the time required for replenishing the supplies.
The factors like the availability of raw materials and Government regulations etc., too affect
the stock of raw materials.
b) Work in progress: The work in progress is that stage of stocks which are in between raw
materials and finished goods. The quantum of work in progress depends upon the time taken
in the manufacturing process. The quantum of work in progress depends upon the time taken
in the manufacturing process. The greater the time taken in manufacturing, the more will be
the amount of work in progress.
Consumables: These are the materials which are needed to smoother the process of
production but they act as catalysts. Consumables may be classified according to their
consumption add critically. Generally, consumable stores does not create any supply problem
and firm a small part of production cost. There can be instances where these materials may
account for much value than the raw materials. The fuel oil may form a substantial part of
cost.



35 CARLTON BUSINESS SCHOOL
35
c) Finished goods: These are the goods, which are ready for the consumers. The stock of
finished goods provides a buffer between production and market, the purpose of maintaining
inventory is to ensure proper supply of goods to customers.
d) Spares: The stock policies of spares fifer from industry to industry. Some industries like
transport will require more spares than the other concerns. The costly spare parts like engines,
maintenance spares etc., are not discarded after use, rather they are kept in ready position for
further use.
All decisions about spares are based on the financial cost of inventory on such spares and the
costs that may arise due to their non availability.
3.2.2 BENEFITS OF HOLDING INVENTORIES
Although holding inventories involves blocking of a firms and the costs of storage and handling,
every business enterprise has to be maintain certain level of inventories of facilitate un interrupted
production and smooth running of business. In the absence of inventories a firm will have to make
purchases as soon as it receives orders. It will mean loss of time and delays in execution of orders which
sometimes may cause loss of customers and business.
A firm also needs to maintain inventories to reduce ordering cost and avail quantity discounts etc.
There are three main purpose of holding inventories.
1. The transaction motive: This facilitates continuous production and timely execution of sales
order.
2. The precautionary motive: Which necessitates the holding of inventories for meeting the
unpredictable changes in demand and supplies of materials
3. The speculative motive: Which induces to keep inventories for taking advantage of price
fluctuations, saving in reordering costs and quantity discounts

3.2.3 OBJECTS OF INVENTORY MANAGEMENT
Definition of Inventory Management: Inventory Management is concerned with the determination
of optimum level of investment for each components of inventory and the operation of an effective
control and review of mechanism



36 CARLTON BUSINESS SCHOOL
36
Objectives of inventory management:
1. To ensure continuous supply of materials, spares and finished goods so that production should not
suffer at any time and the customers demand should also be met.
2. To avoid both over stocking and under stocking of inventory.
3. To maintain investment in inventories at the optimum level as required by the operational and
sales activities.
4. To keep material cost under control so that they contribute in reducing the cost of production and
overall costs.
5. To eliminate duplication in ordering or replenishing stocks. This is possible with the help of
centralizing purchases.
6. To minimize loses through deterioration, pilferages, wastages and damages.
7. To ensure perpetual inventory control so that materials shown in stock ledgers should be actually
lying in the stores.
8. To ensure right quality goods at reasonable prices. Suitable quality standards will ensure proper
quality of stocks. The price analysis, the cost analysis and value analysis will ensure payment
of proper prices.
9. To facilitate furnishing of data for short term and long term planning and control of inventory.

3.2.4 TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT
A proper inventory control not only helps in solving the acute problem of liquidity but also
increases profit and causes substantial reduction in the working capital of the concern.
The following are the important tools and techniques of inventory management and control.
3.2.4.1 DETERMINATION OF STOCK LEVELS
Carrying of too much and too little of inventory is detrimental to the firm. If the inventory level is
too little, the firm will face frequent stock outs involving heavy ordering cost and if the inventory level is
too high it will be unnecessary tie up of capital.
An efficient inventory management requires that a firm should maintain an optimum level of
inventory where inventory costs are the minimum and at the same time there is no stock out which may
result in loss or sale or shortage of production.



37 CARLTON BUSINESS SCHOOL
37
a) Minimum stock level:
It represents the quantity below its stock of any item should not be allowed to fall.
Lead time: A purchasing firm requires sometime to process the order and time is also required by
the supplying firm to execute the order.
The time in processing the order and then executing it is known as lead time.
Rate of Consumption: It is the average consumption of materials in the factory. The rate of
consumption will be decided on the basis of past experience and production plans.
Nature of materials: The nature of material also affects the minimum level. If a material is
required only against the special orders of the customer then minimum stock will not be required for such
material.
Minimum stock level can be calculated with the help of following formula.
Minimum stock level Re ordering level (Normal consumption x Normal re order period)
b) Re ordering Level:
When the quantity of materials reaches at a certain figure then fresh order is sent to get materials
again. The order is sent before the materials reach minimum stock level.
Re ordering level is fixed between minimum level maximum level.
c) Maximum Level:
It is the quantity of materials beyond which a firm should not exceeds its stocks. If the quantity
exceeds maximum level limit then it will be over stocking.
Overstocking will mean blocking of more working capital, more space for storing the materials,
more wastage of materials and more chances of losses from obsolescence.
Maximum stock level Reordering Level + Reorder Quantity (Maximum Consumption x
Minimum reorder period)





38 CARLTON BUSINESS SCHOOL
38
d) Danger Stock Level:
It is fixed below minimum stock level. The danger stock level indicates emergency of stock
position and urgency of obtaining fresh supply at any cost.
Danger Stock level = Average rate of consumption x emergency delivery time.
e) Average Stock Level:
This stock level indicates the average stock held by the concern.
Average stock level = Minimum stock level + x reorder quantity.
3.2.4.2 DETERMINATION OF SAFETY STOCKS
Safety stock is a buffer to meet some unanticipated increase in usage. The demand for materials
may fluctuate and delivery of inventory may also be delayed in such a situation the firm can be face a
problem of stock out.
In order to protect against the stock out arising out of usage fluctuations, firms usually maintain
some margin of safety stocks.
Two costs are involved in the determination of this stock that is opportunity cost of stock outs and
the carrying costs.
If a firm maintains low level of safety frequent stock outs will occur resulting into the larger
opportunity costs. On the other hand, the larger quantity of safety stocks involves carrying costs.
3.2.4.3 ECONOMIC ORDER QUANTITY (EOQ)
The quantity of material to be ordered at one time is known as economic ordering quantity.
This quantity is fixed in such a manner as to minimize the cost of ordering and carrying costs.
Total cost material = Acquisition Cost + Cost + Carrying Costs + Ordering Cost.
Carrying Cost:
It is the cost of holding the materials in the store.




39 CARLTON BUSINESS SCHOOL
39
Ordering Cost:
It is the cost of placing orders for the purchase of materials.
EOQ can be calculated with the help of the following formula
EOQ = 2CO / I
Where C = Consumption of the material in units during the year
O = Ordering Cost
I = Carrying Cost or Interest payment on the capital.
3.2.4.4 A B C ANALYSIS: (ALWAYS BETTER CONTROL ANALYSIS)
Under A B C Analysis. The materials are divided into 3 categories viz., A, B and C.
Almost 10% of the items contribute to 70% of value of consumption and this category is called
A category.
About 20% of the items contribute about 20% of value of category C covers about 70% of items
of materials which contribute only 10% of value of consumption.
3.2.4.5 VED ANALYSIS: (VITALLY ESSENTIAL DESIRE)
The VED analysis is used generally for spare parts. Spare parts classified as Vital (V), Essential
(E) and Desirable (D).
The vital spares are a must for running the concern smoothly and these must be stored adequately.
The E type of spares is also necessary but their stocks may be kept at low figures. The stocking of D
type spares may be avoided at times. If the lead time of these spares is less, then stocking of these spares
can be avoided.
3.2.4.6 INVENTORY TURNOVER RATIO
Inventory turnover ratios are calculated to indicate whether inventories have been used efficiently
or not.



40 CARLTON BUSINESS SCHOOL
40
The inventory turnover ratio also known as stock velocity is normally calculated as sales /
average inventory of cost of goods sold / average inventory.
Inventory conversion period may also be calculated to find the average time taken for clearing the
stocks. Symbolically.
Inventory Turnover Ratio = Cost of goods sold
_________________________
Average inventory at cost

(Or)
Net sales
= ________________________
(Average) Inventory
And,
Inventory conversion period = Days in a year
______________________
Inventory Turnover ratio

3.2.4.7 CLASSIFICATION AND CODIFICATION OF INVENTORIES
The inventories should first be classified can then code numbers should be assigned for their
identification. The identification of short names are useful for inventory management not only for large
concerns but also for small concerns. Lack of proper classification may also lead to reduction in
production.
Generally, materials are classified accordingly to their nature such as construction materials,
consumable stocks, spares, lubricants etc. After classification the materials are given code numbers. The
coding may be done alphabetically or numerically. The later method is generally used for coding.
The class of materials is assigned two digits and then two or three digits are assigned to the
categories of items divided into 15 groups. Two numbers will be category of materials in that class.
The third distinction is needed for the quality of goods and decimals are used to note this factor.
3.2.4.8 VALUATION OF INVENTORIES METHOD OF VALUATION
FIFO method



41 CARLTON BUSINESS SCHOOL
41
LIFO method
Base Stock method
Weighted average price method
3.2.4.8.1 THE FIFO METHOD (FIRST IN FIRST OUT METHOD)
Under this method it is assumed that the materials or goods first received are the first to be issued
or sold. Thus, according to this method, the inventory on a particular date is presumed to be composed of
the items which were acquired most recently.
The value inventory would remain the same even if the perpetual inventory system is followed.
Advantages: - The FIFO method has the following advantages.
1) It values stock nearer to current market prices since stock is presumed to be consisting of
2) The most recent purchases.
3) It is based on cost and, therefore, no unrealized profit enters into the financial accounts of the
company.
4) The method is realistic since it takes into account the normal procedure of utilizing or selling
those materials or goods which have been longer longest in stock.

Disadvantages: - The method suffers from the following disadvantages.
1) It involves complicated calculations and hence increases the possibility of clerical errors.
2) Comparison between different jobs using the same type of material becomes sometimes
difficult. A job commenced a few minutes after another job may have to bear an entirely
different charge for materials because the first job completely exhausted the supply of
materials of the particular lot.
The FIFO method of valuation of inventories is particularly suitable in the following
circumstances:
I. The materials or goods are of a perishable nature.
II. The frequency of purchases is not large.
III. There are only moderate fluctuations in the prices of materials or goods purchased.
IV. Materials are easily identifiable as belonging to a particular purchase lot.



42 CARLTON BUSINESS SCHOOL
42
3.2.4.8.2 THE LIFO METHOD (LAST IN FIRST OUT METHOD)
This method is based on the assumption that last item of materials or goods purchased are the first
to be issued or sold. Thus, according to this method, inventory consists of items purchased at the earliest
cost.
Advantages: - This method has the following advantages:
1) It takes into account the current market conditions while valuing 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.
The method is most suitable for materials which are of bulky and non Perishable type.
3.2.4.8.3 BASE STOCK METHOD
This method is based on the contention that each enterprise maintains at all times a minimum
quantity of materials or finished goods in its stock. This quantity is termed as base stock. The base stock
is always valued at this price and its carried forward as a fixed asset. Any quantity over and above the
base stock is valued in accordance with any other appropriate method. As this method aims at matching
current costs to current sales, the LIFO method will be most suitable for valuing stock of materials or
finished goods other than the base stock. The base stock method has advantage of charging out material /
goods at actual cost. Its other merits or demerits will depend on the method which is used for valuing
materials other than the base stock.
3.2.4.8.4 WEIGHTED AVERAGE PRICE METHOD
This method is based on the presumption that once the materials are put into a common bin, they
lose their identity. Hence, the inventory consists of no specific batch of goods. The inventory is thus
priced on the basis of average priced on the quantity purchased at each price.
Weighted average price method is very popular on account of its being based on the total quantity
and value of materials purchased besides reducing number of calculations. As a matter of fact the new
average price is to be calculated only when a fresh purchase of materials is made in place of calculating it
every now and then as is the case with FIFO, LIFO methods. However, in case of this method different
prices of materials are charged from production particularly when the frequency of purchases and
issues/sales in quite large and the concern is following perpetual inventory system.



43 CARLTON BUSINESS SCHOOL
43















CHAPTER-IV
ANALYSIS OF INVENTORY MANAGEMENT
















44 CARLTON BUSINESS SCHOOL
44
















4.1 ANALYSIS PART-1
RATIO ANALYSIS (INVENTORY)














45 CARLTON BUSINESS SCHOOL
45


4.1.1 LEVEL OF INVENTORY
TABLE


The inventory level was found to be increased trend from 2006-2007 to 2010-2011. The
overall inventory level position for the five years is satisfactory.




S.No Particulars 2009-10 2010-11 2011-12 2009-1 2013-14
1
Raw materials
Lime stone
(stacker 60 Per cent)
Iron ore
(stacker 25 Per cent)
Clay ash
(stacker 15 Per cent)

3330.80

1387.83

832.70

5169.86

2154.11

1292.47

8392.21

3496.76

2098.05

11109.76

4629.10

2777.44

11265.50

4693.96

2816.40
TOTAL(clinker) 5551.33 8616.44 13937.02 18516.26 18775.86
2 Work in process 5386.48 8451.74 13822.02 18351.46 18611.09
3 Finished goods 6251.55 9316.59 14522.32 19216.54 19416.11
Total 17189.36 26384.77 42331.36 56084.26 56803.06
Qty in thousand tones



46 CARLTON BUSINESS SCHOOL
46
4.1.2 INVENTORY TURNOVER RATIO
. The inventory turnover ratio measures the number of times a company sells its inventory
during the year.


TABLE
INVENTORY TURNOVER RATIO

S.No Year
Cost of goods sold
(`in lakhs)
Average stock (in tons) Inventory turnover ratio
1
2009-10 2663028 487428 5.46 per cent
2
2010-11 2844494 503184 5.65 per cent
3
2011-12 3094850 819401.5 3.78 per cent
4
2012-13 4010580 945491.5 4.24 per cent
5
2013-14 4521886 822538.5 5.50 per cent
Source: Annual reports of Zuari cement pvt limited
The inventory turnover ratio was high in the year 2009-10 after that 2010-11 the
inventory turnover ratio was decreased. The present value of inventory turnover ratio is good.




47 CARLTON BUSINESS SCHOOL
47
4.1.3 INVENTORY CONVERSION PERIOD
The inventory conversion period is the time required to obtain materials for a product,
manufactured it, sell it.




TABLE
INVENTORY CONVERSION PERIOD
S.No Year No. of days Inventory turnover ratio
Inventory conversion
period (in days)
1 2009-10 365
5.46 per cent 66
2 2010-11 366
5.65 per cent 64
3 2011-12 365
3.78 per cent 96
4 2012-13 365
4.24 per cent 86
5 2013-14 365
5.50 per cent 65
Source: Annual reports of Zuari cement pvt limited
The inventory conversion period is normally indicates the wealth of the company. The
company wants to concentrates with its inventory conversion period.






48 CARLTON BUSINESS SCHOOL
48









4.2 ANALYSIS PART-2
EOQ ANALYSIS








49 CARLTON BUSINESS SCHOOL
49




4.2.1 EOQ ANALYSIS FOR THE YEAR 2009-10 (TABLE)
Item
Annual
requirement
O C P EOQ
Total
investment
with EOQ
Total
investment
without EOQ
Saving
inventory
cost
Iron Ore 31500 36 1.5 65 1230 81794 138615 56821
Lime Stones 15000 40 1.25 144 980 142345 145225 2880
Clay Ash 14000 42 2 144 767 111982 135915 23933
Sulphur 13000 34.5 1.75 153 716 110801 133927 23136
Gypsum 13500 35 1.25 144 869 126223 130688 4465
Bauxite 11500 36.5 1.5 150 748 113322 116173 2851
Source: Annual report of Zuari cement pvt limited
The companys annual requirement for the year 2009-10 is 101000 tons of raw materials.
They using investment with EOQ spent ` 787168. When the same in without investing EOQ is
` 882551. So the company saved ` 169432 in the year 2009-10.




50 CARLTON BUSINESS SCHOOL
50

4.2.2 EOQ ANALYSIS FOR THE YEAR 2009-10 (CHART)


0
20000
40000
60000
80000
100000
120000
140000
160000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
81794
142345
111982
110801
126223
113322
138615
145225
135915
133927
130688
116173
Total investment with EOQ
Total investment without EOQ



51 CARLTON BUSINESS SCHOOL
51


4.2.3 EOQ ANALYSIS FOR THE YEAR 2010-11(TABLE)
Item
Annual
requirement
O C P EOQ
Total
investment
with EOQ
Total
investment
without
EOQ
Saving
inventory cost
Iron Ore 33500 35 1.5 75 1250 95626 169675 74049
Lime Stones 13500 41 2 154 744 116064 140115 24051
Clay Ash 16500 55 1.55 154 1100 171050 171050 0
Sulphur 14000 35 1.5 163 808 132916 153304 20388
Gypsum 12500 36 2 154 671 104676 153304 20388
Bauxite 11000 37 2.5 160 571 92787 118752 25965
Source: Annual report of Zuari cement pvt limited

The companys annual requirement for the year 2010-11 is 103700 tons of raw materials.
They using investment with EOQ spent ` 590000. When the same in without investing EOQ is
` 921215. So the company saved ` 195739 in the year 2010-11.






52 CARLTON BUSINESS SCHOOL
52

4.2.4 EOQ ANALYSIS FOR THE YEAR 2010-11(CHART)



0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
95626
116064
171050
132916
104676
92787
169675
140115
171050
153304 153304
118752
Total investment with EOQ
Total investment without EOQ



53 CARLTON BUSINESS SCHOOL
53



4.2.5 EOQ ANALYSIS FOR THE YEAR 2011-12 (TABLE)
Item
Annual
requirement
O C P EOQ
Total
investment
with EOQ
Total
investment
without EOQ
Saving
inventory
cost
Iron Ore 13500 34 1.5 65 1260 83789 153905 7046
Lime Stones 13500 36 1.5 167 805 135642 151515 15873
Clay Ash 15000 38 1.75 165 807 134567 166445 13878
Sulphur 14000 37 1.75 164 769 127462 154384 26922
Gypsum 15000 35 2.5 165 648 108540 166775 58235
Bauxite 11200 36.5 1.75 170 684 117476 128191 10715
Source: Annual report of Zuari cement pvt limited

The companys annual requirement for the year 2011-12 is 98500 tons of raw materials.
They using investment with EOQ spent ` 68646. When the same in without investing EOQ is `
800543. So the company saved ` 114076 in the year 2011-12.




54 CARLTON BUSINESS SCHOOL
54

4.2.6 EOQ ANALYSIS FOR THE YEAR 2011-12(CHART)




0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
83789
135642
134567
127462
108540
117476
153905
151515
166445
154384
166775
128191
Total investment with EOQ
Total investment without EOQ



55 CARLTON BUSINESS SCHOOL
55


4.2.7 EOQ ANALYSIS FOR THE YEAR 2012-13 (TABLE)
Item
Annual
requirement
O C P EOQ
Total
investment
with EOQ
Total
investment
without EOQ
Saving
inventory cost
Iron Ore 34000 36 1.5 95 1271 123231 217605 94374
Lime Stones 12500 37 1.75 174 727 127770 146226 18456
Clay Ash 14000 40 1.5 175 864 152496 164575 12079
Sulphur 16000 38 1.75 174 834 146575 187161 40586
Gypsum 18000 36 2.75 175 686 121938 212190 90252
Bauxite 17000 37 1 180 1122 203082 205062 1980
Source: Annual report of Zuari cement pvt limited
The companys annual requirement for the year 2012-13 is 111500 tons of raw materials.
They using investment with EOQ spent `875092. When the same in without investing EOQ is
`1132819. So the company saved `2577276 in the year 2012-13.





56 CARLTON BUSINESS SCHOOL
56



4.2.8 EOQ ANALYSIS FOR THE YEAR 2012-13 (CHART)


0
50000
100000
150000
200000
250000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
123231
127770
152496
146575
121938
203082
217605
146226
164575
187161
212190
205062
Total investment with EOQ
Total investment without EOQ



57 CARLTON BUSINESS SCHOOL
57


4.2.9 EOQ ANALYSIS FOR THE YEAR 2013-14 (TABLE)
Item
Annual
requirement
O C P EOQ
Total
investment
with EOQ
Total
investment
without EOQ
Saving
inventory cost
Iron Ore 38000 37 1.75 105 1268 135358 268736 133378
Lime Stones 13500 35 1.25 185 869 161852 167588 5736
Clay Ash 12000 38 3 195 551 109099 157770 48671
Sulphur 15000 40 3.25 185 608 114455 187225 72770
Gypsum 17000 40 1.25 194 1043 203646 221110 17464
Bauxite 18000 39 2.75 200 715 144965 242235 97270
Source: Annual report of Zuari cement pvt limited
The companys annual requirement for the year 2013-14 is 113500 tons of raw materials.
They using investment with EOQ spent ` 869375. When the same in without investing EOQ is
` 1244664. So the company saved ` 375289 in the year 2013-14.




58 CARLTON BUSINESS SCHOOL
58


4.2.10 EOQ ANALYSIS FOR THE YEAR 2013-14 (CHART)


135358
161852
109099
114455
203646
144965
268736
167588
157770
187225
221110
242235
0
50000
100000
150000
200000
250000
300000
Iron Ore Lime Stones Clay Ash Sulphur Gypsum Bauxite
Total investment with EOQ
Total investment without EOQ



59 CARLTON BUSINESS SCHOOL
59









CHAPTER-V
SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION









60 CARLTON BUSINESS SCHOOL
60
5.1 FINDINGS
5.1.1 RATIO ANALYSIS (INVENTORY)
Inventory level of the company has increased year by year. However there is no
problem in the inventory level of the Zuari cement pvt.limited.
Inventory turnover ratio the ratios of the year has been found as low in the years
of 2011-12 and 2012-13. After those periods the inventory turnover ratio has
slightly increased in the year 2013-14. Even though that level is quite low when
compare with 2010-11.
Inventory conversion period is found at good level though the effort is to keep
the inventory conversion period as low.
5.1.2 EOQ ANALYSIS
EOQ analysis for the year 2009-10 to 2013-14 is good. For this year they
followed EOQ with investment for purchase of goods.
EOQ analysis for the year 2010-11 to 2013-14 is good. For this year they
followed EOQ with investment for purchase of goods.
In EOQ analysis for the year 2011-12 to 2013-14 is good. For this year they
followed EOQ with investment for purchase of goods.
In EOQ analysis for the year 2012-13 to 2013-14 is good. In this year the EOQ
with investment and EOQ without investment are same.
In EOQ analysis for the year 2013-14 to 2013-14 is good. All years of EOQ is
followed only investment with EOQ.



61 CARLTON BUSINESS SCHOOL
61
5.2 SUGGESTIONS
5.2.1 RATIO ANALYSIS (INVENTORY)
Inventory level of the company shows the increase of the raw materials, work-in-
process and finished goods. The inventory level of Zuari cement pvt limited is
well.
Inventory turnover ratio detected some problems. Now they use their cement
which are produced in Zuari cement pvt limited for their own purpose. If they sell
that to others also then only the ratio will be increased.
Zuari cement pvt limited sells the 25 per cent of the cements produced, remaining
they used for own purpose. For sales to others more credit days may be allowed to
their agents.
5.3 CONCLUSION
The study covers the inventory management for effective inventory control. The
technique used is Economic Order Quantity Analysis named as EOQ Analysis to find out
the rate with EOQ and without EOQ investment for purchasing of good in manufacturing
the cement at Zuari Cement Pvt Limited. With this the inventory management of the
organization was found to be quite good during the years 2009-2014. From this study it
can be concluded that the organization has been in effective in inventory management.
The study will be used for Zuari Cement Pvt Limited in varied ways.





62 CARLTON BUSINESS SCHOOL
62
BIBLIOGRAPHY
BOOKS
Asohok Banerjee - Financial Accounting A Managerial Emphasis Excel Books
2005
Collis Business Accounting Palgrave Macmillan 2007
Khan MY Jain P.K Management Accounting : Text, problems and cases 4
th
Edition
Tata McGraw Hill 2007
Pandikumar Management Accounting Excel Books 2007
Ramachandran N Kakani Kumar Ram Financial Accounting For Management Tata
McGraw Hill 2006
Robert Anthony David Hawkins Kenneth A.Merchant Accounting Text and Cases
Tata McGraw Hill 2007
S.K Bhattacharyya JohnDeaden Costing for Management Vikas Publishing 2002
S.N Maheswari S.K Maheswari Accounting for Management Vikas Publishing
2006
WEBSITES
en.wikipedia.com
Info.shine.com
www.ask.com
www zuaricements.com
www.google.com
www.indiacatalog.com
www.inventoryquzz.com
www.reportjunction.com
www.scribed.com
www.yahoo.com