Professional Documents
Culture Documents
On
INVENTORY MANAGEMENT & ITS ANALYSIS
AT
LIBERTY SHOES LIMITED, KUTAIL
SUBMITTED BY: -
Kurukshetra University,
Kurukshetra
Palvi Sharma
M.B.A 3 rd Semester
(Finance\ Marketing)
College Roll No. 8558
University Roll No.
Declaration
I, Palvi Sharma, student of MBA III Semester, studying at Doon Valley Institute of
Engineering and Technology, Karnal, hereby declare that the summer training
report on Inventory Management And Its Analysis submitted to Kurukshetra
University, Kurkshetra in partial fulfillment of Degree of Masters of Business
Administration is the original work conducted by me.
The information and data given in the report is authentic to the best of
my knowledge. THIS SUMMER TRAINING REPORT IS NOT BEING
SUBMITTED TO ANY OTHER UNIVERSITY FOR AWARD OF ANY OTHER
DEGREE, DIPLOMA AND FELLOWSHIP.
(PALVI SHARMA)
ACKNOWLEDGEMENT
INDEX
Title Page
Acknowledgement
Preface
Executive Summary
Research Methodology
Conclusion
Bibliography
Annexure
PREFACE
LIBERTY shoes Ltd. Is the only Indian company that is among the top five
manufacturers of leather footwear in the world with a turnover exceeding US $100
million. This report is all about study of Inventory Management of Liberty shoes Ltd.
In this, I studied annual reports of different years of Liberty shoes Ltd.
My objective is to study Inventory Management of Liberty shoes Ltd. With
the help of Ratio Analysis. For this report, research design used is exploratory
research design. Exploratory research design main purpose is to formulate a problem
for more precise investigation.
In this, I define clearly what I want to measure and employ adequate method
for measuring it. Data is collected from annual reports of different years of Liberty
shoes Ltd., manual, websites and books.
The study contains certain limitations because enough data was not available
but all the efforts have been made to collect the relevant information through the
source available.
The Company is highly dependent on external debt, which bring in
inflexibility in companys operation. But still the company is in stronger position
because the profits have increased with sales.
LIBERTY SYMBOL
EXECUTIVE SUMMARY
Footwear is a man made outer covering of foot. It is genially made out of leather
but the same can be made with synthetic material. When the human being came
into existence, they were needed to protect themselves from heat, cold dampness,
dust and roughness of ground while walking, standing, or even running. So they
innovate shoes for the protection of their feet.
growing standard of living and demand, many new footwear companies came into
light like Liberty,Corona, Action, Lakhani etc. Production of footwear at this
movement is mainly at Agra, Karnal, Faridabad, Delhi, Kolkatta, Kanpur, Mumbai,
Madras, and Banglore etc.
Footwear industry in India can never be a heavy industry in general and small
entrepreneurs with small investments in machinery and capital could remain for all
purposes the backbone of industry. It is the ideal industry for entrepreneurs without
much of investment in the industry assuring growing demand and profits. Availability
of raw material and manpower is not a problem. So the small sector has to play a
vital role in industry development.
Depending upon the styles, type and purpose, the footwear can be broadly classified
into three groups:
Boot & shoe or closed type footwear covering most part of the feet.
COMPANY PROFILE
COMPANY INFORMATION
Board of Directors
Adesh gupta
Audit committee
Sunil Bansal
Raghu Dayal
Vivek Bansal
Adarsh Gupta
Sunil Bansal
Remuneration/Selection Committee
Raghu Dayal
ISO 9001
Munish kakra
LIBERTY OFFICES
REGISTERED OFFICE
Liberty puram, 13th Mile Stone, G.T Karnal Road,
Kutail, P.O.BASTRA, Distt.Karnal-132001 (Haryana)
Tel. (91)-1748-251111-14
Fax. (91)-1748-251100
E-mail: lpm@libertyshoes.com
CORPORATE OFFICE
2nd Floor, Tower-B, DLF Building No.8
DLF Cyber Citi, Phase II, GURGAON (Haryana)
Tel. (91)-124-4616200
Fax. (91)-124-4616222
E-Mail: mail@libertyshoes.com
BRANCHES
Ahmedabad,Agra,Bangalore,Chennai,Delhi,Hyderabad,Jaipur,
Jammu,Kolkata,Mumbai,Rajpura and Saharanpur.
BANKERS
ABN AMRO Bank N.V.
Central Bank of India
Corporation Bank
HDFC Bank
Hong Kong & Shanghai Banking Corporation Limited
1954
Employment
Business Investment
US $ 100 Million
Status of Business
Present Activities
Annual Turnover
Brand Equity
Infrastructure
Various plants spread over 200 acres of land in and around Karnal,
Libertypuram, Gharaunda in Haryana, Dehradun & Roorkee in
Uttarakhand, Pounta Sahib in Himachal Pradesh supported by strong
Marketing Network having
14 Branch offices
02 Overseas offices
300 Liberty Exclusive Distributors
350 Liberty Exclusive Retail Stores
20 Overseas showrooms
Export Markets
Technology
INTRODUCTION
Liberty Group, come a long way since it began its operations a little over 50 years ago
in the cityof Karnal, Haryana. The emphasis since the very beginning has been to
offer great products at value for money / affordable prices. This led to the
development of Liberty Patented HUMANTECH approach which synergise
traditional workmanship with state of the art technology to provide the best quality at
the most competitive price.
Liberty group companies, set various benchmarks in Footwear Manufacturing within
the Groups Production facilities and also to Industry.
HISTORY:
Liberty Group started operation in 1954 and today comprises of five firms, namely
Liberty Footwear Company, Liberty Enterprises, Liberty Leathers, Liberty Group
marketing Division and Liberty Shoes Limited. The group has an annual turnover of
Rs.500 Crores approximately. Liberty has its own studio for design and development
of footwear. It manufactures footwear both for export and domestic markets. The
company has carved a name for itself in the international market and is Indias largest
exporter of footwear to Germany.
Liberty Shoes Limited, the public company of the group started commercial
production in 1993 and is the countrys leading footwear manufactures today. The
company has state of the art production facilities at Libertypuram to manufacturer
high quality footwear and its contribution in Liberty Groups total sale is over 30%
and its rising steadily.
CORPORATE PHILOSPHY:
Steeped in a philosophy that has at its core innovation, technology and advancement,
we, at Liberty, pride ourselves over and above everything else on our healthy and
heart-felt respect for the human ethos. That which projects itself in the expectancy and
excitement with which one greets the arrival of the new combined with a sincere and
deep regard for the old. That which is appreciative of and adopts at every stage the
unique balance between modernization and tradition.
Liberty as a brand is constantly evolving to keep pace with the changing trends,
styles, beliefs and aspirations of people while maintaining the sanctity of certain
traditions like workmanship and good value.
CORPORATE SAGA:
With people as its leitmotif, Liberty has for over 50 years always stayed in touch with
the aspirations of every successive generation even as it developed the largest range in
the industry catering to every income bracket and age segment. Using the patented
'Humantech' approach that combines the best of talent with the latest in technology.
From the price-conscious, value for money seeking buyer to the trendy, global, priceindifferent customer, from the with it all attitude teenager to the conservative seen it
all adult just about everybody today finds a good reason for being in Liberty.
Liberty is today consolidating and expanding its following which extends from the
fashion alleys to the sidewalks with styles that compliment the newest most
happening trends and also by turning footwear selling into a byword for personalized
service in an ambience and shoe stations in India and abroad.
THE CREDO:
LIBERTY RANGE:
The family brand style personified with something for every need. Be it formal or
casual, at office or at the beach, a conference or a soiree - Liberty fits in effortlessly.
MANUFACTURING:
Liberty also has the ISO: 9001-2000 certification for its Quality, Management
System, a testimony to all the system and procedures in place.
Liberty is a technology driven company HUMANTECH Libertys patented
technology is combination of human craftsmanship and technological excellence.
Satiwala, Pounta Sahib, Himachal Pradesh (Approx 225 K.M. from Delhi)
Batamandi, Paunta Sahib, Himachal Pradesh (Approx 229 K.M. from Delhi)
GROUP COMPANIES:
Liberty Retail Revolutions Limited
Liberty Retail Revolutions Limited, the company behind the Revolutions store is a
100% subsidiary of Liberty Shoes Limited
The company is producing more than 50,000 pairs of footwear a day covering
virtually every age group and income category. Products are marketed across the
globe through 150 distributors, 350 exclusive showrooms and over 6000 multi-brand
outlets, and sold in thousands every day in more than 25 countries including fashiondriven, quality-obsessed nations like France , Italy , and Germany.
Setting new benchmarks in the retail business in India Liberty Retail Revolutions
caters to the aspirations of the style-driven in India with an exclusive chain of
upmarket showrooms, Revolutions Concept Stores, at fashion centres across India.
Its a concept that has opened new frontiers in retail selling - never seen before
fashion hubs, catering to individual styles and looks, in an ambience as magical and
exciting as the products lined up a world class range in footwear fashion and
accessories.
FORTUNE
Genuine leather uppers and extra light poly soles
help complete the power dressing in men with lan
and panache.
GLIDERS
Cool and comfortable, trendy and with it. A range of
stunning brogues and smart lace ups that will be
noticed and talked about every step of the way.
Unmistakably a part of Generation You.
SENORITA
Walk tall, walk light and walk with amazing style.
Rediscover the little girl that lurks not far behind in
every woman, laughing and loving every moment of
life.
TIPTOPP
Its what Mrs. Junejas of the world love to be seen
in. Strappy styles and comfortable heels. And colors
that become the envy of all and sundry. Perfect for
conquering the neighbourhood in designs that are
the latest rage the world over.
WARRIOR
Smart, stylish professional gear crafted from leather
uppers and direct injection P.U. soles with steel toe
caps and offering the widest range of styles in safety
shoes. To master the art of being confident and surefooted on slippery grounds and danger ones.
WINDSOR
The premium is on lightness, style and comfort
which makes it ideal for men who take every
challenge effortlessly in their stride.
FREEDOM
A new introduction in the safety footwear segment in Nitrile PVC
material, offering customers with waterproof, fire retardant and
shock free product in economic range. A safety footwear for
industrial use.
7. Liberty Management is very thin in size comparing with a huge work force in
front line operation.
FINANCIAL
If you think a company that has helped 50 million people think on their feet in style is
big stuff, you have seen very little yet. For us the future plans are not something that
can be termed as crystal gazing but neatly enclosed ideas idea and deliverables in
continuum. We are fast building new brands and products, improving the all times
favorites and expending our marketing infrastructure and honing to our skills to
further the delight of the consumer. With an over all 25% boom planned each year for
the next 5 year you could says that India is only true blue footwear manufacturing
multinational is just peaking over the edge.
DISTRIBUTION NETWORK:
We have distribution network rivals the human arterial system. An reticulate network
of retailer showrooms, and exclusive outlets with a reach like blue green marine
octopus a structured 2-way feeder-feed back system that both gives and receives an
organization of our size would have gone out-of-orbit without a firm support system.
Thanks to the vision and drive of our corporate think tank, we now have a sales
network that brings the breath-taking world of super footwear right at your feet within
seconds. A virtual room service at zero cost, if you will. A marketing system that we
have conceived and created, it is understandably, the envy of competition.
STRENGTH:
At Liberty we upgrade and re-engineer our design every 6 months so that you have
something new, with it and futuristic every time you visit us. Our shoes are much
more than just B.E. Witching leather work. We understand that a shoe for you is an
extension of your personality. And for one who keeps moving onto to stables of desire
loaded with exciting world fashions trends we craft the dreams with the help of
Capital Fashion Technologists shut away not in dream bars but with their heart minds
on the pules of future fashion.
BUILDING:
It mainly consists of eight huge halls meant for manufacturing operation facility, raw
material and finished goods storage, cutting sections, PVC Sole Section, PU Sole
Section, Administrative Block etc. the design and finishing of building is among the
best.
The total area of the building is 170 lacks sq.feet (approx) and total cost of building is
around 550 lacks. The building is of RC framed structure.
MACHINARY:
Five (new technology) injection-moulding machines are being used by the company
for production purpose. All the machines are imported from Italy and Germany.
Production of shoes as well as quality of shoes has been increased and problems of
pasting, sole cracking have been reduced substantially by this technology. Recently
one new computerized machine has been purchased for cutting leather. It has also
been imported from Italy
INNOVATIVE APPROACHES:
Entire production units of Liberty are interlinked by SAP, a unique ERP Solution
implemented for the first time in India in a Footwear Industry with all modules related
with Finance, Logistics & supply chain.
It is rare to see such clean, state of the art production facility in India with following
management systems and tools.
1. KAIZEN is implemented since 2000 and in practice throughout the
organization.
2. 5 S Concept is introduced and in practice since 2001 and presently in matured
stage. The impact of 5 S implementation is visible in all dept. and shop floors
of the organization. We may even consider these units are the model units for
any Footwear Industry
3. LEAN awareness is existing in all production floors of the organisation. Value
streams are standardized for most of the regularly produced articles. Now the
Group is in the process of integrating Lean Concept with PP Module of SAP
for controlling the flow.
4. ISO 9001:2000 CERTIFICATION is awarded to QMS of one of its units and
Group is in
INTERNATIONAL EXPERIENCE:
1. Liberty has more than 25 years of experience in Export Business and enjoying
Status Holder status as Recognized Export House of India. In 80s when Soviet
Market was invaded by Indian Exporters, Liberty was the Market Leader in
USSR.
2. Liberty is having its own office in Russia and Hungary for more than 2 decades.
3. Libertys major operations are mainly with Europe, Middle East, East African,
South African countries and USA.
4. Major brands of Europe, SALAMANDER, JELA, DEICHMANN, ROMIKA and
USA brands like TODDWELSH are selling only Liberty Shoes under their brand
umbrella.
CONTRIBUTION TO INDUSTRY:
1. Liberty has pioneered in bringing PU Technology to India. Liberty has given a
presentation on Footwear foot prints for the future in Asia Pacific Customer
Conference 2000 organized by Huntsman Polyurethane at Singapore on this
technology.
3. Safety Shoes are brought to Indian Market for the first time and an exclusive
brand WARRIOR was launched by Liberty in Industrial Segment shoes. Our
safety shoes are meeting all DIN / EN standards in respective segments.
4. PU technology was introduced to Government Sector, Liberty has set the standard
as member of the BIS Committee. BIS Standard IS: 15298: 2000, applicable for
Safety shoes is the Standard on which Liberty is producing Safety shoes for more
than one decade.
5. Liberty Enterprises is the model unit for above Standard and complete testing
facility is available only with Liberty in India after FDDI.
6. Liberty is the First Footwear Manufacturing facility in India awarded with the
latest ISO 9001:2000 Certification.
7
The first and only footwear Industry in India, having SAP ERP with all modules
related to
Inward/Outward supply chain, Materials, Finance and Costing
8. Liberty has pioneered blend of NITRILE Rubber with PVC in 1996 to make it
more versatile for cold countries usage.
9. Liberty has developed new material TPE (Thermo Plastic Elastomer) for high
quality formal footwear. This material has better properties than PVC or TPR
conventionally
used for formal.
10. Liberty is expanding its operation by manufacturing non woven hags which are
environment clean.
SOCIAL CONTRIBUTION:
1. Liberty Footwear Training Institute formed by our Directors is developing the
local public as technicians of Footwear Industry.
2. Management of Liberty Sponsors the children of Liberty Employees for higher
studies, gives training and employment after graduation in FDDI.
3. Social and Environmental Standard ISES-2000 is in practice with Liberty. This
standard is being monitored by Indo German Export Promotion Project in
India.
4. The products being used by Liberty are Eco-friendly and providing latest
technology to Industry when Indian Markets related with Environment &
Safety are not even aware about the new standards and technology.
CORPORATE GOALS
Liberty wants to attain & maintain good relations between its union &
management.
Liberty wants to be known for the quality for its products & services.
PROJECT REPORT
Sub Objective
The study on Inventory is very important for a firm. The objectives of this
study are as follows:
To determine the various ratios for analyzing the Inventory level of the
company.
INTRODUCTION ABOUT
INVENTORY MANAGEMENT
INTRODUCTION
Inventories constitute the most significant part of current assets of a company like in
India. On an average, Inventories are approximately 60% of current assets in
public Ltd. companies in India. A firm neglecting the management of Inventories will
be jeopardizing its long run profitability and may fail ultimately. It is possible for a
company for a company to reduce its level of Inventories to a considerable degree.
The reduction in excessive inventories carries a favorable impact on a companys
profitability.
normal course of business operations. The assets, which firms store as inventory in
anticipation of need, are
1. Raw material
2. Work in progress
3. Finished Goods
Inventory, is current assets, but differs from other current assets. Because only
financial managers are not involved rather, all the functional areas, i.e. finance,
marketing, production & purchasing are involved.
The job of the financial manager is to reconcile the conflicting view points of the
various functional areas regarding the appropriate inventory level in 0order to fulfill
the over all objective of maximizing the owners wealth.
Thus, Inventory management like the management of other current assets, should be
related to the over-all objective of the firm.
NATURE OF INVENTORY
Inventory are stock of the company is manufacturing for sale and components that
make up the product. The various forms in which inventories exist in a manufacturing
company are:
1. Raw Material: Raw Material is those basic inputs that are converts into
finished goods through manufacturing process. Raw Material inventories
are those units, which will purchase & stored for future production.
2. Work in progress: Work in progress inventories are semi-manufactured
products. They represent products that need more work before they
become finished products for sale.
3. Finished goods: These are completely manufactured products which are
ready for sale. Stock of raw materials and work in progress facilitates
production while stock of finished goods is required for smooth marketing
operations.
VALUATION OF INVENTORY
The price of materials and income of a concern is directly proportional to each other.
So it is necessary that a method of pricing materials should be such that it gives a
realistic value stocks.
To safe guard public interest, the Government of India has instituted statutory controls
to prevent frequent change of material valuation method for at least three years.
The following material pricing methods are generally used:
First in First out
(FIFO)
(LIFO)
BENEFITS IN PURCHASING
If the purchasing of raw material and other goods is not tied to production/sales, i.e. a
firm can purchase, several advantages would become available. In the first place, a
firm can purchase larger quantities than is warranted by usage in production or the
sales level.
In the second, firms can purchase goods before anticipated or announced price
increase. This will lead to a decline in the cost of production. Thus Inventory, serves
as a hedge against price increases as well as shortages of raw materials. This is highly
desirable inventory strategy.
BENEFITS IN PRODUCTION
Finished goods inventor serves to uncouple production and sale. This enables
production at a rate different from that sale. That is production can be carried on at a
higher or lower than the sales rate. This would be of special advantage to firms with a
seasonal sales pattern. In their case, the sales rate will be higher than the production
rate during the part of the year (peak season) and lower during the off-season. The
choice before the firm is either to produce at a level to meet the actual demand. In
brief, since inventory permits least cost production scheduling. Production can be
carried on more efficiently.
BENEFITS IN SALES
The maintenance of inventory also helps a firm to enhance its sales effort. For one
thing, if there are no inventories of finished goods, the level of sales will depend upon
the level of current production. A firm will not be able to meet demand
instantaneously. There will be a lag depending upon the production process. If the
firm has inventory, actual sales will not have to depend on lengthy manufacturing
process.
INVENTORY CONTROL
Effective inventory management requires an effective control system for the
inventories. In managing inventories, the firms objective should be in consonance
with the shareholders, wealth maximization principle. To achieve this, the firm
should determine the optimum level inventory. Efficiently controlled inventories
make the firm flexible. Inefficient control results in unbalanced inventory and
inflexibility the firm may sometimes run out of the stock and sometimes may
pile up unnecessary stocks. This increases the level of investment and makes the
firm unprofitable. To manage inventories efficiency, answers should be sought to
the following two questions:
1. How much should be ordered?
2. When it should be ordered?
The first questions, how much to order relates to the problem of determining
economic order quantity (EOQ), and is answered with an analysis of costs of
maintaining certain level of inventories.
The second question, when to order arises because of uncertainty and is problem
of determining the reorder point.
(1)
ORDERING COST
(2)CARRYING COST
Costs incurred for maintaining a given level of inventory are called Carrying
costs. They include: Storage. Insurance, taxes, Deterioration and Obsolescence.
Carrying costs vary with inventory size. This behavior is contrary to that of
ordering costs which decline with increase in size of inventory. The economic size
of inventory would thus depend on trade-off between carrying costs and ordering
costs.
The optimum inventory size is commonly referred to as economic order quantity.
It is that order size at which annual total costs of ordering and holding are the,
minimum. We can follow three approaches the trail and error approach, the
formula approach and the graphic approach to determine the economic order
quantity (EOQ).
2AO
EOQ =
Where, A is annual requirement.
O is Ordering cost.
And C is Carrying cost.
RE-ORDER POINT
The problem, how much to order is solved by determining the economic order
quantity, yet the answer should be sought to the second problem, when to order. This
is a problem of determining the re-order point. The re-order point is that inventory
level at which an order should be placed to replenish the inventory. To determine the
re-order point under certainty, we should know: (a) Lead time, (b) average usage,
and (c) economic order quantity.
Lead time is the time normally taken in replenishing inventory after the order has
been placed. By certainty we mean that usage and lead time do not fluctuate. Under
such a situation, re-order point is simply that inventory level which will be maintain
for consumption during the lead time.
That is:
Re-order point= Lead Time* Average usage.
SAFETY STOCK
It is difficult to predict usage and lead time accurately. The demand for material may
fluctuate from day to day or from week to week. Similarly, the actual delivery time
may be different from the normal lead time. If the actual usage increases or the
delivery of inventory is delayed, the firm can face a problem of stock-out which can
prove to be costly for the firm. To guard this problem, the firm may maintain a safetystock some minimum or buffer inventory as cushion against expected increased
usage and delay in delivery time.
CLASS
NO. OF
VALUE OF ITEMS
A
B
C
ITEMS%
15
30
55
%
70
20
10
INVENTORY MANAGEMENT AT
LIBERTY
category A:
category
category
PROCESS CYCLE
Manufacturing processs
The company has three kinds of production lines:1. PVC Injection Moulding Process.
2. Stuck on / Lasting Process.
3. EVA Injection Moulding Process.
The manufacturing process can be divided into the following: Making of shoe.
Soling (complete shoe).
Finishing & packing.
The non-leather shoe upper undergo a process known as the PVC INJECTION
MOULDING PROCESS under which upper is tied upon the last which is mounted
on the machine according to the size roll. In the process PVC granules are used as raw
material for sole making which get stucked to the upper with the help of injecti
LEATHER SHOES:Leather Shoe Upper:In leather shoe upper making process leather is cut by hand or on the cutting machines
according to the required size of uppers. Machines cutting process is based on dyes
which are prepared separately for each model. Cutting by hand is on the basis of the
pattern to be specified for each model of the uppers.After skiving and folding these
components are assembled together with the help of stitching machines as per the type
of upper required.
Leather Shoe Soling / Stuck-On Process:In stuck on process , shoe is made by readymade sole which can be of PU , TPR ,
EVA , LEATHER etc. . Upper is lasted on the shoe last according to the size roll with
the help of machines. Thereafter sole according to the upper size is taken and they get
stucked together with the help of pasting process. After completing the sole
attachment , lasts are removed and then the shoe are finished with the help of
trimming machines and stamping machines.
FINISHING AND PACKING:Both Leather and Non-Leather shoe are given the required finished touches by putting
insole, padding, tissue paper etc and after attaching tags, laces etc , are packed in
boxes dispatch
CUTTING MATERIAL
1. Cloth strobe
2. Padded foam
3. Goat skin
4. Softy (cow leather)
5. Cow Venus black
6. Toe puff sheet
7. Foam P.U
8. T.P counter sheet
9. Heavy nylex black
10. Silicon spray
11. Laminated cloth (rexine)
12. Laminated cloth (skin fit)
13. Laminated cloth (mesh)
14. Laminated cloth (RIB)
15. Laminated cloth (canvas)
16. Laminated cloth (EVA lycra)
17. Laminated cloth PVC lining)
18. Leather
19. Leather lining
20. Camarilla lining
21. Fleece lining
22. Rubber
Closing material:
1. Thread
2. Tongue
3. Tape intake (eyelet tape)
4. Eyelet brass
5. Adhesive neufix
6. Adhesive rubber solution
7. Binding nylon
8. Label
9. Adhesive rubber latex
10. Tape cotton
11. Piping polyester
PACKING MATERIAL:
1. Boxes
2. Shoe lift
3. Marketing bag corporate small/non woven
4. Adhesive sticker pictogram
5. Hologram liberty footwear
6. Silica gel blue
7. Tissue paper white/poster paper
8. Tag card
9. Tag pin
10. Carton
11. Carton label
12. Price stickers
13. Hologram genuine
14. Plastic heel
15. Label printed stock, glider black/red.
LASTING MATERIAL:
1. Adhesive P.U 107
2. Adhesive nefix
3. EVA Sole
4. EVA Sheet
5. Sole
INJECTION MATERIAL:
1. PVC Compound
2. EVA Compound
3. PVC Master batch
4. EVA Master batch
VALUATION CLASS
Raw material & comp-IMP
Raw material & comp-IND
Mfd EVA soles
Mfd PU soles
Mfd PVC soles
Trd PU soles-IND
Trd PVC soles-IND
Trd PU soles-IMP
Packing materials-IMP
Packing materials-IND
TOTAL (RAW MATERIAL)
JAN
(crores)
0.13
2.59
0.11
0.52
0
0.28
0
0.05
0
0.24
3.91
FEB
(crores)
0.14
3.19
0.1
0.6
0.02
0.3
0.05
0.05
0
0.37
4.82
MARCH
(crores)
0.13
2.99
0.11
0.54
0
0.35
0.06
0.04
0
0.31
4.54
APRIL
(crores)
0.13
2.47
0.11
0.36
0
0.34
0.01
0.04
0
0.26
3.72
MAY
(crores)
0.13
2.58
0.11
0.28
0
0.29
0
0.04
0
0.27
3.7
JUNE
(crores)
0.14
2.36
0.11
0.43
0.02
0.39
0
0.04
0
0.28
3.76
RESEARCH
METHADOLOGY
RESEARCH METHODOLOGY
STEPS OF METHODOLOGY
COLLECTION OF DATA
ORGANIZATION OF DATA
PRESENTATION OF DATA
ANALYSIS OF DATA
INTERPRETATION OF DATA
COLLECTION OF DATA
There are two methods of collection of data which are as follows:1. Secondary Method
2. Primary Method
Secondary Method
The methodology followed in conducting the study is to collect data regarding
footwear production, working capital and its management, need of working capital in
Liberty Shoes Ltd. .
The facts & data were taken from magazines and annual report of company.
Primary Method
The primary data were collected from asking many individuals, employee of the
company. They provide me relevant information for completing my study.
PRESENTATION OF DATA
After organizing the data , it is ready for presentation. These are presented in different
modes like charts, tables, and diagrams etc. the main objective of presentation is to
put collected data into a easy reliable form.
ANALYSIS OF DATA
After organizing and presenting the data, the researches then has to proceed towards
conclusions by logical inferences.
INTERPRETATION
Interpretation is the last and main step of research methodology. Interpretation means
to bring out meaning of data & to convert mere data into information. After analysis
the data, various conclusion are found out on the basis of logical inferences. Without
interpretation research study cant be completed.
YEAR
Current Assets
Current
2005-2006
2006-2007
1,34,94,75,847
75,67,58,438
1,81,20,38,152
1,37,98,19,154
2007-2008
1,80,59,34,193
1,32,78,92,788
Liabilities
Current Ratio
1.78
1.31
1.36
INTERPRETATION
1. IDEAL CURRENT RATIO IS 2:1.
2. The current ratio has increased from 1.47 to 1.78 between the year 2004-2005
and 2005-2006. Then it decreased to 1.31 in the year 2006-2007 and then
increased 1.36 in the year 2007-2008.
3. This shows that the short term liquidity of the company is not good.
YEAR
2005-2006
2006-2007
2007-2008
Quick Assets
Current
81,29,79,812
75,67,58,438
1,05,02,99,837
1,37,98,19,154
1,04,40,61,085
1,32,78,92,788
1.07
0.76
0.79
Liabilities
Quick Ratio
INTERPRETATION
1. THE IDEAL QUICK RATIO IS 1:1
2. The quick ratio of the company has increased from 0.94 to1.07 between the
year 2004-2005 and 2005-2006. Then decreased to 0.76 and0.79 in the year
2006-2007 and 2007-2008.
3. This means that the company cannot meet its short term obligations.
YEAR
2005-2006
2006-2007
2007-2008
Cash
Current
2,94,45,561
75,67,58,438
4,62,40,483
1,37,98,19,154
4,49,26,777
1,32,78,92,788
0.039
0.033
0.034
Liabilities
Cash Ratio
INTERPRETATION
1. The cash ratio has first increased from 0.032 to 0.039 between the year 20042005 and 2005-2006 and then decreased in the year 2006-2007 and then
increased by 0.001 in 2007-2008.
2. This reveals that the cash position of the company is not sound.
2. ACTIVITY RATIOS
INVENTORY TURNOVER RATIO = NET SALES / INVENTORY
YEAR
Net Sales
Inventory
Inventory
2005-2006
2006-2007
2,21,11,97,993
53,64,96,035
4.12
2,37,54,48,269
76,17,38,315
3.12
2007-2008
2,57,89,34,907
76,18,73,108
3.38
Turnover Ratio
INTERPRETATION
1. This shows that the company is somehow efficient in generating the inventory
into sales.
2. The inventory turnover ratio has decreased from 4.75 to 3.12 between the
years 2004-2005 and 2006-2007and increased to 3.38 in
2007-2008.
YEAR
Sales
Debtors
Debtors
2005-2006
2006-2007
2,21,11,97,993
48,33,85,817
4.57
2,37,54,48,269
72,08,94,474
3.29
2007-2008
2,57,89,34,907
72,41,47,983
3.56
Turnover Ratio
INTERPRETATION
1. The debtor turnover ratio has first increased from 4.12 to 4.57 between the
year 2004-2005 and 2005-2006 and then decreased in the year 2006-2007 and
then increased in 2007-2008.
2. This shows that the debtor management system is try to maintain their
position.
YEAR
Number of Working
2005-2006
2006-2007
365
365
2007-2008
365
Days
Debtors
Turnover
4.57
3.29
3.56
Ratio
80 days
Average
110 days
102 days
Collection Period
INTERPRETATION
1. The average collection period has decreased from 89 days to 80 days between
the year 2004-2005 and 2005-2006 and then increased in the year 2006-2007
and again decreased in 2007-2008.
2. More the average collection period less efficient is the debtor management
system.
YEAR
Sales
Net
Capital
Working
2005-2006
2006-2007
2,21,11,97,993
59,27,17,409
2,37,54,48,269
43,22,18,998
2007-2008
2,57,89,34,907
47,66,97,765
3.73
Working Capital
5.50
5.41
Turnover Ratio
INTERPRETATION
1. The working capital turnover ratio has first decreased from 5.32 to 3.73
between the year 2004-2005 and 2005-2006 and then increased to 5.50 in the
year 2006-2007 and then decreased by 0.09 in the year 2007-2008.
3. PROFITABILITY RATIOS
OPERATING PROFIT RATIO = OPERATING PROFIT X 100
SALES
YEAR
2005-2006
2006-2007
Operating Profit
Sales
31,48,62,163
2,21,11,97,993
14.24
31,28,91,662
2,37,54,48,269
13.17
Operating Profit
2007-2008
32,99,64,549
2,57,89,34,907
12.79
Ratio
INTERPRETATION
1. The operating profit first increases to 14.24% in the year 2005-2006 and then
decreases to 13.17% and 12.79% in the year 2006-2007 and 2007-2008.
2.
This shows that the operating cost of the company has increased from 20042005 to 2007-2008.
YEAR
Net
Tax
Profit
After
2005-2006
2006-2007
2007-2008
18,49,28,514
17,01,94,555
16,05,13,611
Net Sales
2,21,11,97,993
8.36
2,37,54,48,269
7.16
2,57,89,34,907
6.22
INTERPRETATION
1. The net profit ratio first increases from 5.03 to 8.36 in the year 2004-2005 and
2005-2006 and then decreases to 7.16 in the year 2006-2007 and too
decreasing in 2007-2008.
2. This reveals that the efficiency in manufacturing, administering and selling the
products is decreasing.
YEAR
2005-2006
2006-2007
2007-2008
Outsiders funds
25,80,06,52
38,70,96,269
1,14,81,89,285
98,85,72,605
0.39
3,95,92,73,396
0.29
4
Shareholders funds
Debt
81,67,40,225
0.32
Equity
Ratio
INTERPRETATION
1. The debt equity ratio is decreasing which means that the companys
dependence on the external debt is decreasing.
2. This shows greater flexibility in the companys operation.
INTEREST
COVERAGE =
RATIO
YEAR
2005-2006
2006-2007
27,48,63,625
26,65,57,054
interest
taxes
and
2007-2008
24,44,21,752
Interest
Interest
4,74,18,093
5.8
8,81,68,867
3.02
13,34,56,945
1.83
Coverage
Ratio
INTERPRETATION
1. The interest coverage ratio first increases between the year 2004-2005 and
2005-2006 and then decreases in the year 2006-2007 and in 2007-2008.
2. A low ratio indicates excessive use of debt.
SUGGESTION
1.
2.
As the exclusive showroom play an important role in making and marking the
image of company. So there should be policy for exclusive showroom.
3.
4.
Television has become the most effective mode of advertising. New trend of
naming programs before the actual name of programs give more insertion in
the minds of people as there was performance on Zee T.V called LIBERTY
PUBLIC DEMAND.
5.
6.
7.
Showroom owners tend to heavily tend to heavily depend on the brand image
rather than theyre own skills and knowledge regarding product. So the big
companies should try to internationalize their products and image and should
give a psychological feeling of being a universal brand.
8.
9.
STEPS TAKEN BY
LIBERTY
LIMITATIONS
LIMITATIONS
Although every effort have been made to collect the relevant information through the
source available, still some relevant information could not be gathered.
1. The time duration could not provide ample opportunity to study every detail of
management in the company.
2. There are restrictions not to visit some specific areas.
3. The concered executives were having very busy schedule.
4. The company on account of confidential reports has not disclosed some
figures
5. Estimates are based upon predictions.
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS
Pandey, I.M., Financial Management, Ed. 2007, VIkas
Publishing House Private Ltd., New Delhi.
Gupta, Shashi K., Management Accounting, Ed.2007, Kalyani
Publishers, New Delhi.
KOthari, C.R., Research Methodology, Ed.2007, New Age
International (P) Limited, Publishers, New Delhi.
MANUAL
Annual Reports
WEBSITES
www.liberyshoes.com
www.libertyfreedom.com
ANNEXURE
LIBERTY
17,04,00,000
64,63,40,225
81,67,40,225
Loan Funds
Secured Loans
48,81,18,223
Unsecured Loans
23,03,68,701
71,84,86,924
Deferred Tax
Deferred Tax Laibility
7,62,83,137
1,61,15,10,286
APPLICATIONS OF FUNDS
Fixed Assets
Gross Block
79,70,30,417
Less: Depreciation
31,21,63,209
Net Block
48,48,67,208
91,82,688
Investments
49,40,49,896
6,42,62,581
53,64,96,035
Sundry Debtors
48,33,85,817
2,94,45,561
30,01,48,434
1,34,94,75,847
22,26,20,721
7,36,57,317
1,05,31,97,809
1,61,15,10,286
2,21,11,97,993
16,23,68,219
2,04,88,29,774
1,11,11,202
6,49,73,637
96,67,26,712
19,95,13,409
19,91,55,747
43,20,32,918
4,74,18,093
15,12,462
3,99,98,538
2,12,49,14,613
1,88,63,57,879
23,85,56,734
4,88,26,320
35,05,000
12,96,900
18,49,28,514
42,01,294
54,964
18,91,84,772
1,69,31,283
20,61,16,055
6,00,00,000
2,53,50,000
35,55,338
11,72,10,717
12.88
17,04,00,000
81,81,72,605
98,85,72,605
Loan Funds
Secured Loans
Unsecured Loans
1,04,03,01,231
23,92,47,480
1,27,95,48,711
Deferred Tax
Deferred Tax Laibility
7,30,34,307
2,34,11,55,623
APPLICATIONS OF FUNDS
Fixed Assets
Gross Block
1,10,55,30,324
Less: Depreciation
35,54,78,429
Net Block
75,00,51,895
8,14,32,312
Investments
83,14,84,207
18,49,99,976
76,17,38,315
Sundry Debtors
72,08,94,474
4,62,40,483
28,31,64,880
1,81,20,38,152
43,53,53,212
5,20,13,500
1,32,46,71,440
2,34,11,55,623
2,37,54,48,269
15,39,92,692
2,22,14,55,577
Other Income
1,67,28,098
20,12,80,051
2,43,94,63,726
EXPENDITURE
Raw Material Consumed and Finished Goods Purchased
1,21,22,49,787
Manufacturing Expenses
20,19,18,212
21,23,26,510
47,36,32,514
8,81,68,867
Excise Duty
25,16,943
Depreciation
4,63,34,609
2,24,43,47,442
19,51,16,284
2,46,36,260
35,34,300
Deferred Tax
32,48,830
17,01,94,554
8,97,143
7,40,683
17,18,32,380
11,72,10,717
28,90,43,097
APPROPRIATIONS
Tranfer to General Reserve
6,00,00,000
22,90,43,097
9.99
17,04,00,000
97,77,89,285
1,14,81,89,285
Loan Funds
Secured Loans
Unsecured Loans
1,03,31,65,873
17,49,91,716
1,20,81,57,589
Deferred Tax
Deferred Tax Laibility
7,08,75,737
2,42,72,22,611
APPLICATIONS OF FUNDS
Fixed Assets
Gross Block
1,26,06,40,151
Less: Depreciation
40,60,66,799
Net Block
85,45,73,352
1,54,92,360
Investments
87,00,65,712
20,33,98,812
76,18,73,108
Sundry Debtors
72,41,47,983
4,49,26,777
27,49,86,325
1,80,59,34,193
42,93,74,450
2,28,01,656
1,35,37,58,087
2,42,72,22,611
2578934907
100427026
2478507881
Other Income
50711294
69857067
2599076242
EXPENDITURE
Raw Material Consumed and Finished Goods Purchased
1319594764
Manufacturing Expenses
189559879
226092498
509261505
133456945
Excise Duty
-4362344
Depreciation
63796894
2437400141
161676101
18589712
-18317902
3049250
Deferred Tax
-2158570
160513611
-5284920
4,387,989
159616680
229043097
388659777
APPROPRIATIONS
Tranfer to General Reserve
6,00,00,000
328659777
9.42