AN INTERNSHIP REPORT ON

INVENTORY MANAGEMENT OF VVDN

TECHNOLOGIES PVT LTD

Submitted in the partial fulfillment of requirement of

MASTER OF BUSINESS ADMINISTRATION

CH. RANBIR SINGH UNIVERSITY, JIND (HARYANA)

Research Supervisor: Submitted By:

DEPARTRMENT OF MANAGEMENT ANKIT
Roll No: 20220034
MBA IIIRD SEM. (FINANCE)

DEPARTMENT OF MANAGEMENT
CH. RANBIR SINGH UNIVERSITY
JIND- (HARYANA)
SESSION 2022-23
 DECLARATION

This is to certify that Summer Training Report entitled INVENTORY

MANAGEMENT OF VVDN TECHNOLOGIES PVT LTD is my original work and
this has not been submitted in part or full to this or any other university/institution for the
award of any degree or diploma.

Signature of Candidate

NAME:- Ankit
ROLL NO.: 20220034
SPECIALIZATION: Finance
SESSION :- 2022-23

ii
 ACKNOWLEDGEMENT

First of all, we thank the almighty for giving this precious gift of life so that we can learn
and keep learning.
A project report is never the sole product of a person whose name appears on the cover.
There is always the help, guidance and suggestions of many in preparation of such a
report. So, I have indebted to several people who have helped me in completing my
project.
I wish to express my sincere thanks to Mr. Ankur Singla (Assistant Manager, HR-
Services) for co-operation, motivation, and invaluable guidance, sympathetic and
encouraging attitude at every stage of preparation of this project. His keen interest, timely
and constant encouragement and generous cooperation gave me confidence and strength
to progress this report. His valuable advice, constructive criticism and suggestion during
course of my study really helped me a lot.
I express my sincere thanks to all those who directly or indirectly helped me in the
successful completion of this project.
Finally, I am thankful to my parents and God for their blessings and showing me the right
way at all moments.

Ankit

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 CONTENTS

Chapter No. Title Page No.

1 Introduction 1-22
2 Company Profile of VVDN Technologies 23-28
Swot Analysis 29
Conceptual Discussion 31-35
3 Review of Literature 36-41
4 Objectives 42
5 Methodology 43-44
6 Data Analysis & Interpretation 45-54
7 Findings & Suggestions 55-56
Bibliography 57

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 CHAPTER-1
INTRODUCTION

Inventory is an idle stock of physical goods that contain economic value, and are

held in various forms by an organization in its custody awaiting packing,

processing, transformation, use or sale in a future point of time. Any organization

which is into production, trading, sale and service of a product will necessarily

hold stock of various physical resources to aid in future consumption and sale.

While inventory is a necessary evil of any such business, it may be noted that the

organizations hold inventories for various reasons, which include speculative

purposes, functional purposes, physical necessities etc.

From the above definition the following points stand out with reference to

inventory:

• All organizations engaged in production or sale of products hold inventory

in one form or other.

• Inventory can be in complete state or incomplete state.

• Inventory is held to facilitate future consumption, sale or further

processing/value addition.

• All inventoried resources have economic value and can be considered as

assets of the organization.

1
 Different Types of Inventory

Inventory of materials occurs at

various stages and departments

of an organization. A

manufacturing organization

holds inventory of raw materials

and consumables required for production. It also holds inventory of semi-finished

goods at various stages in the plant with various departments. Finished goods

inventory is held at plant, FG Stores, distribution centers etc. Further both raw

materials and finished goods those that are in transit at various locations also form

a part of inventory depending upon who owns the inventory at the particular

juncture. Finished goods inventory is held by the organization at various stocking

points or with dealers and stockiest until it reaches the market and end customers.

Besides Raw materials and finished goods, organizations also hold inventories of

spare parts to service the products. Defective products, defective parts and scrap

also forms a part of inventory as long as these items are inventoried in the books

of the company and have economic value.

INVENTORY MANAGEMENT CONCEPT

Inventory management and supply chain management are the backbone of any

business operations. With the development of technology and availability of

process driven software applications, inventory management has undergone

revolutionary changes. In the last decade or so we have seen adaptation of

2
enhanced customer service concept on the part of the manufacturers agreeing to

manage and hold inventories at their customers end and thereby effect Just In

Time deliveries. Though this concept is the same in essence different industries

have named the models differently. Manufacturing companies like computer

manufacturing or mobile phone manufacturers call the model by name VMI -

Vendor Managed Industry while Automobile industry uses the term JIT - Just In

Time where as apparel industry calls such a model by name - ECR - Efficient

consumer response. The basic underlying model of inventory management

remains the same.

The problem of inventory control is one of the most important in organizational

management. As a rule, there is no standard solution – the conditions at each

company or firm are unique and include many different features and limitations.

An occurring task of the mathematical models development and determining the

optimal inventory control strategy is related with this problem. Features of

inventory management models are that the resulting optimal solutions can be

implemented in a fast changing situation where, for example, the conditions are

changed daily. There is a need for new and effective methods for modelling

systems associated with inventory management, in the face of uncertainty.

Uncertainty exists regarding the control object, as the process of obtaining the

necessary information about the object is not always possible. The solution of such

complex tasks requires the use of systems analysis, development of a systematic

approach to the problem of management in general. Inventory models are

3
distinguished by the assumptions made about the key variables: demand, the cost

structure, physical characteristics of the system. These assumptions may not suit to

the real environment. There is a great deal of uncertainty and variability.

In any business or organization, all functions are interlinked and connected to each

other and are often overlapping. Some key aspects like supply chain management,

logistics and inventory form the backbone of the business delivery function.

Therefore these functions are extremely important to marketing managers as well

as finance controllers. Inventory management is a very important function that

determines the health of the supply chain as well as the impacts the financial

health of the balance sheet. Every organization constantly strives to maintain

optimum inventory to be able to meet its requirements and avoid over or under

inventory that can impact the financial figures. Inventory is always dynamic.

Inventory management requires constant and careful evaluation of external and

internal factors and control through planning and review. Most of the

organizations have a separate department or job function called inventory planners

who continuously monitor, control and review inventory and interface with

production, procurement and finance departments.

DEFINING INVENTORY

Inventory is an idle stock of physical goods that contain economic value, and are

held in various forms by an organization in its custody awaiting packing,

processing, transformation, use or sale in a future point of time. Any organization

which is into production, trading, sale and service of a product will necessarily

4
hold stock of various physical resources to aid in future consumption and sale.

While inventory is a necessary evil of any such business, it may be noted that the

organizations hold inventories for various reasons, which include speculative

purposes, functional purposes, physical necessities etc.

From the above definition the following points stand out with reference to

inventory:

 All organizations engaged in production or sale of products hold inventory in

one form or other.

 Inventory can be in complete state or incomplete state.

 Inventory is held to facilitate future consumption, sale or further

processing/value addition.

 All inventoried resources have economic value and can be considered as assets

of the organization.

Different Types of Inventory

Inventory of materials occurs at various stages and departments of an organization.

A manufacturing organization holds inventory of raw materials and consumables

required for production. It also holds inventory of semi-finished goods at various

stages in the plant with various departments. Finished goods inventory is held at

plant, FG Stores, distribution centers etc. Further both raw materials and finished

goods those that are in transit at various locations also form a part of inventory

depending upon who owns the inventory at the particular juncture. Finished goods

5
inventory is held by the organization at various stocking points or with dealers and

stockiest until it reaches the market and end customers.

Besides Raw materials and finished goods, organizations also hold inventories of

spare parts to service the products. Defective products, defective parts and scrap

also forms a part of inventory as long as these items are inventoried in the books

of the company and have economic value.

INVENTORY MANAGEMENT CONCEPT

Inventory management and

supply chain management are

the backbone of any business

operations. With the

development of technology

and availability of process

driven software applications,

inventory management has

undergone revolutionary

changes. In the last decade or so we have seen adaptation of enhanced customer

service concept on the part of the manufacturers agreeing to manage and hold

inventories at their customers end and thereby effect Just In Time deliveries.

Though this concept is the same in essence different industries have named the

models differently. Manufacturing companies like computer manufacturing or

mobile phone manufacturers call the model by name VMI - Vendor Managed

6
Industry while Automobile industry uses the term JIT - Just In Time where as

apparel industry calls such a model by name - ECR - Efficient consumer response.

The basic underlying model of inventory management remains the same.

Let us take the example of DELL, which has manufacturing facilities all over the

world. They follow a concept of Build to Order where in the manufacturing or

assembly of laptop is done only when the customer places a firm order on the web

and confirms payment. Dell buys parts and accessories from various vendors.

DELL has taken the initiative to work with third party service providers to set up

warehouses adjacent to their plants and manage the inventories on behalf of

DELL’s suppliers. The 3PL - third party service provider receives the

consignments and holds inventory of parts on behalf of Dell’s suppliers. The 3PL

warehouse houses inventories of all of DELL’s suppliers, which might number to

more than two hundred suppliers. When DELL receives a confirmed order for a

Laptop, the system generates a Bill of material, which is downloaded at the 3PL,

processed and materials are arranged in the cage as per assembly process and

delivered to the manufacturing floor directly. At this point of transfer, the

recognition of sale happens from the Vendor to Dell. Until then the supplier

himself at his expense holds the inventory.

Let us look at the benefits of this model for both Dell as well as Its Suppliers:

With VMI model, Dell has reduced its in bound supply chain and thereby gets to

reduce its logistics and inventory management costs considerably.

7
DELL gets to postpone owning inventory until at the time of actual consumption.

Thereby with no inventories DELL has no need for Inventory to be invested into

holding inventories.

DELL does not have to set up inventory operations and employ teams for

operations as well as management of inventory functions.

Supplier Benefits

Supplier gets to establish better relationship and collaboration with DELL with

long-term business prospect.

By agreeing to hold inventories and effect JIT supplies at the door to DELL,

supplier will be in a better position to bargain and get more business from DELL.

With VMI model, supplier gets an opportunity to engage in better value

proposition with his customer DELL.

Supplier gets confirmed forecast for the entire year with commitments from DELL

for the quantity off take.

VMI managed is managed by 3PL and supplier does not have to engage himself in

having to set up and manage inventory operations at DELL’s premise.

3PL Managed VMI holds inventories of all suppliers thereby charges each

supplier on per pallet basis or per sq.ft basis. Supplier thereby gets to pay on

transaction basis without having to marry fixed costs of inventory operations.

Today most of the Multi National companies have successfully managed to get

their suppliers and 3PL service providers to setup VMI through out their plants all

over the world and this model has become the order of the day.

8
 Inventory is a necessary evil that every organization would have to maintain for

various purposes. Optimum inventory management is the goal of every inventory

planner. Over inventory or under inventory both cause financial impact and health

of the business as well as effect business opportunities.

Inventory holding is resorted to by organizations as hedge against various external

and internal factors, as precaution, as opportunity, as a need and for speculative

purposes.

 Reasons why organizations maintain Raw Material Inventory

Most of the organizations have raw material inventory warehouses attached to the

production facilities where raw materials, consumables and packing materials are

stored and issue for production on JIT basis. The reasons for holding inventories

can vary from case to case basis.

 Meet variation in Production Demand

Production plan changes in response to the sales, estimates, orders and stocking

patterns. Accordingly the demand for raw material supply for production varies

with the product plan in terms of specific SKU as well as batch quantities.

Holding inventories at a nearby warehouse helps issue the required quantity and

item to production just in time.

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 Cater to Cyclical and Seasonal Demand
Market demand and supplies are seasonal depending upon various factors like

seasons; festivals etc and past sales data help companies to anticipate a huge surge

of demand in the market well in advance. Accordingly they stock up raw materials

and hold inventories to be able to increase production and rush supplies to the

market to meet the increased demand.

 Economies of Scale in Procurement

Buying raw materials in larger lot and holding inventory is found to be cheaper for

the company than buying frequent small lots. In such cases one buys in bulk and

holds inventories at the plant warehouse.

 Take advantage of Price Increase and Quantity Discounts

If there is a price increase expected few months down the line due to changes in

demand and supply in the national or international market, impact of taxes and

budgets etc, the company’s tend to buy raw materials in advance and hold stocks

as a hedge against increased costs.

Companies resort to buying in bulk and holding raw material inventories to take

advantage of the quantity discounts offered by the supplier. In such cases the

savings on account of the discount enjoyed would be substantially higher that of

inventory carrying cost.

 Reduce Transit Cost and Transit Times

In case of raw materials being imported from a foreign country or from a far away

10
vendor within the country, one can save a lot in terms of transportation cost buy

11
 buying in bulk and transporting as a container load or a full truck load. Part

shipments can be costlier.

In terms of transit time too, transit time for full container shipment or a full truck

load is direct and faster unlike part shipment load where the freight forwarder

waits for other loads to fill the container which can take several weeks.

There could be a lot of factors resulting in shipping delays and transportation too,

which can hamper the supply chain forcing companies to hold safety stock of raw

material inventories.

 Long Lead and High demand items need to be held in Inventory

Often raw material supplies from vendors have long lead running into several

months. Coupled with this if the particular item is in high demand and short

supply one can expect disruption of supplies. In such cases it is safer to hold

inventories and have control.

All Manufacturing and Marketing Companies hold Finished Goods inventories in

various locations and all through FG Supply Chain. While finished Goods move

through the supply chain from the point of manufacturing until it reaches the end

customer, depending upon the sales and delivery model, the inventories may be

owned and held by the company or by intermediaries associated with the sales

channels such as traders, trading partners, stockiest, distributors and dealers, C &

F Agents etc.

Why and when do Organizations hold Finished Goods Inventories ?

12
 Markets and Supply Chain Design

Organizations carry out detailed analysis of the markets both at national as well as

international / global levels and work out the Supply Chain strategy with the help

of SCM strategists as to the ideal location for setting up production facilities, the

network of and number of warehouses required to reach products to the markets

within and outside the country as well as the mode or transportation, inventory

holding plan, transit times and order management lead times etc, keeping in mind

the most important parameter being, to achieve Customer Satisfaction and

Demand Fulfillment.

 Production Strategy necessitates Inventory holding

The blue print of the entire Production strategy is dependant upon the marketing

strategy. Accordingly organizations produce based on marketing orders. The

production is planned based on Build to stock or Build to Order strategies.

While Build to Order strategy is manufactured against specific orders and does not

warrant holding of stocks other than in transit stocking, Build to Stock production

gets inventoried at various central and forward locations to be able to cater to the

market demands.

 Market penetration
Marketing departments of companies frequently run branding and sales promotion

campaigns to increase brand awareness and demand generation. Aggressive

market penetration strategy depends upon ready availability of inventory of all

products at nearest warehousing location so that product can be made available at

13
 short notice - in terms of number of hours lead time, at all sales locations through

out the state and city.

Any non-availability of stock at the point of sale counter will lead to dip in market

demand and sales. Hence holding inventories becomes a necessity.

 Market Size, location and supply design

Supply chain design takes into account the location of market, market size,

demand pattern and the transit lead time required to reach stocks to the market and

determine optimum inventory holding locations and network to be able to hold

inventories at national, regional and local levels and achieve two major objectives.

The first objective would be to ensure correct product stock is available to service

the market. Secondly stocks are held in places where it is required and avoid

unwanted stock build up.

 Transportation and Physical Barriers

Market location and the physical terrain of the market coupled with the local

trucking and transportation network often demand inventory holding at nearest

locations. Hilly regions for example may require longer lead-time to service. All

kinds of vehicles may not be available and one may have to hire dedicated

containerized vehicles of huge capacities. In such cases the will have to have an

inventory holding plan for such markets.

Far away market locations means longer lead times and transportation delays.

Inventory holding policy will take into account these factors to work out the plan.

14
 Local tax and other Govt. Rules
In many countries where GST is not implemented, regional state tax rules apply

and vary from state to state. Accordingly while one state may offer a tax rebate for

a particular set of product category, another state may charge higher local taxes

and lower inter state taxes. In such cases the demand for product from the

neighboring state may increase than from the local state. Accordingly inventory

holding would have to be planned to cater to the market fluctuation.

While in case of exports from the country of origin into another market situated in

another country, one needs to take into account the rules regarding import and

customs duties to decide optimum inventories to be held en route or at destination.

When should the orders be placed?

Answering the above two questions will call for a lot of back end work and

analysis involving inventory classifications and EOQ determination coupled with

Cost analysis. These decisions are always taken in co ordination with

procurement, logistics and finance departments.

Any inventory of raw materials or finished goods runs into thousands of SKU

items. Especially in case of Raw Material Inventory as well as Spare Parts

Inventory these numbers could be much higher when compared to Finished

Goods. Even in Finished Goods some products like clothes, grocery etc could run

into thousands of SKUs across the entire range.

Every unit of Inventory has an economic value in the books of the company.

Therefore as an asset one needs to have a control over the inventory and ensure
15
that the books stock matches with the physical stock. By book stock essentially we

mean system stock.

Inventory management on one hand consists of managing the inventory

transactions and data in the system and on the other it involves physical processes

16
on the ground. Both these have to work in tandem to ensure that all transactions

are closed and completed both in the system as well as on the shop floor.

In a warehouse a typical day operations begin with receiving materials from

different vendors, which are unloaded, counted and updated in the system. The

system then issues a GRN and directs the location to which the material should be

stored. Accordingly the material is then moved to the storage location and a

confirmation back in the system closes the entire transaction. At the same time,

parallel processes for shipment delivery will be under process where the system

releases pick orders on the warehouse. Operations staff picks up the materials as

per pick list and confirm back to the system, which then releases a packing order

and an invoice for shipment. Amidst these multiple transactions there would be

quite a few operational transactions like bin to bin transfers, kitting etc which are

again transacted in the system followed by physical process and re confirmation to

the system.

In such situation where multiple transactions both in system as well as physical

operations are going on and the tasks are interdependent, any process deviation in

any one of the transactions is bound to occur resulting in differences between

system transactions and physical inventory.

Current trend in the industries is to outsource the warehousing operations to third

party service providers, in which case the transactions increase manifold because

of the introduction of additional system at the warehouse end, which belongs to

the third party vendor. The principle customer maintains his inventory in his ERP,

17
which transacts with the third party vendors WMS - Warehouse Management

System and the Physical transactions on the shop floor, which have to run

concurrently with the system.

Systems Issues

Normally the ERP system and the WMS are interfaced using standard interfaces.

Both systems exchange standard interface files updating the transactions carried

out in each of the systems and are downloaded at both the ends in periodic batch

frequencies of half hour or one hour. Thus all receipts received physically at the

warehouse in one hour get updated in warehouse WMS which then sends out the

GRN information to Client’s ERP for updating. Client’s ERP similarly processes

the orders based on the inventory available in its system and issues sales orders

which are sent across to WMS. WMS then generates pick waves which when

confirmed lead to releasing of packing list and invoice. These transactions are

again completed physically and WMS is updated. WMS further sends out the

information of dispatch to ERP for further updation. For these transactions to

happen smoothly both ERP as well as WMS should match perfectly in terms of

inventory and transaction information.

When in case of day-to-day operations, hundreds of transactions are being

processes at both the ends concurrently; the system updates may not happen on

real time basis and can lead to inventory discrepancies. Therefore it becomes

necessary to have daily reconciliation of all transactions between both systems as

well as operations.

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System discipline required

Such transaction based systems call for strict discipline on the part of system users

to ensure they complete all processes without deviation and regularly update the

masters and reconcile on daily basis. Any lack of discipline can effect not only the

inventory but effect transactions as well. For Example, if for any reason a

particular SKU or consignment is blocked at the warehouse and is not to be

dispatched, the inventory block should not only happen in WMS which controls

floor operations but in ERP also. Otherwise in the ERP the blocked inventory may

be showing as open inventory and get allocated for a sales order.

Master Data Up-dation is a MUSTM

SKU code numbers in any inventory are subject to frequent changes. You can also

have the same description and same item being supplied by different vendors.

Every time a new SKU is created at the Customer’s ERP, one must ensure that the

same new SKUs are created in the WMS too. WMS master data with regard to

SKU Code, description and other SKU Master Data and Vendor Master

information should mirror that of the ERP. If by oversight or careless ness this co-

ordination is found lacking the inventory gets mixed up or does not get uploaded

into the system.

System Inventory should match with Physical Inventory

The inventory that is setup and maintained in the ERP as well as WMS should

correspond to the inventory on the shop floor. For example the inventory shown in

ERP and WMS with details of each location as to where, how much is stored in

19
which location should match exactly with the physical reality. On the shop floor

the physical location should have the same SKU, Exact quantity as per System

entry. Any mismatch on the floor location resulting out of mistake from the

operations staff of keeping inventory in wrong location will create havoc in both

system as well as operations.

TYPES OF INVENTORY BY FUNCTION

INPUT PROCESS OUTPUT

Raw Materials Work In Process Finished Goods

Consumables required for Semi Finished Finished Goods at

processing. Eg : Fuel, Production in Distribution Centers

Stationary, Bolts & Nuts etc. various stages, lying through out Supply

required in manufacturing with various Chain

departments like

Production, WIP

Stores, QC, Final

Assembly, Paint

Shop, Packing,

Outbound Store etc.

Maintenance Production Waste Finished Goods in

Items/Consumables and Scrap transit

20
 Packing Materials Rejections and Finished Goods with

Defectives Stockiest and

Dealers

Local purchased Items Spare Parts Stocks &

required for production Bought Out items

Defectives, Rejects

and Sales Returns

Repaired Stock and

Parts

Sales Promotion &

Sample Stocks

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 CHAPTER-2

VVDN TECHNOLOGIES PROFILE

VVDN is a Product Engineering & Manufacturing company focused on designing

& manufacturing end-to-end products across several technology vertical markets

(5G, Data Center, Vision, Networking, Wi-Fi, IoT, Defense, Cloud & Apps).

VVDN’s India HQ is located at Gurgaon, India and its North America HQ’s is

located in San Jose, CA, USA. VVDN serves global customers across several

regions including US, Canada, Europe, India, Vietnam, Korea, and Japan.

VVDN's business model includes Product Engineering Services and ODM

Services. VVDN’s Product Engineering Team Strength is 2,500+ and VVDN’s

Manufacturing Strength is 3,000+ in staff. VVDN has 9 advanced Product

Engineering Centers in India, which are fully equipped to design & test the

complete hardware & software required to develop a complete product or solution.

VVDN’s Manufacturing facilities are located at Manesar, Gurgaon, India which

includes in-house best-in-class SMT Factory, Molding & Tooling Factory, Product

Assembly Factory, and Product Certifications labs. VVDN’s Engineering &

22
Manufacturing facilities are fully complied to develop & manufacture Enterprise,

Consumer, Industrial, and Automotive-grade produc

Mission: To make technology an asset for you with our best quality services.

Vision: To be the leading provider of qualitative Embedded System Solutions

worldwide.

VVDN is a concept-to-production company with a vision to bring global OEM’s

to India for their electronic product design and deliver them the final products,

enabling the eco-system for solution development and manufacturing. VVDN has

the capability to manufacture and deliver products including Wi-Fi access points,

IoT and Artificial Intelligence (AI) cameras, IoT gateways, EV chargers,

Automotive dashcams, Personal and Logistics trackers, Industrial tablets, Thermal

cameras, and many others.

Address: Infocity II, D-22, Phase 2, Info Technology Park, Sector 33,

Gurugram, Haryana 122001

Phone: 0124 428 4250

VVDN Technologies has been working in the area of safe disposal of electronic

waste. This thought is supported by our global policy, as well the legislation

passed by the Ministry of Environment and Forests & Climate Change (MoEF &

Cc) called E-waste (Management) Rules, 2016, which came into effect from 1st

October, 2016.

23
VVDN Technologies will seek shared responsibility and cooperation from

customers in reducing the environmental impact of their products.

VVDN Technologies will comply with all the applicable laws related to e-waste

management Rules 2016.

Our EPR Plan ensures VVDN Technologies complies with the E-Waste

(Management) Rules, 2016 and E-Waste (Management) Amendment Rules, 2018.

As part of the E-waste recycling initiative, we have partnered with M/s E-Waste

Recyclers India which is itself a Recycler and Dismantler. M/s E-Waste Recyclers

India is registered as a recycler with Haryana state Pollution Control Board

(HSPCB) for management and recycling of E-waste.

It is part of our agreement that M/s E-waste Recyclers India will collect e-waste

generated from PAN India and recycle/dismantle the same at their plant at

Industrial Shed no. 15, Rozka Meo Industrial Area, NUH, Mewat, Haryana –

122103.

How this channelization will work?

If you want to handover your old product than you can call us on our Toll Free:-

1800-102-5679 & our Customer care representatives will explain you about the

process of disposal and will share the nearest drop point location to drop e-waste

and If any customer wants to handover the material from their door steps then we

24
do send our recycler’s reverse logistic team to collect the items and channelize the

same to our e-waste partner plant for the final processing.

M/s E-waste Recyclers India has signed an agreement with Professional Logistics

Private Limited for reverse logistics for Channelization of E-waste to the facility

VVDN has more than a decade of experience in Product Engineering &

Manufacturing electronic solutions. We help customers steer their next-generation

solutions with end-to-end design, development, and manufacturing – all under one

roof. We offer a unique value proposition by being a one-stop-shop for our

customers by offering complete hardware, software, mechanical, testing,

prototyping, certification, and manufacturing services. Our main focus is to help

customers with their next technology innovation in the space of 5G, Wireless,

AI/ML on Vision-based solutions, IoT, Cloud & Apps. To enable the same, we

have set up R&D centers, testing lab infrastructure, and world-class manufacturing

facilities in India.

VVDN’s India HQ is Global Innovation Park at Manesar, Gurugram, India and its

North America HQ’s is located in Fremont, CA, USA. We help global customers

across several regions including US, Canada, Europe, India, Vietnam, Korea, and

Japan.

25
VVDN’s CSR overview

Corporate Social responsibility has become a part of VVDN business philosophy.

VVDN is continuously making effort towards environment sustainability through

plantation drives to combat pollution and take a step towards maintaining the

ecological balance. VVDN also contributes towards enriching the lives of

underprivileged people of the society by promoting the education among the

children, women, elderly and the differently abled and livelihood enhancement

projects.

VVDN as part of its commitment is focusing on giving back to the society and

making every effort to ensure that it grows in a socially and environmentally

responsible way, while meeting the interests of its stakeholders by delivering

economic, social and environmental benefits

26
EXECUTIVE LEADERS

BOARD OF DIRECTORS

27
 SWOT ANALYSIS

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that

Inventory Glassware encounters both internally and in macro environment that it

operates in. Strengths and Weaknesses are often restricted to company’s internal -

resources, skills and limitations.

Opportunities and Threats are factors that are analyzed in view of the prevalent market

forces and other factors such as legal & environmental, economic , technological, social,

health & safety, and political.

According to global executive survey done by Harvard Business Review & Brightline

Initiative – Only 20% of the strategic targets set by organizations are realized. Rest 80%

of the strategic targets are not achieved because of incomprehensive planning, limited

resource allocation, and poor execution.

The successful organizations such as Inventory Glassware are the one who able to predict

market trends better than others, provide resources to develop products and services to

leverage those trends, able to counter competitors’ threats, and meet customers’ expected

value proposition.

28
 CONCEPTUAL DISCUSSION

Inventory is an important resource of every business to run its day-to-day

operations uninterruptedly. It impacts various steps of the supply chain such as

manufacturing, ware housing, sales etc. The amount of inventory available with a

business should be sufficient enough so that various activities of the business are

not adversely affected.

Likewise, there should not be excessive amount of investment in inventories. This

is because over investment can lead to inventories remaining idle. Thus, it would

result in blocking of working capital . Therefore, inventory plays a very important

role in managing the various operations of the business. So, let’s understand what

is inventory and various types of inventory before understanding the concept of

inventory management.

Meaning and Types of Inventory

Inventory forms the most important current assets of the business. According

the Indian Accounting Standard 2, inventories are the assets that are:

 Held for sale in the ordinary course of the business

 Still in the process of production for sale of such inventory

 To be used currently in the production of goods or services that are

eventually sold

29
Thus, inventory is classified into the following three categories:

1. Raw Material

These are the inputs used by the business to manufacture goods smoothly. The

quantity of raw materials to be held by a business depends on:

 The rate at which raw materials are utilized,

 Time it takes to restock raw materials and

 Other factors like government policies, availability of raw materials etc

2. Work-In-Progress

Work-in-progress refers to the semi-finished goods that are still under production

and have not reached the final stage of the finished product. The quantity of work-

in-progress of a business depends on the length of its manufacturing process. Here,

length of production process means the time it takes to convert the raw materials

into finished goods. Greater the time gap, more is the quantity of work-in-progress

of the business.

3. Finished Goods

Finished goods refer to the final goods sold to the customers. Businesses keep

stock of finished goods to avoid supply shortages. The amount of finished goods

in inventory depends on the nature of business, demand for the goods etc.

30
Purpose of Holding Inventory

As mentioned above, an adequate quantity of inventory needs to be maintained by

a business to avoid stock runouts in times of peak demand. Similarly, too much

inventory can lead to locking of the working capital funds thereby impacting the

profitability of the business.

Thus, every business aims at maintaining optimum level of inventory to avoid

such situations. So, there are three important motives for holding inventory. These

include:

Transaction Motive

As per this motive, businesses hold adequate amount of inventory for

uninterrupted production and timely fulfillment of the same order.

Precautionary Motive

This motive makes it necessary for the businesses to hold inventory for unforeseen

changes in demand and supply of materials.

Speculatory Motive

As per this motive, businesses maintain inventories to take benefit of price

changes. This results in savings in the reordering cost and quantity discount.

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Inventory Management

It is important to manage inventory efficiently as it plays an important role in

various aspects of business. Thus inventory management includes proper planning

of buying, managing, warehousing and accounting of inventory. Businesses

having proper inventory management systems are able to know:

 what to buy,

 how much to buy,

 where to buy,

 at what time to buy

 Where to store etc.

Now, various departmental heads of business would always disagree with the issue

of inventory. For instance, the finance head would want to invest lesser amount in

inventory given the cost involved and idle inventory impacting the profitability.

Likewise, the production manager would want to invest more in inventory to avoid

running out of stock and to produce goods uninterruptedly. The ultimate aim of

inventory management is to maintain adequate stock levels. This is because

excessive inventory leads to blocking of working capital. And inadequate

inventory results in shortage of raw material leading to stalled production process.

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Objectives of Inventory Management

The objectives of inventory management are as follows:

 Maintaining uninterrupted flow of raw materials and finished goods. This is

to ensure continuous production process and timely fulfillment of demand

for goods by customers.

 Getting rid of excessive or inadequate inventory.

 Keeping a check on raw material cost thereby reducing the cost of

production and the overall cost of running the business.

 Reducing losses on account of wastage, damage or spoilage of raw material

inventory.

 Ensuring continuous inventory control. This is done so that inventory

reflecting in the financial statements should always match with the physical

inventory in warehouses.

 Holding optimum inventory as needed by production and sales process.

 Ensuring that goods are of high quality and are offered at favorable prices.

 Maintaining optimum level of inventory. This is to ensure that all the

activities including production and operations are carried out seamlessly.

 Avoiding double ordering of the same raw material stock.

 Providing necessary statistics for future inventory control and planning.

 Holding various management levels accountable by laying out clear cut

inventory management policy.

33
Inventory Management Techniques

There are several inventory management techniques that are in practice. A

business entity needs to implement an inventory control system based on its

convenience. Further, this inventory control system needs to be such that it covers

each type of inventory item required at every stage of production cycle.

Following are a few of the important inventory control techniques that a business

can implement:

1. ABC Analysis

2. Economic Order Quantity

3. Just-in-Time

4. Material Requirement Planning (MRP)

5. Safety Stock

6. VED Analysis

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 CHAPTER-3

REVIEW OF LITERATURE

Sagan (1999) perhaps the first theoretical paper on the theory of Inventory

management, emphasized the need for management of Inventory accounts and

warned that it could vitally affect the health of the company. He realized the need to

build up a theory of Inventory management. He discussed mainly the role and

functions of money manager inefficient Inventory management. Sagan pointed out

the money manager’s operations were primarily in the area of cash flows generated

in the course of business transactions. However, money manager must be familiar

with what is being done with the control of inventories, receivables and payables

because all these accounts affect cash position.

Cohn and Pringle in their study (2000) illustrated the extension of Capital

Asset Pricing Model (CAPM) for Inventory management decisions. They tried to

interrelate long-term investment and financing decisions and Inventory management

decisions through CAPM. They emphasized that an active Inventory management

policy based on CAPM could be employed to keep the firm’s shares in a given risk

class. By risk, he meant unsystematic risk, the only risk deemed relevant by CAPM.

Owing to the lumpy nature for long-term financial decisions, the firm is continually

subject to shifts in the risk of its equity. The fluid nature of Inventory, on the other

hand, can be exploited so as to offset or moderate such swings. For example they

suggested that a policy using CAPM could be adopted for the management of

35
marketable securities portfolio such that the appropriate risk level at any point in

time was that which maintains the risk of the company’s common stock at a

constant level.

Copeland and Khoury (2002) applied CAPM to develop a theory of credit

expansion. They argued that credit should be extended only if the expected rate of

return on credit is greater than or equal to market determined required rate of return.

They used CAPM to determine the required rate of return for the firm with its new

risk, arising from uncertainty regarding collection due to the extension of credit.

Thus, these studies show how CAPM can be used for decisions involved in

Inventory management.

Adesh Sharma (2004) applied accelerator model with financial variables to

determine the factors influencing investment in inventories in pesticides industry in

India. Data had been taken form the Stock Exchange Official Directory, Mumbai for

the period 2000-02 in respect of 18 firms in this industry. The coefficients of the

accelerator and financial variables were found to be significant and positive. The

coefficient of inventory of inventory stock was significant and negative.

Walker stated that theory of Inventory management by developing three

prepositions. However, Walker tested empirically the first proposition only.

Walker’s Study would have been more useful ─ had he attempted to test all the

three propositions.

Weston and Brigham (2006) further extended the second proposition

suggested by Walker by dividing debt into long-term debt and short-term debt. They

36
suggested that short-term debt should be used in place of long-term debt whenever

their use would lower the average cost of capital to the firm. They suggested that a

business would hold short-term marketable securities only if there were excess

funds after meeting short-term debt obligations.

Welter (2007) stated that Inventory originated because of the global delay

between the moment expenditure for purchase of raw material was made and the

moment when payment were received for the sale of finished product. Delay centres

are located throughout the production and marketing functions. The study requires

specifying the delay centres and Inventory tied up in each delay centre with the help

of information regarding average delay and added value. He recognized that by

more rapid and precise information through computers and improved professional

ability of management, saving through reduction of Inventory could be possible by

reducing the length of global delay by rescuing and/or favourable redistribution of

this global delay among the different delay centres. However, better information and

improved staff involve cost. Therefore, savings through reduction of Inventory

should be tried till these saving are greater or equal to the cost of these savings.

Thus, this study is concerned only with return aspect of Inventory management

ignoring risk. Enterprises, following this approach, can adversely affect its short-

term liquidity position in an attempt to achieve saving through reduction of

Inventory. Thus, firms should be conscious of the effect of law current assets on its

ability to pay-off current liabilities. Moreover, this approach concentrated only on

37
total amount of current assets ignoring the interactions between current assets and

current liabilities.

Bansal (2008) in his study on Inventory Management: A case Study of

Bharat Heavy Electricals Limited, Bhopal Unit, (BHEL), has evaluated the existing

systems of inventory management. He emphasizes the need for automatic

replenishment system in the undertaking offer studying the application of ABC

analysis and EOQ technique of inventory control. He also points out the

accumulation of surplus stores and non-moving items in the organization and

recommends that the surplus and absolute stores which are no longer required

should be disposed off as early as possible at the best available price. Further, he

suggests the preparation of monthly class wise statements on inventories for

effective control over them and the introduction of reconciliation system of stores

ledgers with account ledgers to avoid misappropriation of stores, and spares for

production and operation are above their actual consumption level. The inventories

in general are found to be above their routine requirements. The holdings of stores

and spares corresponding to two to three years requirements should be considered

excess

Sambasiva Rao. K (2008) In his Study on Inventory Management in Public

Sector Ship Building Industry evaluates. The performance of materials management

and identifies some problems faced by materials management in the heavy

engineering industry. The method of investigation involves the documentary

evidence and survey of expert opinion. He evaluates the existing purchase systems

38
and lead time involved in procurement of materials and suggests that the long lead

time should be reduced. His study points at the excess inventory in terms of number

of months cost of production in all the engineering units.

Hari R. Swami (2010) said that Inventory management in public

undertakings evaluates the performance of materials management in the central

public undertakings in Rajasthan Viz., Instrumentation Limited, Kota Unit, HMT,

Ajmer Unit, Hindustan Zinc Limited, Debari Unit, Hindustan Copper Limited,

Khetri Unit and Sambhar salts limited. The methods of investigation includes

questionnaire interview, on the spot study and desk work techniques etc. It is

observed that the cost of materials accounts for more than 50 percent of the total

cost of production in the selected units of the study.

Basu (2014) illustrated the extension of Capital Asset Pricing Model

(CAPM)10 for Inventory management decisions. They tried to interrelate long-term

investment and financing decisions and Inventory management decisions through

CAPM. They emphasized that an active Inventory management policy based on

CAPM could be employed to keep the firm’s shares in a given risk class. By risk, he

meant unsystematic risk, the only risk deemed relevant by CAPM. Owing to the

lumpy nature for long-term financial decisions, the firm is continually subject to

shifts in the risk of its equity. The fluid nature of Inventory, on the other hand, can

be exploited so as to offset or moderate such swings. For example they suggested

that a policy using CAPM could be adopted for the management of marketable

39
securities portfolio such that the appropriate risk level at any point in time was that

which maintains the risk of the company’s common stock at a constant level.

Singhvi (2015) adopting the Inventory cycle approach to the Inventory

management, also suggested that investment in Inventory could be optimized and

cash flows could be improved by reducing the time frame of the physical flow from

receipt of raw material to shipment of finished goods, i.e. inventory management,

and by improving the terms on which firm sells goods as well as receipt of cash.

However, the further suggested that Inventory investment could be optimized also

(1) by improving the terms on which firms bought goods i.e. creditors and payment

of cash, and (2) by eliminating the administrative delays i.e. the deficiencies of

paper-work flow which tended to extend the time-frame of the movement of goods

and cash.

PROBLEM OF STATEMENT

Lack of optimization is a common design problem that makes it more difficult to

accurately plan and forecast future inventory needs. A well-designed inventory

system must capture the right data at the right time to avoid ordering mistakes that

result in inaccurate inventory levels. Optimization is especially important as a cost-

control measure in a manufacturing business, because it functions both to reduce

waste and improve serviceability

40
 CHAPTER-4

OBJECTIVES OF THE STUDY

1) To keep inventory at sufficiently high level to perform production and sales

activities smoothly.

2) To minimize investment in inventory at minimum level to maximize

profitability.

3) To minimize carrying cost of inventory.

4) To keep investment in inventory at optimum level.

5) To reduce the losses of theft, obsolescence & wastage etc.

41
 CHAPTER-5

RESEARCH METHODOLOGY

The basic types of research are as follows:

Analytical research:

In this the researcher has to use facts or information already available, and analyze

these to make a critical evaluation of material.

Quantitative research:

It is based on measurement of a quantity.

This report is based on “Quantitative & Analytical” Research.

RESEARCH DESIGN

The type of research in my study is descriptive. The main aim is to find out the

Inventory management of VVDN Technologies pvt ltd, Gurugram.

SOURCES OF DATA

Data Collection:-

There are two main sources for collecting data. These are:-

1. Primary Data.

2. Secondary Data.

1. Primary Data:

It is the data that is collected for the first time. It is fresh and the originally

collected by the surveyor.

42
 2. Secondary Data:

Secondary data is the one which is collected by the some one else and already

used in some or the other form. Here the secondary data will be as the theoretical

aspects of promotional tools and the statistical method made use of.

 Magazines
 Books
 Analysis of existing reports.
 Internet
TYPES OF DATA COLLECTION:

Secondary Data Collection:

Secondary data are those data which is already collected and stored. Secondary data

can easily get from the Annual Reports, Journals, websites etc. of the company. It

will save the time, money and efforts to collect the data. Secondary data also made

available through trade magazines, books, Internet etc.

Secondary data is gathered from the annual reports, Red Herring Prospectus, and

Internet. The aim of data collection is to gain familiarity and to achieve Inventory

Management of VVDN Technologies pvt ltd, Gurugram.Hence, there has take help

from Websites of the VVDN Technologies pvt ltd, Gurugram to analyze the result.

ANALYSIS TOOLS

Data collection through Secondary Data i.e. Internet, Annual Reports of the

VVDN Technologies pvt ltd, Gurugram resulted in availability of the desired

information.

Collected information is tabulated through bar diagrams.

43
 CHAPTER-6

DATA ANALYSIS AND INTERPRETATION

Inventory represents products a company owns and plans to use in its

production process within the next year. Inventory can be in the form of raw
materials, work in progress or finished goods. Raw materials can include
commodities such as metal or oil, while work-in-progress inventory refers to
goods that have undergone a certain level of processing on a company's
production line but are not finished goods yet. Finished goods are products that
are available for sale by a company. Certain companies such as clothing
retailers do not have raw materials or work in progress included in their
inventories due to the nature of their business.

Keeping inventory on hand is not only costly, as a company has to incur

warehousing expenses, but it also presents an opportunity cost as the company
could have done other profitable things with the funds invested in inventory.
Also, inventory tends to become obsolete or even spoil, resulting in balance
sheet declines and charges on a company's income statement.

But here in VVDN Technologies , the operating cycle involves the period of
conversion of raw material into work in process, work in process into finished
goods and finished goods into sale.

Inventory 2020 2021 2022

Raw Material Conversion 39.6 62.5 78.7

Period
Work In Progress 12.9 13.8 24.2
conversion Period

44
 Finished Goods Conversion 38.1 29.8 53.8
Period
Debtors 37.8 43.4 53.2

128.4 149.5 209.2

The operating cycle of VVDN Technologies is increasing year by year, as it is

clear from the above table. It is important to note here is that it is the raw material
conversion period which has increased from 2020 to 2022, forcing the overall
operating cycle of VVDN Technologies to increase.

Raw Material Conversion Period 2020-22

45
 Raw Material Conversion Period

80
70
60
50
40
30
Raw Material
20
Conversion Period
10
0

1 2 3

46
Interpretation

To see this table it is evaluated that Raw Material is increased of the Company
every year.

Work in Progress Conversion Period 2020-22

Work In Progress conversion Period

25

20

15
Work In Progress conversion Period
10

1 2 3

Interpretation

To see this table it is evaluated that Work in progress is also double from 2019 to
2021

47
 Finished Goods Conversion Period 2020-22

Finished Goods Conversion Period

60
50

40
30
Finished Goods Conversion Period
20

10

1 2 3

INTERPRETATION

From this table it is concluded that In 2020 it is 38.1 and it is decreased in 2022
and it is 29.8 but in 2021 it is increased 53.8

48
 WORKING OF OPERATING CYCLE:-

A) INVENTORY CONVERSION PERIOD

B) DEBTOR CONVERSION PERIOD

A) INVENTORY CONVERSION PERIOD :-

1) RAW MATERIAL CONVERSION PERIOD=

Average raw material * 365

Total cost of raw material consumed

Total cost of raw material consumed= (Raw material consumed +Stores and spares
consumed)

2) WORK IN PROGRESS =

Average work in progress *365

Cost of production

3) FINISHED GOODS CONVERSION PERIOD=

Average stock of finished goods *

365 COGS

COGS(cost of good sold)= { Purchases + opening inventory – closing

inventory}

B) DEBTOR CONVERSION PERIOD:-

Average book debts * 365

Credit sales

Credit sales = Net sales (Assumed)

49
ANALYSIS OF INVENTORY
(Rs. Lacs)
Particulars 2022 %age 2021 %age

Current Assets:

Inventories 219,464.98 48.05 106,972.99 42.79

Sundry Debtors 75,365.63 16.50 58,041.39 23.22

Cash & Bank 74,031.55 16.21 19,623.69 7.85

balance
Loan & Advances 87,828.66 19.23 65,305.71 26.12

Total Current 456,690,82 100.00 249,943.78 100.00

Assets
Current Liabilities

Sundry Creditors 84,995.49 30.06 82,033.40 41.21

Acceptance 126,453.51 44.72 68,931.36 34.63

Interest accrued but 5,779.46 2.04 4,898.52 2.46

not due

Other Liabilities 32,122.76 11.36 22,029.76 11.06

Provisions 28,755.17 10.17 21,133.17 10.61

Total 282,735.65 100.00 199,026.21 100.00

Thus we see from the common size statement that main components of current
assets are Inventories and Loans & advances. The share of inventories in 2021 was

50
42.79% but now it increased to 48.05% in 2022 which shows large sum of money
has been blocked in inventories.

Inventory

250,000.00

200,000.00

150,000.00
Inventory
100,000.00

50,000.00

0.00

2022 2021

INVENTORY FOR YEAR 2021-22

2016
2021

INTERPRETATION

To see this chart, it is concluded that Inventory is almost double of the

company for the year 2022 in the comparison of year 2021

51
 Cash & Bank balance

80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00 Cash & Bank balance
20,000.00
10,000.00
0.00

2022 2021

2021
CASH AND 2016
BANK BALANCE FOR THE YEAR 2021-22

INTERPRETATION

Cash is also increase to 74031 in the year 2022 and 19623 in the year 2021

52
 Sundry Creditors

85,000.00
84,000.00
83,000.00
Sundry Creditors
82,000.00
81,000.00
80,000.00
2016
2022 2021

INTERPRETATION

Sundry Creditors is also increased to 84995 lacs in the year 2022 besides 82033
Lac in the year 2021

53
VVDN TECHNOLOGIES IS LOOKING FOR DOUBLE DIGIT GROWTH

Another factor that could influence this ratio is the use of just-in-time inventory
method. Companies using just in time system of inventory management usually
have high inventory turnover ratio as compared to others in the industry.

Inventory turnover ratio is computed by dividing the cost of goods sold by average
inventory at cost. The formula/equation is given below:

Two components of the formula of inventory turnover ratio are cost of goods sold
and average inventory at cost. Cost of goods sold is equal to cost of goods
manufactured (purchases for trading company) plus opening inventory less closing
inventory. Average inventory is equal to opening balance of inventory plus closing
balance of inventory divided by two.

54
 CHAPTER-7

FINDINGS

 Raw Material is increased of the Company every year.

 Work in progress is also double from 2020 to 2022
 In 2020 it is 38.1 and it is decreased in 2021 and it is 29.8 but in 2022 it is
increased 53.8
 Inventory is almost double of the company for the year 2022 in the
comparison of year 2021
 Cash is also increase to 74031 in the year 2022 and 19623 in the year 2021
 Sundry Creditors is also increased to 84995 lacs in the year 2022 besides
82033 Lac in the year 2021

55
 SUGGESTIONS

1. VVDN Technologies should finance all its requirement of Inventory

through short term sources of finance as they are cheaper than the long term
sources. It is financing a part of its Inventory from long term sources of finance as
it is clear from the fixed assets to total long term fund ratio.

2. The Company is not adopting proper inventory systems like A.B.C.

analysis, V.E.D. analysis etc. this inventory system can make the inventory
management more result oriented. Since, inventory covers the major potion of
VVDN Technologies current assets; it should be given prime attention.

3. The company should do proper Cost-to-Benefit analysis before purchasing

the raw material i.e. scraps for following months in light of its storage cost, current
prices, estimated future prices, further demand etc. along with the opportunity cost
of holding such inventory.

56
 BIBLIOGRAPHY

 Anthony, Roberts N.: Management Accounting Taxes and Cases Homewood

Illinois Richard D. Irwin, 1998.

 Adesh Sharma, “Investment and Financing in Pesticides Industry in India,”

Indian Journal of Finance and Research, Vol.V. No.2 July 1999, p. 67-83.

 Agarwal N.K.: Analysis of Financial Management, New Delhi, National

Publishing House, 2001.

 Vijaykumar and A. Venkatachalam, “Working Capital and Profitability – An

Empirical Analysis,” The Management Accountant, October 1995 p. 748-
750;

WEBSITES

www.google.com

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