A

PROJECT REPORT

ON

INVENTORY MANAGEMENT

Submitted by

Akashkumar Rameshbhai Panchal

Under the guidance of
PROF. MEGHA BHOGAWAR
Submitted To

University of Mumbai for partial fulfillment of the requirement for the

award of Master Management Studies.

Alamuri Ratnamala Institute of Engineering And Technology, Thane

2022-23
 ACKNOWLEDGEMENT

It is my greatest pleasure to acknowledge sincere gratitude towards Mr. S. Y.

Patankar (HR) who gave me a good opportunity to do my project in the EXCEL

Industries Limited.

I am also grateful to Mr. Swapnil sir (A/c Dept.) for their valuable

advice; I would also like to thank the whole A/c department for co-operation and

support in completion of my project.

I am always thankful to our Prof. VITTHAL JADHAV for helping

me to make this project successful.

I am also thankful to entire accounting department workers who

gave me information about the ratio analysis and thanks to MSIBM College who

helped me to making this project.

AKASHKUMAR RAMESHBHAI PANCHAL

STUDENT NAME AND SIGNATURE

STUDENT ID: ARMIET/MMS21/PA004

 CERTIFICATE

This is to certify that Mr. Akashkumar Rameshbhai Panchal has completed the project report with
us for his/her project report work on “INVENTORY MANAGEMENT” in fulfillment for the
completion of his Course with ALAMURI RATNAMALA INSTITUTE OF ENGINEERING
AND TECHNOLOGY on “MASTER OF MANAGEMENT STUDIES” as prescribed

By ALAMURI RATNAMALA INSTITUTE OF ENGINEERING AND TECHNOLOGY

This Project Report is record of authentic work carried out by him with guidance by our relevant
department

PROF. MEGHA BHOGAWAR

Signature of guiding teacher

EXTERNAL GUIDE
 DECLARATION

I am Mr. AKASHKUMAR RAMESHBHAI PANCHAL hereby declare that

the project report entitled “INVENTERY MANAGEMENT ’’for excel industry

limited. Is a genuine project prepared by me in partial Fulfillment of degree of master

of business Administration of “University Of Mumbai”

The project work is original and the conclusions drawn herein are based on the data

Collected and analyzed by me.

AKASHKUMAR RAMESHBHAI PANCHAL

STUDENT NAME AND SIGNATURE

STUDENT ID: ARMIET/MMS21/PA004

 INDEX

SERIAL NO. PAGE NO.

PARTICULARS

1 Executive summery 1

2 Introduction 2-8

3
Company Profile 9-15

4 Objectives of Study 19

5 Research Methodology 20-22

6 Data collection and Interpretation 23-47

7 Observations 48

8 Findings & Conclusion 46

9 Limitations 49

10 Bibliography 50
11 Annexure 51
1. EXECUTIVE SUMMARY

As a part of the partial fulfilment of the MMS course at Vishwakarma Sahajeevan

Institute of management, Khed (Ratnagiri), Summer Internship project was undertaken

with the EXCEL INDUSTRY LIMITED, LOTE.

This project is specially designed to understand the project matter of Inventory

Management System in the company. This project gives us information and report about

company’s Inventory Management. Throughout the project has been on Presenting

information and comment in easy intangible manner. The purpose of the training was to

have practical experience of working in an organization and to have exposure to the

various management practices. This training has also given me an on the job experience

of financial management.

This project is very useful for those who want to know about company and

Inventory Management of the company.

1
2. INTRODUCTION

2.1.1 Introduction to Inventory Management:

The term inventory refers to the goods or materials used by a firm for the purpose

of production and sale. It also includes the items, which are used as supportive materials

to facilitate production.

There are three basic types of inventory: raw materials, work-in-progress and

finished goods. Raw materials are the items purchased by firms for use in production of

finished product. Work-in-progress consists of all items currently in the process of

production. These are actually partly manufactured products. Finished goods consists of

those items, which have already been produced but not yet sold.

Inventory constitutes one of the important items of current assets, which permits

smooth operation of production and sale process of a firm. Inventory management is that

aspect of current assets management, which is concerned with maintaining optimum

investment in inventory and applying effective control system so as to minimize the total

inventory cost

2.1.2 Definition:

1. The term inventory has been defined by the American Institute of Accountants as the

aggregate of those items of tangible personal property (a) are held for sale in the ordinary

course of business, (b) are in the process of production for such sales, or

(c) Are to be currently consumed in the production of goods & services offer to be

available to sale.

2
2. The term inventory refers to the stockpile of the products a firm is offering for sales &

the components that make up the product. Inventories are the stocks of product of a

company, manufacturing for sale & the components that make up the product.

3. Inventory management may be defined as the sum of total of though activity necessary

for the acquisition, storage, disposal or material.

2.1.3 Nature of the Inventory/Components of Inventory

Form the above definition we can draw the components of inventory. The various forms

in which inventory exist in a manufacturing firm are raw material, work-in-progress,

finish goods, store & spare.

COMPONENTS OF INVENTORY

Work-in-
Raw Material Finish Product Store & Spare
progress

Raw Material:

Raw materials are those inputs that are converted in to finish goods through

manufacturing process. These from major input from manufacturing a product. In other

word, they are very much needed for uninterrupted production.

Work-In-Process:

Work –in-process is that stage of stocks that are between raw material & finish goods.

Work-in-process inventories are semi-finish product. They represent product that need to

undergo some other process to become finished goods.

3

Finished Product:

Finished products are those products, which are ready for sale. The stock of finished

goods provides a buffer between production & market.

 Stores & Spares:

Stores (included office & plant cleaning material like, soap, brooms, oil, & fuels, light
etc.) are those purchased & store the purpose of maintenance of machinery

2.1.4 Importance of Inventory Management

1. To create buffer against uncertainties in supply & demand

2. To take advantage of lower purchasing & transportation cost associated with high

volume.

3. To advantage of economies of scale associated with manufacturing product in

batches.

4. To exploit speculative opportunity for buying & selling commodities & other

product.

5. To maintain independence of supply chain

6. Time- The time lags present in the supply chain, from supplier to user at every stage,

require that you maintain certain amount of inventory to use in this “lead time”

7. Uncertainty- Inventories are maintained as buffers to meet uncertainties in demand,

supply & movements of goods.

8. Economics of scale- Ideal condition of “one unit at a time at a place where user need

it, when he needs it” principal tends to lots of cost in terms of logistics. So bulk buying,

movement & storing brings in economies of scale, thus inventory.

9. It enables to firm to achieve purchasing, transportation &/or manufacturing.

10. It balances supply & demand. Seasonal variable will affect inventory Levels.

4
11. It enables specialization in manufacturing. Hence, economies may be realized. Due

to large runs of a certain product, which may be held in?

2.1.5 Advantages of Inventory Management

1. A good inventory management strategy improves the accuracy of inventory

orders.

Proper inventory management helps you figure out exactly how much inventory you need

to have on-hand. This will help prevent product shortages and allow you to keep just

enough inventory without having too much in the warehouse.

2 .A good inventory management strategy leads to a more organized warehouse.

A good inventory management strategy supports an organized warehouse. If your

warehouse is not organized, you will have a hard time managing your inventory. Many

companies choose to optimize their warehouses by putting the highest selling products

together and in easily accessible places in the warehouse. This, in turn, helps speed up

the order full-fillment process and keeps customers happy.

3. A good inventory management strategy helps save time and money.

Inventory management can have real time and monetary benefits. By keeping track of

which products you have on-hand or ordered, you save yourself the effort of having to

do an inventory recount to ensure your records are accurate. A good inventory

management strategy also helps you save money that could otherwise be wasted on slow-

moving products.

5
4. A good inventory management strategy increases efficiency and productivity.

Inventory management devices, such as barcode scanners and inventory management

software, can help drastically improve your efficiency and productivity. These devices

will help eliminate manual processes so your employees can focus on other – more

important – areas of the business.

5. A good inventory management strategy keeps your customers coming back for

More:

It’s a fact that good inventory management leads to what you are constantly striving for

– repeat customers. If you want your hard-earned customers to come back for your

products and services, you need to be able to meet customer demand quickly. Inventory

management helps you meet this demand by allowing you to have the right products on-

hand as soon as your customers need them.

2.1.6 OBJECTIVE OF INVENTORY MANAGEMENT:


Ensure a continuous supply of raw materials facilitate uninterrupted production


Maintain sufficient stock of row materials in period of short supply & anticipate price
changes


Maintain finished goods inventory for smooth sales operation & efficient customer service


Minimize the inventory costs


Control inventory investment by maintaining optimum inventory

6
Company’s ERP (Enterprise Resource planning):

ERP is a computerized system which used by manufacturing industries to derive

competitive advantages in the production & financial areas. Is a system which is a set of

integrated programs capable of managing a company’s vital business options for an entire

multi-site, global organization

Excel Industry Limited. Also using ERP software for managing their vital business

operations for whole organization. While using such software Excel have their own server

in their Lote office in Lote, pershuram at Khed. Because of this software, it is easy to

maintain important record to Excel, lote branch with their head office. Some benefits for

using ERP software to Excel Industry Limited. Are as follows:

1) Use of latest technology

2) Help to improve & optimize capacity or resource utilization (machines, Material,

Man and money).

3) Reduction of lead time.

4) On time Production/performance lending to on time shipmate/delivery.

5) Helps reduction in quality costs.

6) Help in providing timely & accurate production-oriented information, facilitating, in

the process better analysis, planning & control.

7) Help to improve information accuracy, finance, manufacturing informed decision

making capability.

7
Enterprise Resource Planning is now being positioned in excel as the foundation and

integration of enterprise-wide information systems. Such systems help link together all

the operations of an organisation including accounts, finance manufacturing &

distribution as well as connect the organisation to its customers & supplier company ERP

is totally integrated with HR, maintains management, sales & distribution , quality

management, manufacturing & operational planning etc.

8
 2.2 COMPANY PROFILE

2.2.1 HISTORY

Excel Industries Limited has a long way since its origin in a Kitchen Lab in 1941. Over

the years, Excel came to be known as an industry leader in the area of Agro-chemicals and

Agro-chemical intermediates. Using its chemistry and chemical technology, Excel also

expanded its Chemical manufacturing range to include water treatment chemicals and

Polymer additives and a few other specialist chemicals.

Excel Commitment to sustainable development led us to venture in field of environment

and bio-technology. Excel is a Pioneer and Technological leader in rapid conversation of

Municipal Solid waste to organic Composite. In order to ensure focus, attention has to be

given on expanded range of activities. The Agro Business division was spun off as a

separate company, Excel Crop Ltd. in 2003.

Today Excel is organized into three divisions:-

1. Chemicals

2. Pharmaceuticals

3. Environment & Biotech

9
2.2.2 VISION

Vision- 2001

A World renowned reliable company, friend of the farmer, industry, urban and cares for

all stakeholders, practising innovative and value based management principles and

providing quality products and services through committed teams of people. Will become

a Rs.1000 Cr. (250 Cr. Exports) enterprise in the fields of

 Agrochemicals &Intermediates.

 Industrial, Speciality & Performance Chemicals.

 Agri Services – Water Management

Seeds

Celrich

Nutrients

Knowledge

 Waste Management & Hygiene

 Natural Products, Herbal & Biological Products.

 Agri produce.

 Energy : Conventional & Renewable

Being conscious of social and national priorities thus being a responsible Corporate

Citizen.

10
2.2.3 MISSION

We the members of Excel family, pay our respects to the memory of our
th
founder Late Shri. C. C. Shroff, our dear Pappa, on this 19 November, 1990,
making

th
the commencement of the 50 year of what is now Excel and rededicate
ourselves to

further fulfil the vision of our founder to make humble contributions to country,
innovation and through individual and collective endeavour.

Satisfaction of our shareholders, customers, our own people, suppliers,

institutions, investors, society and community is paramount to us. We will make whole

hearted efforts for the fulfilment of this objective through our interactions and

interdependence with them.

India, our country is blessed with abundant natural resources in terms of

soil, sunlight, rain, rivers, minerals, underground resources, forests, mountains and snow.

We are fortunate to have a background of thousands of years of culture and civilisation

where values, principles and respect for nature are key factors. We the member of Excel

family will follow the path of imbibing our cultural spirit, harmoniously working to

preserve, utilise and protect our natural resources and to continue to base our practices

on values and principles.

We have the responsibility towards industry and community. Rural

community is the heart of India. We will be friends and contributors to well being of both

industrial and rural community. Not only through our products and services, but also

through our knowledge and expertise, we will be of assistance to community and

industry.

11
 Company is togetherness. We will work and contribute, learn and grow

together in the spirit of “Saha-Viryam”. This is our resolution and we resolve so. We pray

to the Almighty that we be granted the strength to fulfil our this mission.

12
 QUALITY POLICY

We at Excel Industries Limited, manufacturer and supplier of Industrial Chemicals,

Intermediates and Crop Protection Chemicals are committed to :

Enhance customer satisfaction by providing Quality Products,

Information, and Services;

Comply with applicable regulatory requirements;

Continual improvement of the Quality Management System;

Establish and review the Quality objectives;

Be a preferred alliance partner for development of new products;

Work intensely on new business developments;

Communicate and understand this policy within the organization;

Review it periodically for its continuing suitability.

Revision : 00S.R. Potdar

Date : 02.04.2003 In-charge Chemicals Division

13
 AWARDS

2004 National Energy Conservation Award

(Second Prize) in chemical sector for the year 2004 from Ministry of Power,
New Delhi. (For Roha Site)

2004 International Spirit at work award

For nurturing the human spirit at work and inspiring others by your
example.

2004 ICMA Award

For Excellence in Management of Health, Safety and Environment.

2004 Greentech Safety Silver Award

by Greentech Foundation, New Delhi.

2003 National Safety Council – Maharashtra Chapter – Maharashtra Safety

Award
For achieving Lowest Accident Frequency Rate During The Year 2003 in
Chemicals and Fertilizers Sector. (For Lote Parshuram, Ratnagiri).

1998-99 GPFA Prestige Award

for outstanding contribution in developing indigenous technology for
manufacture of pesticides and winning recognition in domestic as well as
international market and giving thrust to India’s Export contribution

1995-96 The Chartered Financial Analyst is pleased to present the Certificate of

Honour

14
2.2.4 BOARD OF DIRECTORS

1. K.C. Shroff Chairman Emeritus

2. G Narayana Chairman Emeritus

3. A. C. Shrof Chairman and MD

4. UshaShrof Vice-chairperson

 Board Members

SetumadhavRangraoPotdar Executive Director

Dipesh K. Shroff Director

Ramchandra N. Bhogale Director

Atul G. Shroff Director

Harish NarendraMotiwalla Director

Priyam S Jhaveri Director

MadhukarBalvantray Parekh Director

NileshBhaskarSathe Director

15
2.2.5 PRODUCTS

1) Agrochemical intermediates-Under this, the company manufactures a range

of Phosphorus Derivatives like Phosphorous Pent sulphide, Phosphorous Trichloride,

Diethylthiophosphoryl Chloride and many more. These derivatives are used in

manufacturing of Organo phosphorous pesticides, lube oil additives, mining chemicals,

pharmaceutical, dye intermediates and fire retardant plasticizers.

2) Phosphates- Under this, it manufactures range of Codex, Sequale and Dispercel.

These products have applications in cooling water treatment, boiler water treatment, soaps

and detergents, textile processing, bottle washing, industrial and institutional cleaners,

deflocculation of slurries, antiscalant formulations for oilfields, sea water evaporators,

reverse osmosis & sugar processing.

3) Speciality Chemicals- Under this, Excel Industries has developed speciality

chemicals such as SPA, PPPBP, PEEB, DTPs, PPA, THPE, DMBPC, NICOTINIC and

ESTER. These chemicals find application in ion extraction, chelation, polymer

manufacture, as an additive in paper industry and as corrosion scale inhibitor.

4) Biocides- the Company produces BIOCEL SP 85 and ACEXCEL-240. It is used as an

Industrial fungicide in Textiles, Paints, Guargum, Adhesives and Paper-Pulp industries and

as a Slimicide and Algaecide in Cooling Water Systems.

5) Pharma Products- the Company produces products such as TPP, DMATA.HCL,

NI4, DMT-T, DMT-CI, 2-DOR and MOEBr.

16
2.2.6 Name of the Main Finished Product

Codex
Acetyle Chloride
Biocel
THPE
PHARMA – T5 T6

2.2.7 Supplier:

1. Raw materials

Gohil Dyechem Urvashi chemicals

C J Shah & co. Radiant Orgnics Pvt. Ltd.
Sunita commercial Pvt .Ltd. Urmi chemical
Jupiter Dyechem B.H.Enterprises

2. Containers:

Time Techno Plast

MystricalPolyplast
Shree Ambika Industry
Dimple Drums & Barrels Pvt. Ltd.
Paradise Packing Pvt. Ltd.

17
3. Stores and Capital Store

B G Enterprises
Deepak Enterprises
Vineet Sales Corporation
Amar Plastics
Kailash Hardware & Electricity Store
Sonal Engineering Plastic Fabricators

2.2.8 Customer

1. (Domestic)

Gohil Dyechem Shashun Chemicals & Drugs Ltd.

Divi’s Laboratories Univercal Speciality Chemicals
Chembond Chemical Ltd. Val OrganicePvt. Ltd.
Amar Enterprises Urvashi chemical Ltd.
VVF Ltd. Vasu Chemicals

2. (Export)

Univer Product International B V

ZsChimmer and Schwarz (Us Division)
Sabic Innovative Plastic US LIC

18
 3. OBJECTIVE OF THE STUDY

1. Understand the concept of Inventory management

2. To study various methods of Inventory management

3. To study & analysis Inventory management in the excel Industries Limited.

4. To understand the procedure of Inventory Management.

19
 4. RESEARCH METHODOLOGY

Data collection is an important step in methodology of any project & success of any

project will be largely depend upon who much accurate you will be able to collect & who

much time, money & effort will be required to collect the necessary data.

Research
Methodology

Primary Method Secondary

Method
(First hand data)

Primory Method

Questionnaires Observation Discussion

20
 Secondary Method

Books/
Schemes Website
Magazine

4.1 Primary Data

The primary Data is a fresh & first hand data which is collected for the first

time & happened to be original in character. We have collected the information & data

through formal & informal discussion with our profession guide in the organization, &

through personal interview, questionnaire, observation etc. which are methods available

for primary data collection


Observation – under the observation I studied the inventory structure, & the
companies environment


Discussion – help of the discussion with the executive officer I collected the
information about inventory & company

21
4.2 Secondary Data

The data is the data which have already collected & stored. We can easily get secondary

data from records, journals. Annual reports, newsletters & books. It will save the time,

money & efforts in collecting the data. We also have collected the data from report,

website M & M. newsletters etc.


Books: - with helps of book & magazine I understand the concept of inventory.


Website: - I have collected information related to the company from web sites.

22
5. DATA ANALYSIS & INTERPRETATION

5.1 TYPES OF INVENTORY AT EXCEL INDUSTRIES:

5.1.1 Raw material

Particular Products

1. Local Acetic Acid

Caustic Lye

Methanol

Chlorine

Phenol

PCL3

Soda Ash

Dimethyl Formamide

Methane Sulphonic

Chyclooohe

Polymaleic Acid

Mono Ethylene

Soda Bicarb

Sodium Borohydride- NABH4

23
 Imported 4HAP

3MPA

Ortho Creso

Humisol-K2

DiethyleneTrimine

Dimethyl Benzaldehyde

Cyclohexanone

5.1.2 Main Finished Product

Main Finished Codex

Product Acetyle Chloride

Biocel

THPE

PHARMA-T5 T6

24
5.1.3 Fuel Used

Fuel Used Furnace Oil

Light Diesel Oil

Coal

5.1.4 Boiler

Boiler Coal Fire Boiler : 6TPH

: 12TPH

Oil Fire Boiler : 6TPH

25
5.1.5 Packing Material

Packing Fibreboard Drums Size 16”x 21” , Varnished

Material HDPE Carboys (Black)- 30 LTR Cap. Semi Virgin

Polythene Bags 25 kg. Size – 26”x 42”x 250G

HMHDE Carboys Grey LTR.

HMHD Carboys (Blue) 50LTR. Cap. Rocket

HMHD Carboys (Green) Narrow Mouth, 210LTR.

Polythene Bags for Mobicel-H

FIBC (Jumbo)BAG 90x90x120CMS

FIBC (Jumbo)BAG 950X1150X700

MS Open Mouth Drums-200kgs.

Wooden Pallets Size : 44”x 44” x 6” x 4way

Fibreboard Drums Size 16” x 21”; Varnished

HMHDPE Carboys (Blue) 50 LTR. Cap. Rocket

HMHDPE Fixed Head Blow Molded Drums

26
5.2 Procedure of Inventory management of excel:

1. Give a purchase order to respective supplier

2. Receiving of deliveries of raw material

3. Unloading of tanker’s material

4. Inspection of material

5. Identification of raw material

6. Handling of raw materials

7. Storage & preservation of material

8. row material holding for Transfer to other unit of manufacturing

9. Issue of material to production department

10. Issue of material to production department Liquid raw material

11. Disposal of scrap

12. Revalidation of raw material

13. Periodic inventory

14. Product is being manufactured by production

15. Receiving of finished goods

16. Safe handling of materials

17. Dispatch of finished goods

27
1. Give a purchase order to respective supplier:

For making a production of chemicals first of all production department need is

raised for this purpose production dept. make PR (purchase requisition) to purchase

department. Purchase department asks for the quotation to respective supplier. Supplier

send an quotation to purchase department purchase department analyses the quotation &

send this quotation to plant manager check the all quotation & the better quotation in

favour of company is being chosen by the plant manager or the Head office. And order

of the mentioned items in PR is given to the respective supplier.

2. Receiving of deliveries/ Receipt of raw material:

Name of the consignee & address.

Material quality & expired date on the package.

Supplier’s name & purchase order number.

Excise invoice if received along with the chalan is checked for validation:- the

duplicate copy (modvat copy) is receiving . Name & address on invoice is correct.

Quantity on invoice email or telephone & get the number from them. If excise invoice

is not received with the consignment, stamp the challan as “excise duplicate copy for

modvate not received. Kindly submitted within 7 day”& acknowledgement the receipt

& mark mail to concern officer at purchase department If the TC is not read. With

delivery challans pls. seiectoption as NO while raising the GR and also intimate the

same central purchase department. Accordingly weight the vehicle i.e. truck/tanker

check seals on unloading line & filling hole caps. For material received in tanker,

28
 Check seais on unloading line and filling hole caps. For packing material and material

received in tankers and extender 2000349,200057 send the copy of the challan to QC

lab. While unloading all the extenders (i.e. soapstone powder, micro calcite, kcg etc. )

put tarpoline at unloading point. spilled power is collected after completion of unloading

and weight the collected spilled power and provide the tag with code number and

quantity. Polyliners received with raw material packs is removed, retained and recycled

to reduce waste generation; this should be done at the time of unloading itself so that

extra manpower will not be required.

3. Unloading of tanker’s material:-

After receipt of challan copy for passed tanker material:

a) Verify the challan carefully for following

Tanker number


Description of the material

QC verdict and special instruction, if any Code number given to material.

Fill format no. RMS/f/01(permit for unloading tanker)

Fill format no. RMS/f/04( if tanker has is unloaded in barrels)

b) Check the dip reading statement (soft copy-no. RMS/f/03) of the day and identify the

tank in which the material is unloaded. As well check the receipt / during the day.

Verify that enough space foot the received quantity is available in that respective tank.

If not then inform factory planning, factory manager and central purchase department

about the same.

c) Instruct tanker driver to tack his vehicle to the unloading point.

29
d) Check the tanker-unloading pipe is fixed to the tank in which the material is to be

unloaded. Verify code number of the material & tank no./code no. on the unloading

pipe of the tank. Check that the value handles for the tank in which the material is

unloaded is in open position

e) Unload the tanker material & ensure that the tanker is totally emptied

f) After unloading send the empty tanker for weighment on weighgebridge to arrive at

the net wt. for material received from T.Q. lab.

4. Inspection& Identification of material:-

1) Procedure is followed while generating stencilling report from ERP by using

Selection parameters as below:-

Select plan & main stores location. Select goods receipt & Q.C. passing movement

type.Select date of earlier day so that all GR’s created & material passed by Q.C. Report

for I day will be generated.

As per above report take the GR no. as a D/no. & expire date of document sgenerated. In

case of barrels, carboys cases each pack is taken. If tanker unloaded in recycled barrels

despoil all earlier taking by chemical to avoid confusion or wrong issue.

After taking report from Q.C. about intimation of REJECTED material received, then

take the printout for stencilling purpose which is stencilled as “REJECTED”. Further

follow up with central purchase is carried out for sending back the rejected lot back to

supplier

30
5. Handling of raw material:-

1) Subject : Handling of material.

2) Purpose & scope : to define procedure of handling of material in stores

3) Responsibility : officer – stores

4) Procedure :

Forklifts, hands trolleys batter operated stackers & trucks are used for transferring of

RM & PM.

Hand gloves, face shields, goggle, gum boots & safety shoes are used by operators

while handling material as & when required.

Safety instruction boards are displayed at storage & working place wherever required.

Tanker containing solvents & oils are earthed while unloading in storage tanks to take

care of static electricity.

Rubber tire (cushion) is used while unloading barrels containing material from lorry to

unloading ramp wherever necessary.

Master list of the equipment is maintained with engineering department.

31
6. Storage & preservation of materials:-

A) Storage

a) RM/PM/intermediates/consumables received from supplier & production department

are stored atthe designated storage areas under the custody of stores department.

b) The designated storage areas for RM//intermediates/consumables are enumerated.

The layout is available in file. List of storage tanks with detailsare maintained in file.

c) Deliveries (other thank tanker material and packing material) are marked for the

details such D/no. and before inspecting and respective code numbers after approvals

from QC. Lab. Mfg and expiry date is stencilled only for batch managed items.

d) After receiving process order and reservation from production department the

approved RM’s are issued to designated areas in the concerned section/ sub-stores. The

activity is monitored by officer-stores.

e) Perpetual inventory is carried out on daily basis and book stocks with physical stocks

are compared.

Stock taking of all items is done twice in year as per directive from H.O. A/cs

32
B) Preservation:-

Barrels and bags are stocked on pallets as per stocking norms and pallets are kept on racks

for preservation to avoid leakage and deterioration. Torn bags and leaky containers are

replaced by appropriate packaging and then labelled marked.

Some of the items are stored at controlled temp. In cold storage room. List of such items

along with required temp. For storage is maintained separately in file ST/05. Items stored

at designated location are separately documented

8. Raw material loading for transfer to other unit of manufacturing:-

1) Generate the RM stock transfer report from ERP every day. Locate the raw material

2) Ensure that each package is identified by its D. no. & code no. (Not in case of

packing material)

3) In case of torn or damaged bag, cover it with polybags

4) Note down number of package & its weight against each items of raw material &

number

5) Get the raw material loaded in the truck whose tare weight is already taken.

6) After complete loading ensure that the material in the truck properly covered with

tarpaulin.

7) Sent the truck to security officer for weighment for its gross weight on our weig-

bridge.

8) Send the necessary documents along with the transporter such as excise invoice, Etc.

33
9. Issue of material to production department:-
On receipt of purchase order from production department officer-stores

transfer approved raw material in exact quantity to designated area of production

department & post the same PROCCES ORDER in ERP system immediately after the

material. Ensure that all P.P.E.s are used while handling the material.

1) To ensure FIFO for batch manage material check batch no. through MMBE and for

other check GR date by using 101 movement in MB59.

2) officer- stores confirm that a label (RMS/F /05 & 06) with following information is

attached to the pallet transferred to the production department for each raw material

a) Reference no.

b) Batch no.

c) Date and signature to officer for issue of the material.

d) Total quantity along with partly packed quantity.

e) Location where the material is issued.

f) Signature of store officer.

3) If any raw material issue from DE lot should be highlighted with its remark on

process order DEFEED file is maintained on M drive.

4) Party packed quantity is weighed on calibrated weigh scale and delivered to

production department along with the intact bags.

5) For non-production issue to the departments get the reservation create from

production department persons & ensure the posting of the same immediately.

6) PM is issued against reservation.

34
10. Issue of material to production department Liquid raw material:-

Procedure is followed while issuing liquid raw material & additives to the production

department. On receipt of PROCESS ORDER from the production department officer

store & warehouse issues the raw material either in stages or completely as mentioned on

PROCESS ORDER

Following are the point the officer stores & warehouse should follow while issuing the

liquid raw materials.


Confirm that the container being used is of the same raw material.


Ensure the clean the top of raw material barrel & also that of container prior to
weighment.

Ensure that all P.P.E. are used while handling the material.


Weighment is done on the calibrated weigh scales only.


Put earthing to the container and also to the raw material barrel.


To earth the pump if it is used.

Put the partful barrel sticker/ label(RMS/F/08 7 09) on the container weighed.

After completion of weighing keep the drum to its designated place.
Recorded the entire on partful barrel sticker.


When all the raw materials on the PROCESS ORDER are weighed, keep them properly
on the pallet and transfer the pallet to the specified location on the production

floor.

Clean the place immediately after weighing if any spillage occurs.

If any raw material is issued to production in the reused container, prior to issue,


Ensure that container is marked for correct/ unique identification and old code nos. is
defaced on it if any.

35
11. Disposal of scrap:-

11.1 scrap generation:

 The scrap generated in the plant is categorized under Chemical scrap through

production process: -During production chemical scrap are generated through (a)

routine cleaning process of equipment as floor (b) emptied pack of RM / intermediates

(c) Spillage and specific cleaning of the same. Out of this emptied packs of RM (mainly

barrels and carboys) are re-used to extent possible for storage of intermediates. This are

scrapped after several recycling. If the cleaning agent is solvent then the same is stored

for (a) reused (b) distillation for recovery. Rest all are scrapped directly.

 Chemical scrap defects/ expiry:- this scrap is generated due to material which is

defective or expired & can not be worked off. Defective WIP batch under this category

is unload in barrels & scrapped. Also if non moving RM or FG is expired & can not be

revalidated, then the same is scrapped.

 ETP/STP sludge:- ETP sludge is handled separately by the safety in charge of the

location & this document excludes the same as scope.

 Distillation sludge:-distillation of recovered solvent is done either by in house

facility (wherever available) or sent to outside processors.

Distillation bottom sludge generated may be scrapped upon is condition.

Engineering scrap:- Engineering scrap is generated while maintaining / repairing /

upgrading any existing machine and when a new facility is provided. The scrap is stored

separately in scrap yard. Example is metal pieces, structural material, piping material,

equipments, old cable, wood etc.

36
 Paper / plastic waste:-paper / plastic bags & films generated from various sources,

wrappings, packing & printing etc. should be treated as garbage, if un-contaminated.

Scrap committee every plant shall have one scrap committee. The scrap committee shall

be headed by the works manager & would include production manager, QC manager,

commercial manager / account in charge,and engineering manager & stores.

Responsibility of scrap committee to ensure proper control over the scrap generation &

disposal process.


To sort out day to day operating issues related to scrap handling (in / out) physical
& system.


To ensure that the hazardous scrap is disposal off appropriately so as to avoid any
statutory violation.

Working of scrap committee shall meet once a month.

The committee shall review the quantum of scrap generated & disposed.

At least three member of the scrap committee shall sign the excise invoice through

which the scrap is sold.

Scrap committee member should take periodic round of scrap storage area to review

the stock & the storage conditions.

11.2 scrap yard management:-

Scrap yard manufacturing location has designated place as scrap yard. All scrap shall be

accumulated at scrap yard shall be restricted. The material shall be kept properly

segregated as per its hazardous nature and realizable value.

37
11.3 Movement into scrap yard:-

Movement of all scrap into the scrap yard shall happen twice in a day during general

shift in presence of the store officer responsible for scrap yard. All scrap shall be sent

under a scrap ticket signed b the section officer of the originating section and must bear

the following information.

a. Description of scrap

b. Source and reason for generation

c. Approximate quantity

c) Scrap stored outside designated scrap yard

There can be specific instances when we scrap outside scrap yard specific

responsibility shall be assigned to one officer for managing the scrap stored there. A

typical case can be distillation sludge. In such case, works manager must assign the

responsibility.

12. Revalidation of raw Materials.

Procedure is followed while generating revalidation report every month:

Following are the points the officer stores should follow while revalidation report every

month through ERP and is forwarded to quality control for their actions.

Generate revalidation report through ERP.

Select range of storage location (like 2001 to 2005 etc.)

Select plant D-9 lote manufacturing select period of current months.

38
 As per above selection, report will get generate in ERP. This is printed and one hard
nd
copy is given to quality control for revalidation and 2 copy is filed with stores

revalidation file.

Above procedure is only for sensitive/batch managed material only. Hence remaining

RMS like pigment and extenders is issued to production after getting revalidation from

Q.C. if shelf life is over.

13. Periodic inventory:-

Following procedure is followed by officers’ stores & warehouse for doing periodic

inventory.

1) As per schedule given by factory accounts transaction is completed (posting of

reservation & completion of G.R.) prior to stock cheeking activity.

2) P.L. sheet is collected from accounts department & physical stock cheeking activity

is completed in stipulated time. Book vs. actual stock is reconciled before verification.

3) Physical stock is verified from internal/external auditors as per physical inventory

schedule. Also obtain auditor signature on PI sheet.

4) Posting P.I. sheet in ERP

5) Any change is made in PI sheet due to error is change in ERP

6) After completion of PI sheet posting sheet is returned to account department.

Production department. This is posted in ERP by BSR under intimation to account or

excise department for record.

39
 FIFO is employed at the time of providing material to the customer in order to ensure

that shelf life is not exceeded. All finished goods are batch managed hence FIFO is used

by system itself.

The dispatches are made either directly to the customer’s premises or to the depots

which in turn caters to customer / dealers in their territory on basis of dispatch plan give

& as per allocation available in the system. Direct dispatches to the customer at their

premises are done as per written or verbal instruction from marketing department &

planning department.

14. Product is being manufactured by production department:-

After completion of all the procedure, a liquid as well as solid raw material is collectively

put in the machine & after specific reactions & processes product comes in the semi-

finished stage & then semi-finished product is sent to the next stage & then at last it get

ready for sale. Now product is being sent to BSR i.e. (bonded store room) this is the

warehouse of finished goods. Here all products are ready to send either to other customer

companies or to another plant of the same industry.

15. Receiving of finished goods:-

1) Subject : Receiving of finished goods

2) Purpose : To receive the material for storage

3) Responsibility : Warehouse/store department officer

4) Procedure : The procedures is as follows

40
a) Warehouse:- After viewing the unrestricted stock in computer system, brings the

material to warehouse for dispatch. Warehouse officer verifies the following things while

lifting the material.

b) Taking printout of stock of product:- The printout of taken as per the report available

in the computer system & the detail on the containers. In case of any discrepancy, then

report it immediately to production department & try to find out solution on it.

c) After receivingthe material, stored it in the BSR (bonded store room) where all the

finished goods store. Here all goods are ready for sale either company’s deposits or the

dealers or customers.

16. Safe handling of materials:-

1) Subject : Handling off material.

2) Purpose of scope : To define Procedure of handling of material in stores

3) Responsibility : Stores department officer

4) Procedure :


Forklifts, hands trolleys, battery operated stackers & truck are used for transferring
of RM & PM.


Hand gloves, face shield, helmets, goggles, gum boots & safety shoes should
be used by operators whilehandling material as & when required.


Safety instruction boards should be displayed at storage & working
places wherever required.

Master list of the equipment should be maintained with engineering department.

41
Storage and preservation of materials:-

1) Subject : Storage & preservation of material

2) Purpose : To define storage & preservation System of issues of finished goods

3) Responsibility :warehouse or store department officer.

4) Purpose : As follows

A) Periodic verification of finished goods:

a) The objective of periodic verification is to detect worsening of condition of finished

goods and take necessary action to prevent reoccurrence and also to ensure FIFO.

b) Periodic verification is carried out 2 times in year.

B) Warehouse procedure:

a) Finished goods delivered to warehouse are stored till dispatched to customer in the

Designated areas termed as “bonded store room (BSR)” & the layout for the same is

available with department in file.

b) “Returned goods” received from the customer for rectification is stored in a

Separate area reserved for them.

c) Preservation:

42
 Leakey container are sent for replacement to production department for

appropriate packaging and then stencilled.

Finished goods which are already expired are further revalidated by QC as and when

requirement is given from marketing.

C) Road permit availability monitoring on daily basis:

a. Road permit are required to ensure 100%Dispatches.

b. Correlation & reconciliation of actual required road permits with the actual

c. availability

d. Email to all concerned depots or customer for road permit status on daily basis

e. Check courier receipt for road permit on daily basis.

17. Dispatch of finished goods:-

1) Subject : Dispatch of finished goods

2) Purpose : To dispatch of finished goods to customer / Depots.

3) Responsibility : Warehouse/store department officer

4) Procedure : Delivery of finished goods

Unrestricted finished goods in computer system in production department.

Location of finished goods is transferred to BSR location for dispatch. Unrestricted

material is posted in BSR location through ERP

While moving material to BSR batch number are checked. Ensure that customer

specific requirements are followed e.g. issue of test certificate, sample, and panel are sent

along with the supply to specific customer.

43
Material is stacked at the designated area in BSR

List of materials in restricted stock is generated on monthly basis & communicated to

factory planning for further action.

Material of which shelf life is over is moved to separate specified area which is

revalidated by QC as and when required prior to dispatch to depots. If any FGs from BSR

are required for re-work is issued to production against E-mail from the factory planning,

production department.

Direct dispatches to the customer at their premises are done as per written or verbal

instructions from marketing department or planning department.

5.3 Methods of Inventory Management

A. Economic Order Quantity:

The economic order quantity (EOQ) is the inventory management technique for

determining optimum order quantity which is the one that minimize the total of its order

and carrying costs; it fixed ordering costs against variable ordering costs. By finding the

lowest total annual costs(as a function of ordering costs, annual demand or usage, annual

inventory carrying costs, and average costs or value of unit of inventory ), the EQO is

determined.

43
ECONOMIC ORDER QUANTITY

The Economic Order Quantity is considered of following cost:

Ordering Cost:

It is related with purchased items & it would include expenses on the requisitioning or

preparation of purchase order, expediting transport, receiving inspecting and placing in

storage. Ordering cost increasing with number of orders; thus more frequently inventory

is acquired, the higher the firm’s ordering cost. Ordering cost decrease with increasing

size of inventory.

Caring Costs

Costs incurred for maintaining a given level of inventory are called carrying costs. It

include storage, taxes, deterioration & obsolescence. Carrying costs vary with inventory

size.

Storage Costs

It arises when inventories are short of requirement for meeting the needs of production

or the demand of customers. Inventory shortages may result in one or more of the

following: high cost concomitant with ‘cash’ procurement, less efficient and uneconomic

production schedules, and customers dissatisfaction and loss of sales.

Total Cost:

The sum of the order & carrying costs represents the total cost of inventory. This is

compared with the benefits arising out of inventory to determine the optimum level of

inventory.

44
A. FIFO METHODS (FIRST IN FIRST OUT)

This method assumes that the order in which materials are received in the store is the

order in which they are issued from the store. Hence the material which is issued first is

priced on the base of the cost of material received earliest so on and so forth. FIFO means

managing inventory and financial matter involving the money a company ties up within

inventory of produced goods, raw materials, parts, components ,or feed stocks.

FIFO is a common method for recording the value of inventory. It is appropriate where

there are different batches of similar products. The method presumes that the next item

to be shipped will be the oldest of that type in the warehouse. In the practice, this usually

reflects the underlaying commercial substance of the transaction since many company

rotates their inventory.

B. LIFO METHODS (Last in First Out)

LIFO stands for last –in, first-out, meaning that the most recently purchased items are

recorded as sold first. In LIFO accounting, ahistorical method of recording the value of

inventory, a firm record the last unit purchased as the first unit sold. Since price generally

rises over time because of inflation, this method record the sales of the most expensive

inventory first and there by decreases profit and reduces taxes. However this method

rarely reflects the physical flow of indistinguishable items. LIFO valuation permitted on

the belief that an ongoing business dose not realize an economic profit solely from the

inflation. When prices are increasing, they must replace inventory currently being sold

with higher priced goods. LIFO better matches current cost against current revenue.

45
C. ABC ANALYSIS:

In order to exercise effective control over materials, A.B.C. (Always Better Control)

method is of immense use. Under this method materials are classified into three

categories in accordance with their respective values. Group ‘A’ constitutes costly items

which may be only 10 to 20% of the total items but account for about 50% of the total

value of the stores.

A greater degree of control is exercised to preserve these items. Group ‘B’ consists of

items which constitutes 20 to 30% of the store items and represent about 30% of the total

value of stores.

A reasonable degree of care may be taken in order to control these items. In the last

category i.e. group ‘Q’ about 70 to 80% of the items is covered costing about 20% of the

total value. This can be referred to as residuary category. A routine type of care may be

taken in the case of third category.

This method is also known as ‘stock control according to value method’, ‘selective value

approach’ and ‘proportional parts value approach’.

If this method is applied with care, it ensures considerable reduction in the storage

expenses and it is also greatly helpful in preserving costly items.

46
 6.OBSERVATIONS

1. FIFO and LIFO Inventory method is used in the company.

2. The Inventory is ordered as per the requirement. The Raw material which is not easily

available is ordered in bulk and stored.

3. Maximum export is done to earn profit.

4. Every month Inventory budget is prepared.

5. The company import from local and international supplier.

6. Sales are increasing every year.

7. The company is providing good quality of product and services.

8. Raw material is verified on the quarterly basis.

47
 7. FINDING &CONCLUSION

After the study, we can come to a conclusion that, effectiveness of inventory management

should improve in all the aspects; hence the industry can still strengthen its position by

looking into the following.

1. The inventory should be fast moving so that warehouse cost can be reduced.

2. The finished goods have to dispatch in feasible time as soon as manufacturing

completed.

3. Optimum order quantity should be maintained, hence cost can be minimized.

4. Proper inventory management techniques are employed by the

inventory management organisation within the

5. The inventory is being purchased by the order of the Head Office, costing of

inventory is done by also Head office.

6. Storage capacity of the finished product is less than the production capacity.

7. Due to the ERP system each and every transaction was recording the ERP

system & it was really beneficial in terms of accuracy & efficiency.

8. Raw material handled by machine.

48
 8.LIMITATIONS

1. Time acted as limiting factors for study.

2. The information about raw material stored is not flourished properly

3. Product information on company website is not available properly

4. Information about company’s inventory is not reviled to trannies.

5. Detail about finished product is not reviled to trainees.

49
 9.BIBLIOGRAPHY

Websites:

1. www.goggle.com

2. www.excelind.co.in

http://www.scanco.com/top-five-benefits-of-a-good-inventory-management-strategy/

http://www.yourarticlelibrary.com/inventory-control/inventory-control-its-objectives-
advantages-and-limitations/27944/

Company Reference:

1. Annual report

2. Company Profile

50
 Annexure
Balance Sheet As on 31st March

A)Equity And Liabilities

1)Shareholders Funds
a)Share Capital 987.45 987.45 1031.82
b)Reserve & Surplus 23137.36 30019.92 42372.75
24124.81 31007.37 43404.57
2)Non-Current Liabilities
Long-term provisions 13553.45 10996.69 3724.10
Deferred Tax Liability 2610.19 3314.62 3897.41
16163.64 14311.31 7621.51
3)Current Liabilities
Short-term borrowings 6530.33 1226.89 171.77
Trade payables 1562.97 1417.33 2152.02
Other current Liabilities 4447.59 5186.65 4013.85
Short-term Provisions 1734.34 2061.51 2555.72
14275.23 9892.38 8893.36
Total 54563.68 55211.06 59919.44

B)Assets
1)Non-Current Assets
a) Fixed Assets
Tangible Assets 28682.46 29845.05 32073.97
Intangible Assets 330.96 573.73 651.17
Capital work-in-progress 1404.86 1008.76 3121.03
30418.28 31427.54 35846.17
2)Current Assets
Current Investment 1277.27 273.86 273.86
Inventories 5464.29 4663.44 5449.21
Trade receivables 11319.46 11505.42 12909.57
Cash and bank balances 3377.00 4532.84 2714.39
Loans and advances 2695.28 2783.01 2468.71
Other current assets 12.10 24.95 257.53
24145.40 23783.52 24073.27
Total 54563.68 55211.06 59919.44

51
 Profit and Loss Account
For The Year Ended 31st March

PARTICULARS 2013-14 2014-15 2015-16

INCOME

Revenue from operations (gross) 55285.93 69613.35 71172.56

Other income 376.37 916.81 914.47

Total revenue (I) 55662.30 70530.16 78087.03

EXPENSES

Cost of raw material & components 33985.23 41744.24 45537.83

consumed

Increase/decrease of inventories of finished (473.42) 84.81 64.99

goods, work-in-progress & traded goods

Employee benefits expense 2258.77 2742.88 3189.93

Finance costs 1153.87 1814.64 975.51

Depreciation & amortization expenses 994.95 1531.72 1765.86

Other expenses 7482.31 9700.88 9151.73

Total Expenses 44401.71 57670.88 60737.35

Profit before tax 10260.59 12859.28 17349.68

TAX EXPENSES

Current tax 2317.96 3539.40 5144.95

Deferred Tax 1120.14 704.43 611.19

Earlier Years (43.79) - 14.14

Total Tax expenses 3394.31 4243.83 5770.28

PROFIT FOR THE YEAR 6866.28 8615.45 11579.40

52