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With Reference TO

GMR Ferro Alloys & Industries


Financial management is the managerial activity which is concerned with the planning and controlling of the firms financial resources.
Finance is regarded as THE LIFE AND BLOOD OF BUSINESS ENTERPRISE. It is the backbone of every business employed in all business


Profit maximization Wealth maximization

Production Marketing Finance





To examine the financial position of the organization The nature of business activity will have a leasing on the inventory policies based on the study of inventory management. Effective inventory management will not allow keeping money locked until it will to smooth performance of the industry and also reacts to economic function and profitability.


To disseminate modern concept and techniques of efficient and effective stores management. To disseminate modern concept and techniques of inventory management agreement, thereby ensuring optimum utilization of available resources. To improve services level of stores and inventory management functions. To develop a carder of committed professional in stores and inventory management.

To study how the inventory is maintained in that organization

The data collected for the study is of two types: Primary Data Secondary Data

Primary data is obtained from officials of finance and other Departments. The primary data is obtained through discussions and contacts with the officials of Steel Industries. The secondary data is obtained from the annual reports and the other documents maintained by the company. The information is collected from the printed and published financial statements of the company.


As two months period of time is a constraint, it was difficult to carry out the study in depth. The Analysis is based on the financial data given by the company.

The study is confined to a period of five years.

Reliability on usage of secondary date is another limitation. It is changing every year.

The New Industrial Policy Regime The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.

ORGANIZATION STRUCTURE OFGMR INDUSTRIES FERRO ALLOY DIVISION: GMR Industry Ferro alloy division was set up in 1989 at Ravivalasa village in Tekkali mandal in Srikakulam district about 150 km from port city of Visakhapatnam. With a capacity of 3500 tons per annum with a 3.5mva submerged electric arc furnace. This capacity is increased to 6000tpa and then to 10000tpa in 1993. The modification and de bottle inking the existing furnace. In 1996 the capacity was increased to 25000tpa with the commission of a second 9 mva furnace.

Every enterprise needs inventory for smooth running of its activity. It serves as a link between production and distribution process. Materials constitute the most significant part of current assets of a large majority of companies in India.

Materials are a stock of the product a company is manufacturing for sale and components that make up the products. The various forms in which materials exists in manufacturing company are: Raw materials Working in process Finished Goods

The optimum inventory size is commonly referred to as economic order quantity. It is that order size at which annual total costs of ordering and holding are the minimum. To find this the formula is:

EOQ = Sqrt (2AO/C) Where, A = Annual Total Requirement, O = Ordering Costs, C = Carrying Costs.

Determining an optimum material level involves two types of costs: ORDERING COSTS & CARRYING COSTS

Usually a firm has to maintain several types of materials. It is not desirable to keep the same degree of control on all the items. The firm should pay maximize attention to those items whose value is the highest. The firm should, therefore, classify materials to identify which items should receive the most effort in controlling. The firm should be selective in its approach to control investment in various types of materials. This analytical approach is called ABC analysis . The high value items are classified as A items and would be under the tightest control. C items represent relatively least value would be under simple control. B items fall in between these two categories and require reasonable attention of management. The ABC analysis concentrates and exception.




Annual Consumption (in. lakhs) 3583.24 3459.48 3308.22 3451.97

Ordering Cost 25 24 23 25

Carrying Cost 20 22 25 28

EOQ Units 94.64 86.87 78.02 78.51

2006-07 2007-08 2008-09 2009-10

coal coal coal coal







ANNUAL CONSUMPTION FOR THE YEAR 2006-2007 STEP: 2 (Rs. In Thousands)

Item Name

Annual Consumption 2590.213 2508.272

Cumulative Cumulative (Rs) Percentage (%) 2590.253 5098.485 18.98 37.37

coke coal

lime dolomite bauxite Manganese

1525.171 1472.131 1253.152 1181.431

9012.077 10484.208 11737.36 12918.791

66.06 76.85 86.03 94.69





It is observed that the capacity utilization is normal in FERRO ALLOYS.

FERRO ALLOYS is not suffering with funds panic for working capital. It has sufficient working capital.
The Inventory turnover, Raw material turnover, Inventory to Networking capital Ratios are increasing and decreasing order. These inventory levels should be in the standard position for achieving the objectives & goals . The Inventory holding period has to be reduced. Company financial position is good in all respects according to my observations.

Management should concentrate to reduce expenditure by using the cost reduction methods. Government has to issue grants and provide some subsidies to develop FERRO ALLOYS. Govt. should issue sufficient funds. Management should concentrate on working capital

The Management should identity its inventory as a fast moving item slow moving item, or long moving item and they should take necessary steps for the disposal of non moving items at the earliest . Management must identified the Raw material inventory management