INVENTORY MANAGEMENT AT COROMANDEL FERTILISERS LIMITED, VISAKHAPATNAM

 

Project report submitted to Andhra University, Visakhapatnam Partial fulfillment for the award of the Degree in

MASTER OF BUSINESS ADMINISTRATION
Submitted by

SK. HANIF
Registered No : 2085454041 Under the esteemed guidance of

Mr.P.V. PRASAD
Asst. Professor – MBA, HOD- BBM

DEPARTMENT OF MANAGEMENT STUDIES. AQJ CENTERE FOR PG STUDIES
(Affiliated Andhra University, Visakhapatnam-530 017) (2008-2010)

INTRODUCTION 

Inventory constitutes the most significant part of current assets to a large majority of companies in India. On an average inventories are approximately 60% of current assets in public Limited companies in India. Because of the large size of inventories maintained by the firms, a considerable amount of funds is required to be committed to them. It is possible for a company to reduce its levels of inventories to a considerable degree e.g., 10 to20 percent, with out any adverse effect on production and sales, by using simple inventory planning control and techniques. And at the same time company should not invest excess money in inventory by managing large size of inventories. The company may loose the opportunity cost on the excess inventory and also the carrying cost will increase due to large size of inventories. Therefore it is advisable for the company to maintain inventory at an optimum level always. There are different techniques available for the company to maintain optimum level of inventory.

OBJECTIVES OF THE STUDY

The study titled “INVENTORY MANAGEMENT”- A case study of Coromandel fertilizers ltd., has been carried out with the following objectives. To find whether the CFL ensures a continuous supply of materials to facilitate uninterrupted production. To study the inventory management policies, techniques and their effectiveness. To give suggestions to increase inventory turnover. To make an appropriate investment in inventories and keep it at an optimum level.

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SCOPE OF THE STUDY

The scope of my study is confined to one of the key areas of finance i.e. inventory management. The study concentrates on the methods and techniques followed by CORAMANDAL FERTILIZERS LIMITED for its inventory management and its relative merits and demerits. The study appraises the company’s success in meeting the requirements of the company and the country by helping the farmers to raise agriculture output to meet the requirement of the country’s growing population for food grains.

METHODOLOGY

Both primary and secondary data were used in conducting this project which is as follows: PRIMARY DATA: This is done by personal discussions with various officials in warehouse department and financial department of CFL. SECONDARY DATA: Data collection from the in-house purchase order books, indent books and journals relating to fertilizers industry magazines and annul report of CFL. The secondary data is obtained from the annual reports and the documents maintained by the company.

LIMITATIONS

The below mentioned are the constraints under which my study has been carried out. The study is confined to only 5 years. Most of the information has been kept confidential and as such is not passed on as a part of the policy of the company. Since the number and size of inventory is very large, all the raw materials could not be included in the analysis.

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INDUSTRY PROFILE

Fertilizers refer to any materials, which supply nutrients to plants in fields, which can be readily absorbed by them. Since the essential physiological attribute of seeds is their ability to convert a great duel of nutrients into grain. The spread of this variety lead for greater consumption of fertilizers simultaneously with increasing demographic pressure on the agricultural productivity has assumed more importance. The fertilizers which are most widely used are classified as under basing the nutrients available. The most widely nutrients are nitrogen, phosphorus and potash.

COMPANY PROFILE

Coromandel fertilizers Ltd was incorporated in 1964, was result of the synergistic effort EID parry India Ltd now belonging to the Rs.8500crores (USD $ 2 Billion) Murugappa Group one of the leading business house in India and two major US corporations Chevron Chemical Company and Industrial Mineral and Chemical Corporation (IMC). This bought to India analysis fertilizers in 1995. Chevron Chemical Company disinvested their taken infamous of EID parry and IMC in end of 1998 after effecting buy back of 20% of CFL, total share in while the promoters did not anticipate the group stake has gone up to 78.31%. The Indian Financial Institution held about 12.61% equity the remaining 9% being held by the public.

CFL’S MAJOR COMPETITIORS => The Fertilisers and Chemicals Travancore Ltd. (FACT) => Hindustan Liver Ltd. (HLL) => Indian Farmers Fertilisers Co-operation Ltd.(IFFCO)

FINDINGS

Company is right now using only four inventory management techniques such as ABC analysis, XYZ analysis, FIFO, Non – moving items. The company is using XYZ analysis only for the past four years. E.O.Q method is followed by the company only on few inventories.

SUGGESTIONS

Company should maintain an optimum level of inventory to ensure efficient and smooth production. The company is investing huge amount on A class and X category items on which the company would loose opportunity cost. Therefore company shall reduce size of inventories on these categories. The categories under XYZ & ABC have to be continuously monitored and reviewed. The company can maintain only minimum investment in order to maintain efficiently .

SUMMARY

Inventory management as a project has been carried over in C.F.L for a duration of 8 weeks. This topic is chosen because almost 60% of the working capital is blocked in inventories for all the Indian companies. Hopefully the company would consider the suggestions in managing the inventories effectively in coming years.

Under the Esteemed Guidance of

Asst. Professor – MBA, HOD- BBM VISAKHAPATNAM

Done by:

SK. HANIF

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