B.S.M SWAMY PPT

7/29/2019 B.S.M SWAMY PPT

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With Reference TO

GMR Ferro Alloys & Industries

LimitedSRIKAKULAM


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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

activities.

Profit maximization

Wealth maximization


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FINANCINGDECISION

INVESTMENTDECISION

DIVIDEND

DECISION

LIQUIDITYDECISION

Production

Marketing

Finance


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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 keepingmoney locked until it will to smooth performance of the

industry and also reacts to economic function and

profitability.


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OBJECTIVES OF THE STUDY

To disseminate modern concept and techniques of efficient andeffective 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


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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 SteelIndustries.

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.

METHODOLOGY


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LIMITATIONS OF THE STUDY

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.


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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.


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ORGANIZATION STRUCTURE OFGMR INDUSTRIES FERRO ALLOYDIVISION:

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 to10000tpa 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.

.


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Every enterprise needs inventory for smooth running of its activity. It serves as alink 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


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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

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:


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The high value items are classified as A items and would be underthe 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.

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 .


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DATA ANALYSIS AND INTERPRETATION

Years Items

Annual

Consumption

(in. lakhs)

Ordering

Cost

Carrying

Cost

EOQ

Units

2006-07 coal 3583.24 25 20 94.64

2007-08 coal 3459.48 24 22 86.87

2008-09 coal 3308.22 23 25 78.02

2009-10 coal 3451.97 25 28 78.51

2010-11coal

3079.10 29 32 74.70


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ABC ANALYSIS

Item NameAnnual

ConsumptionCumulative (Rs)

Cumulative

Percentage (%)

coke 2590.213 2590.253 18.98

coal 2508.272 5098.485 37.37

quartz 2388.421 7486.906 54.88

lime 1525.171 9012.077 66.06

dolomite 1472.131 10484.208 76.85

bauxite 1253.152 11737.36 86.03

Manganese 1181.431 12918.791 94.69

chromite 723.142 13641.933 100

ANNUAL CONSUMPTION FOR THE YEAR 2006-2007

STEP: 2

(Rs. In Thousands)


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It is observed that the capacity utilization is normal in FERROALLOYS.

FERRO ALLOYS is not suffering with funds panic for working capital.

It has sufficient working capital.

The Inventory turnover, Raw material turnover, Inventory toNetworking 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.


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I 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


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