inventory project

7/28/2019 inventory project

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LIST OF TABLES

Table

No.

PARTICULARS Page

No.

IV-1 Inventory Turnover Ratio 49

IV-2 Work in Progress 51

IV-3 Stock Holding Rays 53

IV-4 Percentage of Work in Progress 55

IV-5 Percentage of Inventory in Current

Asset

57

IV-6 Percentage of Inventory in Total

Asset

59

IV-7 Percentage of Inventory in

Networking Capital

61

IV-8 Current Ratio 63

IV-9 Trend in Sales 65

IV-10 Trend in Inventory 68

IV-11 Comparative Balance Sheet 70

IV-12 Stock Position 78


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LIST OF CHARTS

Table

No.

PARTICULARS Page

No.

IV-1 Inventory Turnover Ratio 50

IV-2 Work in Progress 52

IV-3 Stock Holding Rays 54

IV-4 Percentage of Work in Progress 56

IV-5 Percentage of Inventory in Current

Asset

58

IV-6 Percentage of Inventory in Total

Asset

60

IV-7 Percentage of Inventory in

Networking Capital

62

IV-8 Current Ratio 64

IV-9 Trend in Sales 67

IV-10 Trend in Inventory 69

IV-11 Stock Position 83


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ABSTRACT

The project work entitled A Study an Inventory Management with

special reference to Dharani sugars and Chemicals Limited. The Inventory

Management analysis helps to measure the financial soundness of the company.

Inventory control is one of the key elements of overhead

management which is a major factor in the next profit of any business just in

time ordering and inventory control helps a practice to create an effective step-

by-step system and the top performing companies world wide have adopted it,

as it is one of the best methods.

This study helps the management to make the best us of its

inventory analytical type of research design has been adopted for this study.

Data collection is done through secondary data Tools like

inventory turnover ratio has been used for analyzing the data,

The study consists of the inventory management analysis of the

lost 5 years to know about the financial soundness of the company. The

inventory management is a powerful tool of the financial management.


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CHAPTER - I

1.1. INTRODUCTION OF INVENTORY MANAGEMENT

Inventory management involves the control of assets being

produced / procured to be sold in the normal course of the firms operations.

The general categories of inventory include raw materials inventory, work-in-

process inventory, and finished goods inventory. The three categories of

inventory taken together constitute the biggest component of current assets. The

management of inventory assumes significance in the light of the magnitude of

funds blocked in them. A comfortable cushion of inventory enables the firm toabsorb both supply and demand shocks. 1-lowever, possessing a high level of

inventory for long periods of time is likely to affect the bottom-line adversely

due to increased inventory storage, obsolescence. and spoilage costs.

Conversely, an inventory level that is too low is not good either, because the

business runs the risk of losing out on potential sales and potential market share

as well. Thus the thrust of inventory management is to arrive at the optimal

level on inventory.

MEANING OF INVENTORY

Inventory represents value locked up at both ends of the production

system. For a typical manufacturing firm, this blockage is in the form of raw

material at one end of the production system, WIP (or semi-finished) goods at

the other end. For a trading/merchandising firm such as Big Bazaar, inventory

refers to the stock of finished goods for sale, while in the case of a

manufacturing business, the definition of inventory includes raw material, WIP

(or semi-finished) goods, and finished goods. Thus, the definition of inventory

is specific to the nature of business. Although spares and stores are also shown

as a part of inventory for financial reporting purpose, they are excluded from the

definition of inventory in the chapter because they are procured to facilitate

production/operations and not for sale.


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MOTIVES FOR HOLDING INVENTORY

There are three specific motives for holding inventory

TRANSACTIONARY MOTIVE

The basic purpose of holding inventory is to carry out

production/procurement and setting transactions in an interrupted manner.

RECAUTIONARY MOTIVE

Since uncertainty and associated risks are inevitable, the business

must always plan for them. There or with the demand for outputs. An adequate

raw material inventory level tides over temporary supply side constraints and

reduces input availability risks. Similarly, sufficient inventory of WIP and

finished goods enables the firm to overcome uncertainties related to the

production line and the demand side respectively. This is termed the

precautionary motive of holding inventory.

In addition to transaction and precautionary motives, firms might

also be holding inventory in anticipation of gain from expected rises n future

prices of raw material or finished goods. This is reefed to as speculative

motive. For example, if an oil refinery with the objective of gaining from an

anticipated hike in international oil prices increases its crude oil reserves, it is

said to be doing so with a speculative motive.

TYPES OF INVENTORY

Raw Materials Inventory

Raw material inventory consists of basic materials used as inputs in

the firms production operations. For a steel manufacturing firm, iron ore is the

main raw material; for a construction company, cement, iron, bricks, etc., are

the basic raw materials. All manufacturing firms maintain a raw materials


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inventory, regardless of the specific form of the inventory. Its purpose is to

decouple the production function from the purchasing function that is, to make

these two functions independent of each other, so that delays in shipment of raw

materials do not cause production delays. In the event of a delay in shipment,

the firm can meet its need for raw materials by dipping into its existing raw

material inventory.

Work-in process inventory

Work-in-Process inventory consists of partially finished goods

requiring additional work before they become finished goods. The more

complex and lengthy the production process, the larger will be the investment in

WIP inventory. The purpose of WIP inventory is to decouple the various

operations in the production process so that machine failures and work

stoppages in one stage of operation do not affect the subsequent stages.

Finished Goods Inventory

The finished goods inventory consists of unsold goods on which

production process have been completed. The purpose of a finished goods

inventory is to decouple production and sales functions, so that sales remain

unhindered by stoppages/slowdown in the production process. Firms holding

such an inventory can absorb temporary bottlenecks in the production process,

meet delivery schedules, and service customers demands despite the lag in the

production schedules.

INVENTORY NIANAGEMENT

Inventory management involves an interface between all the

departments along the productive distributive channel of the firm. Such

departments are the direct stakeholders, and have their own interests in

inventory management. The purchase department, in order to benefit from the

economies of scale, indulges in bulk buying, which may cause an overstocking

of raw material. The production departments focus is on output maximization


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through improved operational efficiency, for which unhindered production is a

prerequisite. Therefore, the production department would always want sufficient

inventory of WIP so that interruption at some stage in the production line does

not affect its output, i.e., finished goods. Similarly, the marketing department,

with its objective to maximize sales, would focus on maximizing investment in

the finished goods inventory, as it enables the firm to exploit any sudden spurt

in demand.

These individual goals of the different department may lead to sub-

optimization of organizational resources. The role of the finance department,

Therefore, Assumes significance. The finance department not being a directstoke holder. In the purchase production distribution process, can decide about

the optimal level of inventory investments in a dispassionate manner. It not only

reconciles the varied and often conflicting goals of the purchase, production,

and marketing departments with regard to inventory investments, it also looks at

inventory management from the broader perspective of shareholders wealth

maximization.

Proper inventory management requires a total systemic view that

integrates both the suppliers and the customers into the business. It is no wonder

that many times the dividing line between inventory management and supply

chain management gets blurred. Instead of taking a functional view of inventory

and looking at it in isolation, inventory management should be seen as a subset

of overall corporate strategy. Inventory management is intricately linked to

overall business strategy, and so reflects the prevailing strategy in a firm.


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1.2. INDUSTRY PROFILE

India has been known as the original home of sugar and sugarcane.

Indian mythology supports the above fact as it contains legends showing the

origin of sugarcane. With over 450 sugar factories located throughout the

country, the sugar industry is amongst the largest agro processing industries in

India, with au annual turnover of Rs.150bn.

India is the largest consumer and the second largest producer of

sugarcane next to brazil. Presently, about 4 million hectares of land is under

sugarcane with an average yield of 70 tones per hectare.

India is the largest single producer of sugar including traditional

cane sugar sweeteners. khan sari and gur equivalent to 26 million tones raw

value followed by brazil in the second place at 18.5 million tones. Even in

respect of white crysal sugar, India has ranked No.1 position in 7 out of last 12

years. During 2011-2012 India produce 17.0 million tones (155 lakh tones white

sugar) while brazil in 1st place produced 18.5 million tones.

Mostly the rural population in India consumes traditional

sweeteners gur and khan sari. In the early 1930s nearly 2\3 of sugarcane

production was utilized for production of alternate sweeteners. gur and khan

sari. With better standard of living and higher incomes, the sweetener demand

has shifted to white sugar. Currently, about l\3 sugarcane production is utilized

by the fur and khan sari sectors. Being in the small-scale sector, these two

sectors are completely free from controls and taxes. Which are applicable to the

sugar sector.

The advent of modern sugar processing industry in India began in

1930 with grant of tariff protection to the Indian sugar industry. The number of

sugar mills increased from 30 in the year 1930-31 to 135 in the year 1935-36

and the production during the same increased from. ah tones under the dynamicleadership of private sector.


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SUGAR INDUSTRY STRUCTURE

Indian sugar industry can be broadly classified into two sub

sectors, the organized sector i.e., sugar factories and the unorganized sector i.e.,manufacturers of traditional sweeteners like gur arid khan sari.

Since the sugar industry in the country uses only sugarcane as an in

input, sugar companies have been established in large cane growing states like

Uttar Pradesh, Maharashtra. Tamilnadu, Karnataka. Punjab and Gujarat. Uttar

Pradesh leads the tally by contributing 24% of the countries total sugar

production and maharashtra stands next with 20% contribution.

Out of 453 sugar mills in the country, 252 are in the co-operative

sector, 134 are in the private sector and 67 are in the public sector.

CURRENT POSITION

The Indian sugar industry is the second largest agro-processing

industry in the country.

No. of sugar factories established 493

Total capital employed Rs 16,000 cores

Total payment to cane growers Rs 20000 cores

Contribution to central & state exchequers Rs 12000 coresDirect employment: Rural Educated Rs 1600 cores

Farmers\ families involved in sugarcane Rs 5.00 Lakh

(7.5% of rural population) Rs 45 million

In global sugar economy, the Indian sugar industry has achieved a

number of milestones.


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Largest sugar producer in 7 out of 1 0 years.

Second largest area under cane / cane production.

Among the cost-effective industries with its field cost (sugarcane) being

the second lowest, despite small land-holdings and low productivity.

Fourth efficient processor of sugar despite low capacity of its sugar plants

as compared to very large-size plants in other plants in other parts of the

world.

TECHNOLOGY ADOPTED IN SUGAR INDUSTRY

Double sulphitation process is employed for production of

plantation of white sugar which has a poll of 99.8%. Government has laid down

quality standards in terms of grain size namely Large (L), Medium (M), Small

(S) and in the colour series of 31, 30 and 29.

The mill extraction is generally around 94 to 96% while the overall

extraction is about 85% and the losses account for about 2% to 2.5%, owing to

small capacity of the individual units automation in the sugar industry has not

received a high priority. Some units however, have pH control; auto feed system

and boiler control equipments.

SUGAR POLICY

Under the present policy of partial decontrol 30% of production byeach unit is supplied for public distribution system known as the levy sugar. The

levy sugar is distributed to the public irrespective of the economic status. The

balance 70% is sold in the free marked against monthly releases issued by the

government, This policy has been continuing since 1967-68 expect for brief

periods of de-control mainly during the years of surplus production and

accumulated sugar stocks.


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Government announces the statutory minimum price (SMP) for

sugarcane every year based on the recommendations of the commission for

agricultural costs and prices (CACP).

CONSUMPTION TRENDS

During the 9th five year plan period, the government projected the growth

rate in consumption at a compound rate of 5.6% having regard to the GDP at

7%. The projected requirement of production and installed capacity upto the

year ended 2011-2012 is given below.

Sugar yearSugar production (in

laksh tones)

Installed capacity

(lakhs tones)

2000-2001 185.0 194.8

2001-2002 194.8 205.2

2002-2003 205.2 216.1

2004-2005 216.1 227.6

2005-2006 227.6 239.7

2006-2007 239.8 252.6

2007-2008 252.7 266.0

2008-2009 264.8 279.2

2009-2010 277.6 291.0

2011-2012 291.2 302.8

I.3 PROFILE OF THE FACTORY

GROUP


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Dharani sugars and chemicals limited is one of the units of POP

Group of company promoted by Non-Resident Indians based at United States of

America under the dynamic leadership of Dr.Palani G.Periasamy, MA..

MA..Ph.D., a leading economist and industrialist. Dr. Palani O.Periasamy was a

tenured professor of Economics and Director of the Graduate school of

Business Management at University of Baltimore, USA. On a passion to bring

some contribution to born country he established the industry in Tamilnadu.

LOCATION OF THE FACTORY

Dharani sugars and chemical ltd., is the first sugar factory setup in

southern part of Tamilnadu, the most industrially backward area. The factory is

situated at Naranapuram village of Sivagiri taluk in Tirunelveli district. It is one

of few heavy industries of the district and it is the first agro based industry of

the district. It caters to the needs of cane growers of three districts viz, major

parts of Thirunelveli, the western parts of Tuticorin and western parts of

Virudhunagar.

CAPACITY OF THE FACTORY

The installed capacity of the sugar unit is 2500 TCD.

DATE OF COMMISSION 06.03.1989.

The DISTILLERY unit has been installed with the capacity of 30 KLD of

Rectified spirit and 10 KLDof Extra neutral alcohol.

DATE OF COMMISSION 25.06.1995

CANE PRODUCTION

The factory has commenced its maiden season in March 1989 and

has successfully completed 19 crushing seasons with total crushing of around

78 lakhs tonnes of cane.

CANE PROCUREMENT MANAGEMENT


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Cane an agro based raw material is cultivated in 100 kilometre

radius. Like other raw materials, we cannot procure and store it in the industry

and use according to our requirement. Whereas the planting of cane itself has to

be planned well in advance in accordance with the crushing programme of the

factory for the next year. Hence, the cane lanting in the field has to be

controlled by the industry to suit their requirement of cane according to the

crushing programme. We have opened 14 divisional offices with one cane

officer and 4 or 5 cane assistants in each division to approach the ryots and

advise them in planning of cane, development, harvesting and supplying to the

factory.

Around 15000 cane growers are under our fold and they have been

provided with crop loans through local financial institutions. The cane

cultivation is completely monitored by our cane department. The ryots are

advised in method of preparation of field, preparation of seed, method of

cultivation, manuring, pest controlling and harvesting. The post harvesting

service is also rendered to bring up the ratoon crop and registered to the factory.

SOCIO ECONOMIC FACTORS

The rural growth of a country is scaled at the growth of villages.

The growth of the villages is scaled at the growth of agro based industries. Our

industry is also taking part in developing the socio economic growth of the

villages in all three districts.

EMPLOYMENT OPPORTUNITY

Around 1000 employees are being directly benefited and about

10000 people are being indirectly benefited by offering themselves for the

promotional operations of sugar cane production.


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Nearly around 40 to 50 crores of money is generated for a season

and transacted in the rural area which strengthens the economic growth of our

area.

SUGAR FACTORY OPERATION

Our factory is one of the modern factories in Tamilnadu and is the

first one setup with auto setting mill in the world which contributes to the

maximum efficiency of the industry.

MILLING

The delivered cane is weighed, sampled for cane quality and

unloaded in the feeder table. The cane is prepared by means of cane preparation

devices arranged in the field. A serious of three roller mills crush the prepared

cane and extract the raw juice. Water is added (imhibition) in the last mill to

help wash the juice for extraction of residual sugar. The residue left after

extraction of the juice is called bagesses and it is used as the fuel in the boilers

and it cane also be used for paper manufacturing.

CLARIFICATION

The raw juice is strained heated and lime is added to cause

impurities such as mud to settle. Clarifiers separate the juice in to clarified juice

and muddy juice. The muddy juice is sent to filter where the juice is removed

leaving mud (filter cake) which is used as manure.

EVAPORATION

The clarified juice is then boiled in evaporators which remove most

of the water leaving thick syrup.


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HUMAN RESOURCE DEPARTMENT

Training

After the selection they give joining date and from join ITI

candidates are trained 2 years. Other graduates are taking training at 1 year. If

they physically and mentally fit means the management will select them

otherwise they will not selected be the management.

Personal file

After the selection, candidates passport size photos and address,

blood group. Medical certificates, agreement all those things are received fromthe selected candidates by the personal department. That file are called

candidates personal file. This is creating and maintained by personal

department.

RECRUITMENT SOURCES

Internal

- Transfer

- Promotion

External

- Advertisement Friends and employees reference

- Casual applicant

ADMIN RULES AND POLICY

Workers and others not allowed to smoking and drinking within the

factory campus.

They dont allow to using mobile with in factory. But the office people

can use mobile with in the office only, they also not allowed to using

mobile in production area and other areas.

Workers and others not allowed taking any plastic to the factory.Workers

should keep punctuality and start work at a proper time. This is also

watched by time office and they can give performance and discipline

report to general manager. This may lead to dismiss the candidate.


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Dharani sugars working hour is 24 hours, round clock of two times.

They are not allowing any vehicles to the factory.

Workers should be in uniform.

MAINTENANCE FUNCTION

Personal records

All the candidates or employees name. Address, post, duty details,

authority. Conduct number, blood group, medical certificate, agreement all

those personal file are maintained by personal department.

Safety

Here normal health dont affected from work to the employees.

The management provide good ventilation and sitting facilities; through this

they maintain the workers with safety.

Machines

All the machines are buying through loan. Loan from MGT branch,

Indian bank. They maintain the machineries properly, giving services, making

repair correction, create depreciation for every machine.

Induction program

If any new employee recruited for any job, he /she will introduce to

the other employees by the general manager. The personal department manager

will tell about the rules and regulation and taking two types of classes.

CLASS ROOM TRAINING

Will give by the personal department persons weekly two days

about the work teaching with theoretical.


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ON-JOB-TRAINING

On-job-training will give by the existing workers and experienced,

expert persons. On-job-training means work spot training. What they will do in

future practically that all trained to them in works spot.

TOTAL NUMBER O.F EMPLOYEES

325 peoples are working in the Dharani sugar and chemicals Ltd.

Naranapuram. 15 securities is for security level. There are permanent workers

also seasonal workers.

WORKING HOURS

8 hours per day (working hours time). There are three shifts for

production process.

1st

shift - morning 6.00 am to 2.00 pm2nd shift - afternoon 2.00 pm to 10.00 pm

3rd shift - night 10.00 pm to 6.00 am

1/2 hour lunch break for workers

1 hour lunch break for office workers.

Central shift for production process

Only one shift - 8.00 am to 5.00 pm

Central shift for office workers

Only one shift - 8.30amto5.3Opm

Securities also shift by three times.


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SELECTION PROCESS

Employment

exchange

Advertisement

Reference

Receive filled

application

Written test

conduct byinterview

Personal interview

conduct by

interview

Final approval

Provisional

certificate issued

by managing


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CANE DEPARTMENT

Target fixation

Before a particular crushing year begins, the cane department has

to fix the target of raw materials to be procured. This target can be fixed based

on the production capacity of the mill. The production capacity of the mill is

2500 tonnes crushing per day. Usually the miffs crushing period in a year is 10

months. Thus the total requirement of sugarcane for a particular crushing period

is 750000 tonnes. This requirement can be converted into no. of acres to be

planted by dividing the total requirement with average yield per acre. The

average sugarcane yield per acre is 35 tonnes. Thus to meet the total

requirement of cane, we have to plant 21428 acres for full capacity utilisation of

the mill.

DEMARCATION OF AREA FOR SUGAR MILL BY GOVERNMENT

Tirunelveli district - Sivagiri taluk,Sankarankovil taluk,V.K.pudur taluk

Virudhunagar district - Rajapalayam taluk & Srivilliputtur taluk

Temporary allocation

Kovilpatti

Pail of Thirunelveli taluk

Thiruchendur taluk

Part of Thoothukudi taluk

Vilathikulam

The target fixed for each division can be decided based on potential

pockets. Potential pockets are in terms of soil suitability, sources of irrigation,

type of land, cropping pattern followed in that area etc.,

Once the target is fixed to each division, the cane assistants has to

approach the farmers and collect planting offers.


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Credit facilities

The farmers can be provide with credit facilities ie. bank loan

under tie-up arrangements. Thus the farmers can avail crop loan only on supply

of sugarcane to thc mill and all the sugarcane proceeds should be send to loan

arrangement. For identiflcation each field and farmer are provided with Ryot

number.

STORE DEPARTMENT

Material Receipt Process

In store department they having all the things, what all the

materials the other department needs inside of the factory. If they dont have

means they receive purchase indent and they will buy it from out side or they

give request to the head office and they will provide the things to them.

Through head office purchase means above 7000 cost of purchase

that are like chemicals. any machinery parts, machine oils, etc., The store

manager will demanding the material (with the reason for what purpose) to the

head office.

Purchase Indent

Purchase indent means what are all the things demanded by the

departments inside of the factory. The concern department will send a

purchasing material name, in what quality, quantity (No, kg). purpose to the

store department demanded material requisition to the store department by the

concern department is purchase indent.

Purchase Order

After receiving purchase indent from other department, the store

manager will searching the materials where its available, and before that he

analyze the same material. Where we buy it in past days, then he will search

many suppliers and then to one suppliers placing order at a positive and suitable

place for buying material. Positive place means lowest price but good quality of

material).


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Vendor Supply

After placing order supplier will supply the material to the factory.

The company will pay the amount through bank or sent LR directly.

Materials Enters Factory

When the materials is enters into the factory inward gate pass will

give by the security peoples.

Received at Stores

After that getting inward gate pass the materials will send to the

stores department. They will receive the materials.

MATERIAL ISSUE PROCESS

Material Issue Slip from Consumer Department

In which department want material that department will issuing slip

to the store manager for getting material.

Sent to Stores

Then they sent that material issue slip to store.

Stock Availability Checked

The store peoples will check the wanted material is available or not.

Store Issue Material

If the material is available means they will issue material or not they

will buy it and issue to the consumer department. Then material slip will codified

in computer - posting bin cards - send it to electronic data process section -

computer feeding - finally reports generated.


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MATERIAL ISSUE CHART

Material issue slip from consumer dept

Sent to Stores

Stock availability checked

Stores issue materials

Materials issues slip codified

Bin card posted

Sent to EDP section

Computer feeding

Reports generated

Financial Cost center

Expenses Capital A/C Stock A/C Cr


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ORGANISATION CHART

GENERAL

MANAGER

H.O.D

ADMINISTRATOR H.O.D

ENGINEERING

H.O.D

CANE

H.O.D

ADMINISTRATOR

MANAGING

DIRECTOR

(SUGAR DVN)


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1.4 PRODUCT PROFILE

PROCESS OF SUGAR MANUFACTURE

Sugarcane. the raw material for sugar is brought to the factory in

lorries, tractors and tyre carts and weighed in the weigh bridge. The total

weights of the cane received in a day is posted in the sugar cane purchase

account maintained by the factory. An allowance of 0.1% is made for binders.

The water introduced in the mill is called IMBIBITION

WATER. The weight of the water is assessed by means of automatic flow

recorder. The BAGASSE obtained from the mills after the extraction of juice

from the sugarcane is used in the boilers as fuel for producing steam from the

water. to run the mill turbines and to generate electricity required to run the

factory.

The juice obtained in the mill house is known as mixed juice is

pumped to the boiling house after weighing. The mixed juice is heated to a

temperature of 65C in the primary heater and the milk of lime is added to the

juice and the sulphur dioxide (S02) is added simultaneously. The juice is now

called treated juice and further heated to l00C and pumped to huge clarifies. In

this tank settling aid is added and the juice gets settled leaving the muddy juice

at the bottom and the clear juice overflows from the clarifiers as the inflow is

continuous.Here phosphoric acid is added to further precipitation in the

evaporator. The muddy juice is pumped from the clarifier to mud mixer where it

is mixed with fine particles of bagasse and the mixed slurry is taken to vacuum

filter. To extract the juice from this slurry. water is sprayed and the juice is

sucked through the perforated surface of the rotating drum by means of vacuum.


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ANHYDROUS SLCOHOL

The raw material utilized for producing anhydrous alcohol (99.8%

v/v) is molasses. The rectified spirit is produced by continuous fermentation &

distillation process. The rectified spirit contains 94.68% of ethanol and 5.32%

v/v water. The water in the rectified spirit is to be removed to produce 99.85 v/v

ethanol which is called as anhydrous alcohol. This is achieved by the latest

advanced technology of vapour phase molecular sieve system. The rectified

spirit, which is in liquid stage, is taken to the rectifier cum stripping column and

boiled with steam to bring it to vapour stage. The alcohol vapour is passed

through a super heated to raise the temperature to 130C by using steam.

The regeneration of molecular sieve beds is achieved by applying

vacuum to the bed. The absorbed water from the molecular sieve material

desorbs and evaporates into the ethanol vapour steam.

The ethanol is stripped and the water is recycled to the rectifier

column of R.S plant. In the rectifier column of RS plant the higher alcohols are

tapped and sent to a decanter. In the decanter the higher alcohol liquid in mixed

with water for separating it and the remaining liquid is again sent to the rectifier

column. So this water will be stopped and the water which comes out of the

anhydrous alcohol plant will be utilised for the same.

This is only a purification process where the water is removed form

the rectified spirit for concentration of ethanol.)


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PROCESS OF ETHYL ALCOHOL MANUFACTURE

Fermentation

The raw material molasses is diluted with water in the ratio of 1:2.8

to 3.0 in order to bring down the sugar % in diluted molasses for the growth of

yeast. To this diluted molasses solution the yeast is added as reactant and

diammonium phosphate urea and sulphuric acid is added to this for providing

neutrients to the yeast. Then the whole solution is allowed to undergo reaction

for 24 hrs in three reaction vessel namely fermenters by cascade process

(continuous process). After completion of the reaction, the sugar percent in the

molasses is converted to ethyl alcohol & CO(2). This solution after conversion

is known as FERMENTED WASH. It is ready to distillation process.

Distillation

The fermented wash contains about 7 to 8.5% v/v. ethyl alcohol is

send for distillation section. It mainly consists of two column. 1 .analysercolumn. 2.rectifier column. first, the fermented wash is sent to the top of the

analyser column and the steam passes at the bottom. While the steam contact

the down coming fermented wash, ethyl alcohol present in the fermented wash

goes to the rectifier column and remaining unwanted material emerges as spent

wash at the bottom.

The clear juice so obtained is concentrated to 60 brix at the

evaporators in a series of vessels, where the vapour from the previous vessel

heats the juice the next vessel for conserving heal and steam, the evaporators

vessels are in vacuum and boiling taken place under reduced pressure. The thick

liquid emerging out of last vessel is known as syrup and S02 gas is passed

through the syrup to bleach the same (second suiphitation). This is known as

SULPHURED SYRUP. The sulphured syrup is pumped to pan floor for storing

in tanks and then taken for boiling in the vacuum pan.


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It will not be possible to extract all sugar from the syrup in one

operation. Three separate carefully controlled boiling brings out sugar. The

syrup is boiled in the vacuum pans. The thick boiled mass with sugar grains is

known as MASSECUITE. For purification purpose different grades of

massecurites are boiled -as A,B &C. The final liquid that we get by centrifuging

from C-Massecurites is termed as final molasses from which no recoverable

sugar is got. Hence, sent out as bye-product (FINAL MOLASSES) to the

storage tanks. For obtaining white sugar, A massecuite is processed. In this,

after attaining the required grain size, it is discharged to the crystallizers. From

the crystallizers, it is sent to centrifugal machines, where the sugar is separated

and the molasses is purged out.

The sugar produced must confirm to ISI specifications and is

indicated on the bags as S-29, S-30. etc., as the case may be alphabet shows the

sugar grain size and the number indicates the degree of whiteness of sugar.

I.MAIN PRODUCT-SUGAR

A. Sugar Collection at Bins

The final product sugar is first collected in the sugar bin& As we are

storing sugar in the bins, we could able to pack and store a clay production in the

general shift itself.

B. Packing

The sugar is packed in 50 kgs., and 100 kgs bags according to the

requirements through automatic weighing scale. Before brought for bagging the

sugar bags are checked and printed the address and other details as per the

provisions of sugar packing control order through sciten printing Before filling

of sugar, the weight of the bags are checked to the standard weight and sent for

bagging of sugar. The packed sugar is stitched and sent for storage. The cross

weighment checking is done once in every 50 bags of packing.


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C. Storage

After confirming the correct weight the sugar bags are being

transmitted to godowns through conveyor. In the godowns, the sugar bags are

stacked in lots through stackers upto the height of 36 layer& The lot quantity

are determined according to the space availability and convenience.

D. Despatch

The sale advice is received form our head office. The advice is

serially accounted in the sugar despatch advice record and the same number is

fed into the computer link number wise which is the base for preparation of

invoices and other related documents. The sale advice is informed to transport

section for the arrangement of lonies. The lonies for sugar loading will report to

godown office with the sale intencL After verifying the intend and the (SDA)

advice from head office sugar will be loaded to the lorries in a countable

manner.

E. Records & Registers

Personal ledger account (P.L.A) is the register of excise duty

payment account. Invoice wise debit entries shall be made in this account and

the duty is paid once in fortnight through the special challans.

II. BY - PRODUCTS

A. Molasses

Molasses is the one of the main by-products. It is also an excisable

commodity. After separation of molasses from sugar, it is weighed and stored in

steel tanks. The molasses dispatched after getting sale advice from head office

following all central excise procedures adapted for sugar.

B. Bagasse

Bagasse is also an excisable commodity, but exempted from

paying excise duty. A portion of baggase is captively consumed at boiler for the

production of steam.


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C. Filter cake / Press mud

Press mud is one of the waste material arising during the

manufacture of sugar. This is used as manure also it is made composed by

adding distillery effluent.

III. DISTILLERY

Four types of qualities of spirit is manufactured. such as, rectified

spirit, extranuetral spirit, impure spirit and denatured spirit. Among this, D.N.A.

is only the excisable commodity, others are exempted from the payment of

excise duty.

IV. REPORTS I RETURNS

A. Weekly

Production and clearance details of sugar are furnished to directorate of

sugar, New Delhi trough telegram.

Proforma-Il return is furnished to the directorate of sugar, New Delhi.

Production and clearance details of molasses are furnished to thecommissioner of prohibition & excise, Chennai.

B. Fortnightly

Free sales sugar state-wise dispatch details is furnished to the directorate

of sugar. new Delhi.

Production, despatch and stock details to ISMA / SISMA

C. Monthly

E.R-1 Return to central excise department

V. Marketing pattern

Release of sugar is controlled by directorate of sugar, ministry of

food and civil supplies, Government of India, new Delhi, every month certain

quantity of sugar is released to state Government who nominate civil supplies


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corporation in Tamilnadu for distribution to consumers is controlled channel

(Levy sugar).

CHAPTER II

REVIEW OF LITERATURE

Inventory is a list of goods and materiais or those gords and

materials themselves, held available in stock by a. business, Inventory are held

in order to manage and hide from the customer (he ibm that manulhcturesupply

delay is longer than delk cry delay, and also to ease the offect of imperibetions

in the manui during process that lower production etIieieneies if production

capacity stands idle for lack of materials.

HE REASONS FOR KEEPING STOCK

All these stock reasons can apply to any owner or product stage.

BUFFER STOCK

lt is held in individual workstations against the possihtlity that the

upstream workstation may be a little delayed in providing the next item br

processing. Whilst some processes carry very large buffer stocks. I ovota

moved to one (or a tew items) and has now moved to eliminate this stock type.

SAFETY STOCK

It is held against process or machine failure in the hope/belief thatthe thilure can he repaired before the stock rms out. This type of stock can be

eliminated by programmes like fatal Productive Maintenance.

AWERPRODUCTION

It is held because the forecast and the actual sales did not match.

Making to order and ill eliminates this stock type.

i. Financial Managemen - FM. Pandey 9 Edition tV kas Pnhlieaioni


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2. Financial Management K han & Jam 5 Edition

LOT DELAY STOCK

It is held because a part of the process is designed work on a batch

basis whilst only processing items individually. Therefore each item of the lot

must vat for the whole lot to he processed before moving to the next

workstation. This can he eliminated by single piece working or a lot size of one.

DEMAND FLUCTUATION STOCK

It is held where production capacity is unable to flex with demand.

Therefore a stock is built in times of lower utilisation to he supplied to

customers when demand exceeds production capacity. This can be eliminated

by increasing the flexibility and capacity of a production line or reduced by

moving to item level load balancing. Line balance stock is held because

different subprocesses in a line work at different rates. Therefore stock will

accumulate after a fast sub process or before a large lot size sub- process Line

balancing will eliminate this stock type.

CHANGEOVER STOCK

It is held after a sub-process that has a long setup or change-over

time, This stock is then used while that changeover is happening. This stock

can he eliminated h tools like SMED.

Where these stocks contain the same or similar items it is often the

work practice to hold all these stocks mixed together before or after the sub

process to which they relate. This reduces costs. Because they are mixed-up

together there is no visual reminder to operators of the adjacent subprocesses

or line management of the stock which is due to a particular cause and shouldhe a particular individuals responsibility with inevitable consequences. Some


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plants have centralized stock holding across sub processes which makes the

situation even more acute.

THE BASIS OF INVENTORY ACCOUNTING

Inventory needs to be accounted where it is held across accounting

period boundaries since general) expenses should he matched against the results

of that expense within the same period. When processes were simple and short

then inventories were small but with more complex presses then inventories

became larger and valued unsold and incomplete goods has driven many new

behaviours into management practice. Perhaps most significant of these are the

complexities of fixed cost recovery, transfer pricing, and the separation of direct

from indirect costs. This, supposedly. Precluded anticipating income or

declaring dividends out of capital. It is one of the intangible benefits of lean

and the IPS that process times shorten and stock .revels decline to the point

where the importance of this activity is hugely reduced and therefore effort.

Especially management to achieve it can he minimised.

INVENTORY DECISIONS

These refer to means by which inventories are managed.

Inventories exist at every stage of the supply chain as either raw material semi

finished or finished goods. They can also be in-process between locations.

Their primary purpose of buffer against any uncertainty that might exist in the

supply chain. Since holding of inventories can Cost anywhere between 20 to 40

percent of their value, their efficient management is critical in supp1y chain

operations. It is long term in the sense that top management sets goals.


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INVENTORY CONTROL MANAGEMENT

INVENTORY DATA BASE

An important component of inventory planning involves access to

an inventory database It is a structured framework that contains the information

needed to effectively manage all items of inventory, from raw materials to

finished goods.

This information includes the classification and amount ofinventories, demand for the items, and cost to the firm for each item. Ordering

costs Carrying costs and other data,

The EOQ (economic order quantity) refers to the optimal order size

that will result in the lowest total of order and carrying costs and ordering costs.

By calculating the economic order quantity the firm attempts to determine the

order size that you minimize the total inventory costs

INVENTORY FLOW

The management of logistics is concerned with the movement and

storage of materials and finished products. Logistical operations start with the

initial shipment of a material or component part from a supplier and are

finalized when a manufactured or processed product is delivered to a customer.

From the initial purchase of a material or component. the Logistical process

adds value. By moving inventory when and where needed, Thus the material

gains value at each step. For a large manufacturer, logistical operations ma

yconsist of thousands of movements, which ultimately culminate in the delivery

of the product to an industrial user. Wholesaler, dealer or customer.


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INVENTORY RELATED COSTS

INVENTORY CARRYING COST (ICC):

Tax

Storage

Capital

Insurance

Obsolescence

Ordering:

Communication

Processing including material

handling and packaging

Update activities, including

Receiving and date-processing.

BASIC INVENTORY DECISIONS

1 here are two basic decisions that must he made for every item

that is maintained in inventory. These decisions have to do with the timing of

orders for the item and the size of orders for the item.

RELEVANT INVENTORY COSTS

Hem costs

Holding Costs

Ordering Costs

Shortage Costs

Direct cost for getting an item


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Purchase cost for outside orders. Manufacturing Cost for internal orders

Costs associated with carrying items in inventory. Storage and

other related costs. Fixed costs associated with placing an order. Costs

associated with not having enough inventories to meet demand,

E.OQ

The EOQ can be calculated with the help of a mathematical

formula. Following assumptions are implied in the calculation:

CONSTANT OR UNIFORM DEMANI)

Although the FOQ model assumes constant demand. demand may

vary from day to day. If demand is not known in advance the model must be

modified through the inclusion of safe stock.

Constant unit price the EOQ model assumes that the purchase

price per unit of material will remain unaltered irrespective of the order offered

by the suppliers to include variable costs resulting from quantity discounts. Thetotal costs in the EOQ model can be redefined.

CONSTANT CARRYING COSTS

Unit carrying costs mar very substantially as the size of the

inventory rises. perhaps decreasing because of economies of scale or storage

efficiency or increasing as storage space runs out and ne warehouses have to he

rented.

CONSTANT ORDERING COST

This assumption is generally valid. However any violation in this

respect can be accommodated by modifying the FOQ model in a manner similar

to the one used for variable unit price.


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Instantaneous delivery - if delivery is not instantaneous. Which is

general the case: the original LOQ model must be modified through the

inclusion of a safe stock.

INDEPENDENT ORDERS

If multiple orders result in cost saving by reducing paper work and

the transportation cost, the original EOQ model must be further modified, Whilethis modification is somewhat complicated, special EOQ models have been

developed to deal with it.

COST OF CARRYING INVENTORY

Carrying material in inventory is expensive .A number of studies

indicated that the annual cost of carrying a production inventory averaged

approximately 25% of the value of the inventory. The escalating and volatile

cost of money has escalated the annual inventory carrying cost to a figure

between 25% - 35% of the value of the inventory. The following five elements

make up this cost.

Opportunity cost (12% 20%)

Insurance cost (2% 4%)

Property taxes (1% - 3%)

Storage costs (1% 3%

Obsolescence and deterioration (4% 10%)

Total carrying cost (20% - 40%)


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OPPORTUNITY COST OF IN VESTED FUNDS

When a firm uses money to buy production material and keeps it in

the inventory, it simply has this much less cash to spend for other purposes.

Money invested in external securities or in productive equipment earns a return

for the company.

INSURANCE COST

Most firms insure the assets against possible losses from fire and

other forms of damage.

PROPERTY TAXES

This is levied on the assessed value of a firms assets, the greater

the inventory value the greater the asset value and consequently the higher the

firms tax bill.

STORAGE COSTS

The warehouse is depreciated every year over the length of its life.

This cost can be charged against the inventory occupying the space.

THE ABC CLASSIFICATION

An indicator that classifies a material as an A.B or C part according

to its consumption value .The classification process is known as the ABC

analysis.

The ABC classification system is to grouping items according to

annual sales volume, in an attempt to identify the small number of items that

will account for most of the sales volume and that are the most important ones

to control for effective inventory management.


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REORDER POINT

The inventory level R in which an order is placed where R D.L, D

= demand rate (demand rate period (day. week, etc). and I. lead time.

SAFETY STOCK

Remaining inventory between the times that an order is placed and

when new stock is received. I there are not enough inventories then a shortage

may occur.

Safety stock is a hedge against running out tormentor; It is an extra

inventory to take care on unexpected events. It is often called butler stock. 1 he

absence o inventory is called a shortage.

ABC INVENTORY CLASSIFICATION

The ABQ classifications process is an analysis of a range of items,

such as finished products or customers into three categories.

Outstandingly important

B-of average importance

C-relatively unimportant

As a basis for a control scheme each category can and sometimes

should be handled in a different way, with more attention being devoted to

category A, less to 13, and less to C.

BREAK-EVEN POINT

Number of units that must be sold in order to produce a profit of

zero (hut will recover all associated costs). In other words, the breakeven

point is the point at which your product stops costing you money to produce and

sell, and starts to generate a. profit for your company.


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Where:

Q = Breakeven Point. i.e., Units of production (Q),

FC = Fixed Costs,

VC = Variable Costs per Unit

UP = Unit Price

Therefore

Break Even Point Q = Fixed Cost / (Unit Price - Variable Unit Cost)

STOCK CONTROL AND INVENTORY

Stock control, otherwise known as inventory control is used to

show how much stock you have at any one time, and how you keep track of it.

Efficient stock control allows you to have the right amount of stock

in the right place at the right time. it ensures that capital is not tied up

unnecessarily, and protects production if problems arise with the supply chain.

INVENTORY CONTROL OVERVIEW

Normal Inventory

As it sounds, this type of inventory item will be used for the

majority of your parts. It will correctly track the inventory received and sold on

a first in first out basis, will handle cost of sales, and will warn you when youre

out of stock.

NON-INVENTORY TYPE

This is used for selling things that are not really inventory items.

For example, you could be selling warranty. But because you dont have

warranty in a box to sell, and youll never run out of stock, you wont need to

keep inventory control on it. As welt there is no cost of sale adjustments with

non-stock items.


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Labour Parts

You dont have technicians hanging from hooks in your back

room, so like non inventory items. The system will not try to remove them from

inventory when you sell a labour item. The two differences between Non-

Inventory items and Labour items are that you can optionally have the system

ask you for the technician code that did the work so that you can print reports

showing who did what work.

As well, the system will optionally ask for a comment to explain

what was done so that the description of the service work can he printed on the

invoice.

Consignment items

Consignments can be used to keep track 01 inventory that you

dont own, but at the time you sell it, you must pay for it. Youll be able to

generate several reports. Including, a list of inventory that is on consignment but

not sold and a list of inventory solo on consignment but riot yet paid for.

Floor plan Inventory

Floor planning is very similar to consignment, except that you take

possession and own the inventory when you receive it. But you dont have to

pay for it until its sold, or until its been in the store 11w a negotiated period of

time.

Tire Inventory

Windward System Five has the ability to sort and categorize tires

by their size, aspect ratio and rim size. In addition, you will also be able to

search for the tires by just entering in some of the search criteria and having the

system bring up a window of all matches.


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When the list brings up a list of tires that can all fit the vehicle, the

system can sort the list to show the items with the highest quantity in stock at

the top of the list and the items that are out of stock at the bottom of the list.

This will help you sell what you actually have to sell instead of creating special

orders.

Product Inventory

Products are items such as vehicles that you might service or repair

after selling them to the customer. That is, they are an item in the database that

can be sold, and when sold, are automatically added to the customers list, of

products that can be worked on.

Windward System Five can also track whole goods such as

recreational vehicles by keeping, track of the cost of the item before the sale.

add ones and pre-delivery inspection items. In addition, the system can generate

a wash out report one level deep to show the costs and income associated with

the trade in.

Seria1zed Inventory

Those items that need to be tracked by their serial numbers can he

marked as serialized inventory, For example. Fridges, stoves, Computers and

chainsaws might all be serialized. Note that if you plan on servicing these items

in the figure and keeping trek of all work you do on them. They should be

entered as products instead of serial numbers.


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TYPES OF INVENTORY

Several different types of inventories are conducted, depending

upon the type of materiel involved and type of information needed. Bulkhead-to

Bulkhead Inventor

A bulkhead-to-bulkhead inventor is a physical count of all stock

materiel within the ship or within a specific storerooms bulkheadto

bulkhead inventory of a specific storeroom is taken when a random sampling

inventory of that storeroom fails to meet the inventory accuracy rate of 90percent when directed as a result of a supply management inspection (SMI). It is

also taken when directed by the commanding officer or when circumstances

clearly indicate that it is essential to effective inventory control.

SPECIFIC COMMODITY INVENTORY

The specific commodity inventory is a physical Count of all items

under the same cognizance symbol, .FSC or that support the same operational

function, such as boat spares. electron tubes. boiler tubes. or lire brick. This

inventory is taken under the same conditions as a bulkhead- t-bulkhead

inventory; however. Prior knowledge of specific stock numbers and item

location is required to conduct a specific commodity inventory.

SPECIAL MATERIEL INVENTORY

A special materiel inventory requires the physical count of all

items that, because of their physical characteristics, costs, mission essentiality,

and criticality, are specifically designated for separate identification and

inventory Control.


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ADVAPTAGE INVENTORY CONTROL

The Inventor Control gives von the ability to handle our inventory

your way. As one of the most flexible and comprehensive modules in theAdvantage, you can choose the level of control that best suits your specific

business needs. Your inventory can be valued on a LIFO, FIFO or Average cost

basis. You can choose to use pails explosions. Serialized inventory, parts

allocations, Vendors, warehouses and an audit trail.

Handles core pricing

Produces a re order report based on minimum stock quantities

Tracks unlimited vendors per item and recommends a best vendor

Tracks allocations including explosion allocations

Up to 254 discounts per item, including quantity break discounts

Unit conversions can be defined for each item for both buying and selling

quantities

Allows for warehouse transfers and other adjustments

Set up special sale dates for item discounting

Reports the best and worst selling items in each of eight different

categories

Tracks items by location or quantity in multiple warehouses

Can automatically generate items based on a template hem

Utilizes Rapid Entry to facilitate entry of item data

INVENTORY MANAGEMENT AND CONTROL

Their proper management and control assume considerable

Importance. In fact, the management of inventory is given such an importance

that it is often treated synonymous with material management.


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PROCESS OF INVENTORY MANAGEMENT

Determination of optimum inventory levels and procedures of their

review and adjustments.

Determination of the degree of control that is required for the best results.

Planning and design of the inventory control system.

Planning of the inventory control organization.

DETERMINATION OF OPTIMUM INVENTORY LEVEL

Determination of optimum inventory that an organization should

hold is a significant but difficult step. Too much of inventory results in locking

out of working capital accompanied by increased carrying costs.

DETERMINATION OF THE DEGREE OF CONTROL

The second aspect of inventory management is to decide just how

much control is needed to realise the objectives of inventory management. The

difficulty is best overcome by classification of inventory on the basis of value.

Popularly called the ABC classification, this approach is useful in degree of

control

PLANNING AND DESIGN OF THE INVENTORY CONTROL SYSTEM

An inventory system provides the organizational structure and the

operating policies for maintaining controlling goods to be inventoried .The

system is responsible for ordering and receipt of goods, timing the order

placement, and keeping track of what has been ordered how much, and from

whom.

The fixed order quantity system

The fixed order periodic system


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DETERMINING ORGANIZATIONAL ARRANGEMENT STRUCTURE

Inventory management and control is to determine an organization

structure to handle inventory, organizationally speaking .inventory control

function is assigned to materials management, or production planning and

control.

INVENTORY CONTROL TECHNIQUES

Always better control classification

High Medium, Low classification

Vital, Essential and Desirable classification

Scarce, Difficult and Easy to obtain

Fast moving .Slow moving and Non moving

Economic order quantity

Max minimum system

Two bin system

HML CLASSIFICATION

The high, medium and low classification follow the same

procedure as is adopted in ABC classification only difference is that in J-IML

classification unit value is the criterion and not the annual consumption value.

The item of inventory should be listed in descending order of unit value and it is

up to the management to fix limits for three categories.

VED CLASSIFICATION

While in ABC classification inventory are classified on the basis of

their consumption value in HML analysis, unit value is the basis, critically of

inventories is the basis for vital, essential and desirable categorization. The

VED analysis is done to determine the critically of an item and its effect on

production and other services.


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MINIMUM MAXIMUM TECHNIQUE

The minimum maximum technique is often used in connection

with manual inventory control system. The minimum quantity is established in

the same way as any order point. The maximum is the minimum quantity plus

the optimum lot size. In practice a requisition is initiated when a withdrawal

reduces the inventory below the minimum level. The order quantity is the

maximum minus the inventory status after the withdrawal If the final

withdrawal reduces the stock level substantially below the minimum level, the

order quantity will be longer than the calculated EOQ.

COST OF HOLDING INVENTORYOne operating objective of inventory management is to minimize

cost .Excluding the cost of merchandise the associated with inventory fall in

Iwo basic categories.

Ordering or acquisition or set up costs

Carrying costs

ORDERING COSTS

This category of cost is associated with the acquisition or ordering

of inventory. Firms have to place orders with suppliers to replenish inventory of

raw materials, the expenses involved are referred to as ordering costs. Apart

from placing order outside, the various production departments have to acquire

material from the stores.

Receiving, impacting and recording the goods received to ensure

both quantity and Quality. The cost of acquiring material consists of clerical

costs and cost of stationery.

CARRYING COSTS

Those that arise due to the storing of inventory the main

components of this category of carrying cost are storage cost that is tax,


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insurance, Depreciation, maintenance of the building utilities and janitorial

services.


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CHAPTER - III

Ill. 1. RESEARCH METHODOLOGY

DEFIN1TION

Research is the process in which the researches wish to find the

solution for a given problem. Thus the solution helps in the future course of

action.

According to the Ridmen and more it is defined as systematic

effort to gain knowledge. It has been defIned as a careful investigation or

inquiry especially through search for new facts in any branch of knowledge.

NEED FOR THE STUDY

Inventories constitute a major element of the total working capital

Inventory should neither be excessive or inadequate .Since both the Situations

would lead to lose to the company. A study of the inventory management

system therefore becomes necessary to ensure the supply of the required

quantity and quality of inventories at the required time and at the same time to

prevent unnecessary investment in inventory. Such a study may reveal

introduction of new methods of control. Which help in maintaining optimum

level?

III. 2. SCOPE OF INVENTORY MANAGEMENT

The study is based on the annual consumption of company for the period

of 5years from 2-007-2011.

The study can use as the base for understanding the inventory

management


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III.3. OBJECTIVES

To analyze the cost of holding stock.

To study the efficiency an inventory management

To maintain sufficient stock of mw material in periods of short supply

and anticipate price changes.

To reduce the manufacturing lead time.

To maintain a minimum investment in inventories.

To find out the current trend for the performance of the company.


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III. 4. LIMITATION

Inventory and quantity control measure adopted by the company was all

based on secondary data.

There was also constant of time due to which an in-depth study was not

possible.

The non involvement of respondent may be limitation in data collection.


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A. RESEARCH DESIGN

Research Design is the specification of methods and procedures for

acquiring the information needed to structure or to solve given problem. it has

been explained as series of advance decisions that is taken together for a

specification or model for the conduct of investigation.

B. PERIOD OF THE STUDY

This period of study takes for this project 5 years from 2O6-

2QjGol1ected were arranged as per the importance tabulation and charts used in

this project work for the purpose of quick reference and supporting this study.

C.TYPES OF DATA

Primary Data

Secondary Data

SECONDARY DATA

Secondary data mean data that are already available. They refer to

the data which here already been collection and analyzed by someone else.

When the research utilizes secondary data, then he has to look in the various

sources from where he can obtain them. In this case he is certainly not

confronted with the problems that are usually associated with the collection of

original data. Secondary data may either be published data or unpublished data.

Usually published data are available.

ANALYTICAL STUDY

In analytical research on the other hand, the research her to use

facts or information already available and analyze there to make a critical

evaluation of the material.


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CHAPTER - IV

DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS

Analysis of data is a process of inspecting, cleaning, transforming,

and modelling data with the goal of highlighting useful information suggesting

conclusions, and supporting decision making. Data analysis has multiple facets

and approaches, encompassing diverse techniques under a variety of names, in

different business, science, and social science domains.

INTERPRETATION

There is now a standard story about the originality approach to

constitutional interpretation. In the 1970s and 80s certain constitutional lawscholars became concerned with what seemed to them the ungrounded

jurisprudence of the United States Supreme Court. They began to articulate a

theory of interpretation that stressed the obligation of the judge to apply the

Constitution in its original and therefore unchanging sense. By this they meant

the sense intended by the people who wrote and ratified it. I say they

articulated this view because, prior to that time, it was already the prevailing

conventional, if implicit, understanding of constitutional interpretation.


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INVENTORY TURNOVER RATIO

Inventory turnover ratio measures the velocity of conversion ofstock into Sales. The ratio is obtained by

Inventory turnover Ratio = Cost of goods sold / Average

Inventory

TABLE-IV-1


YearCost ofgoodssold

AverageInventory

InventoryTurnover

Ratio

2006-

2007

22,523.5

93034.02 8.41

2007-

2008

20,949.1

81916.84 10.92

2008-

2009

19,815.3

32430.31 8.15

2009-

2010

14,061.4

48403.29 1.67

2010-

2011

54,057.8

725131.83 2.15

INTERPRETATION

The table IV-1 reveals that the inventory turnover ratio

showing slightly increasing trend it was in the year 2009-2010 as


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1.67% and than a sudden increasing in the previous year 2006-2007

as 8.41%, 10.92%, 8.15% and 2010-2011 2.15% respectively.


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CHART-IV-1


Inventory Turnover Ratio

0

2

4

6

8

10

12

2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

Inventory Turnover

Ratio


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WORK IN PROGRESS

Average collection period is computed using the following formula.

Work in progress = Sales / Average work in progress

TABLE-IV-2

WORK IN PROGRESS

Year Sales

Average

Work in

progressWork in

Progress

2006-

2007

32,742.2

9

107.82 303.67

2007-

2008

28,341.9

894.01 301.19

2008-

2009

20,692.5

951.22 403.99

2009-

2010

23,283.0

8

66.92 347.92

2010-

2011

59,667.6

2191.27 311.95

INTERPRETATION


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The table IV-2 reveals that the work in progress Turnover

ratio showing slightly increasing trend it was in the year 2008-2009

as 403.99 and decreasing during the year 2007-2008.


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CHART-IV-1

WORK IN PROGRESS

Work in Progress

0

50

100

150

200

250

300

350

400

450

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

Work in Progress


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STOCK HOLDING DAYS

Stock Holding Days is computed using the following formula.

Stock Holding Days = No. of days in a year / Inventory

turn over Ratio

TABLE-IV-3

STOCK HOLDING DAYS

Year

No. of

days in a

year

Inventory

Turnover

Ratio

Stock

Holding

Days

2006-

2007365 10.79 33.82

2007-

2008365 14.76 24.72

2008-

2009365 8.51 42.89

2009-

2010365 2.77 131.76

2010-

2011365 2.37 154.00

INTERPRETATION

The table IV-3 reveals that the Stock holding days

increasing trend it was low in year 2007-2008 as 24.72 days and


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sudden increasing in the next year 2008-2009 as 42.89 days and

from that it raised to 154 days in the period of 2010-2011.


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Stock Holding Days

020

40

60

80

100

120

140

160

180

2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

Stock Holding

Days

CHART-IV-3

STOCK HOLDING DAYS


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PERCENTAGE OF WORK IN PROGRESS

Percentage of work in progress is computed using the followingformula.

Percentage of work in progress = Work in progress /

Inventory

TABLE-IV-4


YearWork in

progress

Inventory % of Work

in progress

2006-

2007215.64 6068.04 0.03

2007-

200818.03 3833.69 0.04

2008-

2009102.44 4860.62 0.02

2009-

2010133.84 16806.59 7.96

2010-

2011282.54 50263.66 7.61

INTERPRETATION


64/104

The table IV-4 reveals that the work in progress in total

inventory showing slightly increasing trend it was high in the year

2010-2011 as 7.96%


65/104

0

50

100

150

200

250

300

2006-200

2007-200

2008-200

2009-201

2010-201

Work in progress

% of Work in

progress

CHART-IV-4



66/104

PERCENTAGE OF INVENTORY IN CURRENT ASSET

Percentage of inventory in current asset is computed using thefollowing formula.

Percentage of inventory in current asset = Inventory /

current asset

TABLE-IV-5

PERCENTAGE OF CURRENT ASSET

Year

Inventor

y Current

asset

% of

inventory in

current

asset

2006-

2007215.64 6068.04 0.03

2007-

200818.03 3833.69 0.04

2008-

2009102.44 4860.62 0.02

2009-

2010133.84 16806.59 7.96

2010-

2011282.54 50263.66 7.61

INTERPRETATION


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The table IV-5 reveals that the total inventory in current

asset showing slightly increasing trend it was high in the year 2010-

2011 as 0.82% and decreasing during the previous 4 years 2006-

2011 as 0.65%, 0.38%, 0.60% and 0.72% respectively.


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% of inventory in current asset

0

1

2

3

4

5

67

8

9

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

% of inventory

in current asset

CHART-IV-5

PERCENTAGE OF CURRENT ASSET


69/104

PERCENTAGE OF INVENTORY IN TOTAL ASSET

Percentage of inventory in total asset is computed using thefollowing formula.

Percentage of inventory in total asset = Inventory / total

asset

TABLE-IV-6

PERCENTAGE OF TOTAL ASSET

Year

Inventory Total asset

% ofinventory intotal asset

2006-

2007 6068.04 19537.4 0.31

2007-

20083833.69 21792.17 0.17

2008-

20094860.62 21853.73 0.22

2009-

2010

16806.5

9 50963.47 0.32

2010-

2011

50263.6

6100551.24 0.49

INTERPRETATION


70/104

The table IV-6 reveals that the total inventory in total

asset showing slightly increasing trend it was high in the year 2010-

2011 as 0.49% and decreasing during the previous 4 years 2006-

2011 as 0.31%, 0.17%, 0.22% and 0.32% respectively.


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CHART-IV-6

PERCENTAGE OF TOTAL ASSET

0

20000

40000

60000

80000

100000

120000

2006

-2007

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

Inventory

Total asset

% of inventory in

total asset


72/104

PERCENTAGE OF INVENTORY IN NET WORKING CAPITAL

Percentage of inventory in net working capital is computed using the

following formula.

Percentage of inventory in net working capital = Inventory / net

working capital

TABLE-IV-7

PERCENTAGE OF NET WORKING CAPITAL

YearInventor

y

Net working

capital

% of

inventory in

net working

capital

2006-

20076068.04 7731 0.78

2007-

20083833.69 8166 0.46

2008-

20094860.62 6338 0.76

2009-

2010

16806.5

913209 0.81

2010-

2011

50263.6

622488 2.23

INTERPRETATION


73/104

The table IV-7 reveals that the total inventory in net

working capital showing slightly increasing trend it was high in the

year 2010-2011 as 2.23% and decreasing during the previous 4

years 2006-2011 as 0.78%, 0.46%, 0.76% and 0.71% respectively.

CHART-IV-7

PERCENTAGE OF NET WORKING CAPITAL

% of inventory in net working capital

0

0.5

1

1.5

2

2.5

2006-2

007

2007-2

008

2008-2

009

2009-2

010

2010-2

011

YEAR

PERCENTAG

E

% of inventory in

net working capital


74/104

CURRENT RATIO

Current ratio is measuring the liquidity current ratio is the ratio oftotal current asset to total current assets to total current liabilities.

Current ratio = Current Assets / Current Liabilities

TABLE-IV-8

CURRENT RATIO

YearCurrent

Asset

Current

Liabilities

Current

Ratio

2006-

20079215 4916 1.87

2007-

20089983 3231 2.51

2008-

20098117 4810 1.68

2009-

201023258 16422 1.41

2010-

201138942 53687 0.72

INTERPRETATION

The table IV-7 reveals that the Current Asset ratio

showing slightly increasing trend in the year 2007-2008 as 2.51%

and decreasing during the year of 2008-2009 as 1.68%, then asudden decreasing in the year 2010-2011 as 0.72%.


75/104

CHART-IV-8

CURRENT RATIO

Current Ratio

1.87

2.51

1.681.41

0.72

0

0.5

1

1.52

2.5

3

2006-200

7

2007-200

8

2008-200

9

2009-201

0

2010-20

11

YEAR

PERIOD

Current Ratio


76/104

TREND IN SALES

TABLE-IV-9

Year Sales X Y X2

2006-

200732,742.29 -2

-65,484.584

2007-

200828,314.98 -1

-28,314.981

2008-

200920,692.59 0

00

2009-

201023,283.08 1 -23,283.08 1

2010-

201159,667.62 2

119,335.242

EY=164,70

0.56

EY=48,818.

76EY2=10

Y = a + bx

A = Ey/N = 164,700.56 / 5 = 32,940.11

B = EXY/EX2 = 48,818.76/10 = 4,881.88

2007 = 32,940.11 + 4,881.88 (-2)

= 23,176.35

2008 = 32,940.11 + 4,881.88 (-1)

= 28,058.23


77/104

2009 = 32,940.11 + 4,881.88 (0)

= 32,940.11


78/104

2010 = 32,940.11 + 4,881.88 (1)

= 37,821.99

2011 = 32,940.11 + 4,881.88 (2)

= 42,703.87

Forecasted Sales in the year 2012

Y2012 = 32,940.11 + 4,881.88 (3)

= 47,585.75

INTERPRETATION

Dharani Sugars and Chemical Limited of Sales trend in

2006-2007 decreased Rs. 23,176.35 next year of Sales position its

increase on 2011 42703.87. Future Sales on 2012 increase Rs.

47.585.75 the over all financial position satisfactory.


79/104

CHART-IV-9

TREND IN SALES

TREND IN SALES

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

YEAR

SALES

RATIO

Sales


80/104

TREND IN INVENTORY

TABLE-IV-10

Year Inventory X Y X2

2006-

20076,068.04 -2

-12,136.08-4

2007-

20083,833.69 -1

-3,833.69-1

2008-

20094,860.62 0

00

2009-

2010

16,806.5

91 16,806.59 1

2010-

2011

50,263.6

62

100,527.322

EY=81,83

2.6

EY=101,36

4.14EY2=10

Y = a + bx

A = Ey/N = 81,832.6 / 5 = 16,366.52

B = EXY/EX2

= 101,364.14/10 = 10,136.41

2007 = 16,366.52 + 10,136.41 (-2)

= -3,906.6

2008 = 16,366.52 + 10,136.41 (-1)

= 6,230.11

2009 = 16,366.52 + 10,136.41 (0)

= 16,366.52


81/104

2010 = 16,366.52 + 10,136.41 (1)

= 26,502.93

2011 = 16,366.52 + 10,136.41 (2)

= 36,639.34

Forecasted Sales in the year 2012

Y2012 = 16,366.52 + 10,136.41 (3)

= 46,775.75


82/104

CHART-IV-10

TREND IN SALES

TREND IN INVENTORY

6,068.043,833.694,860.62

16,806.59

50,263.66

0

10000

20000

30000

4000050000

60000

2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

YEAR

INVENTORY

RATIO

Sales


83/104

COMPARATIVE BALANCE SHEET

Comparative balance sheet as on two or more different dates can be

used for comparing assets and liabilities and finding out any increase or

decrease in those items. Thus while in a single balance sheet the emphasis in onpresent position. It is on change in the comparative balance sheet. Such a

balance sheet is very useful in studying the trend in an enterprise.

COMPARATIVE BALANCE SHEET OF COMPANY FOR THE

YEAR ENDING DECEMBER 31ST 2007 AND 2008.

Year ending 31st

DecemberIncrease

/December

(amounts)

Increase

/December

(percentage)2007 2008

Assets Current assets

Cash and banks

Debtors

Stock

Loan and advance

606.01

1376.10

6068.04

1165.77

3319.68

1621.72

3833.69

1208.23

2713.67

245.62

2234.35

42.46

447.79

17.83

36.82

3.64

Total Current Assets 9215.92 9982.32 767.4 8.32

Profit and loss a/c

Fixed Assets

704.63

10327.48

-

11808.85

-

1489.37

-

14.45

Total Assets 20242.03 21792.17 1550.14 7.65

Currents Liabilities

Source of funds

1484.83

18757.20

1817.15

19975.02

332.32

1217.8

22.38

6.49

Total Liabilities 20242.03 21792.17 1550.14 7.65


84/104

INTERPRETATION

The shareholders fund has been decreased by 6.49% in the year

2007-08 when compared to 2006-2007. It includes mostly reduced reserve and

surplus. The loan fund has been decreased by 3.64% in the year 2007-2008

when compared to 2006-2007.

The total fixed asset has been increased by 14.45% in the year

2007-2008 when compared to 2006-07. It indicates the sale the assets one part.The total current assets decreased by 8.32% in the year 2007-2008 when

compared to 2006-2007.

It indicates which cannot by used to repay the current liabilities.

But sundry debtors have been decreased by 17.83% in the year 2007-2008.

When compared to 2006-2007 and cash and bank balance has been decreased

by 447.79% in the year 2007-2008. When compared to 2006-2007. The current

liability has been decreased by 22.38% in the year 2007-2008, when compared

to 2006-2007.


85/104

COMPARATIVE BALANCE SHEET OF COMPANY FOR THE

YEAR ENDING DECEMBER 31ST 2008 AND 2009.

Year ending 31st

DecemberIncrease

/December

(amounts)

Increase

/December

(percentage)2008 2009

Assets Current assets

Cash and banks

Debtors

Stock

Loan and advance

3319.68

1621.72

3833.69

1208.23

463.91

995.23

4860.62

1797.39

2855.77

626.49

1026.93

589.16

86.05

38.63

26.78

48.76

Total Current Assets 9983.32 8117.15 1866.17 18.69

Fixed Assets 11808.85 13736 1927.73 16.32

Total Assets 21792.17 21853.73 61.56 0.28

Currents Liabilities

Source of funds

1817.15

19975.02

1778.72

20075.01

38.43

99.99

2.11

0.50

Total Liabilities 21792.17 21853.73 61.56 0.23


86/104

INTERPRETATION

The shareholders fund has been decreased by 0.50% in the year

2008-09 when compared to 2007-2008. The loan and advance has been

increased by 48.76% in the year 2007-08 when compared to 2006-2007. The

total fix

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