A Study on Inventory Management

Paavai Engineering College

A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR

PROJECT REPORT Submitted by

S.GOKUL Register No: 108001612014 In partial fulfillment for the award of the degree Of

MASTER OF BUSINESS ADMINISTRATION In

DEPARTMENT OF MANAGEMENT STUDIES PAAVAI ENGINEERING COLLEGE PACHAL, NAMAKKAL-637 018

JUNE 2012

Chettinad Cement Corporation Limited

Paavai Engineering College BONAFIDE CERTIFICATE

PAAVAI ENGINEERING COLLEGE DEPARTMENT OF MANAGEMENT STUDIES PROJECT REPORT JUNE 2012

This is to certify that the project A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITED, KARUR Is the bonafied record of project done by

S.GOKUL Register No: 108001612014 Of MBA during the year 2011-2012

--------------------------Project Guide

------------------------HOD

Submitted for the Project Viva-Voce examination held on ----------------------------

-----------------------------

--------------------------

Internal Examiner

External Examiner

Chettinad Cement Corporation Limited

Paavai Engineering College DECLARATION

I affirm that the project work entitled A STUDY ON INVENTORY MANAGEMENT IN CHETTINAD CEMENT CORPORATION LIMITTED, KARUR being submitted in partial fulfillment for the award of Master of Business Administration (MBA) is the original work carried out by me. It has not formed the part of any other project work submitted for award of any degree or diploma, either in this or any other University.

Signature of the Candidate

I certify that the declaration made above by the candidate is true

Signature of the Guide

Chettinad Cement Corporation Limited

Paavai Engineering College ACKNOWLEDGEMENT

I would like to express my gratitude to Shri.CA. N. V. Natarajan, B.Com., FCA., Chairman and Smt. Mangai Natarajan, M.Sc., Correspondent, Paavai Institutions, Namakkal for giving me an opportunity and facility to complete this project. I

wish

to

place

my

deep

sense

of

gratitude

to

Dr. K. K. Ramaswamy, M.E., Ph.D., Director Admin. Paavai institutions and I would like to

express

my

gratitude to Dr. C. Jegadheesan, M.E., MS., Ph.D., Principal, Paavai

Engineering College, Namakkal. I offer my profound gratitude to Dr.G.Gopalakrishnan, M.B.A, M.Phil, Ph.D Head, Department of Management Studies, Paavai Engineering College, Namakkal, for his entire support to complete this project report. I owe my boundless gratitude to my faculty guide, Dr.A.Arumugam.M.Com, M.Phil, M.B.A., Ph.D Professor of MBA Department, for his guidance and supervise of this project for successful completion. I sincerely thank to Mr.Thirunavukarasu, HR manager, Chettinad Cement Corporation limited, Karur for giving me permission to do this project at their concern. I express my sincere thanks to my beloved parents, friends and the staff member for and those who are encouraged and supported for completion and this project report.

S.GOKUL

Chettinad Cement Corporation Limited

Paavai Engineering College TABLE OF CONTENTS

CHAPTER NO

DESCRIPTION

PAGE NO

LIST OF TABLES LIST OF CHARTS ABSTRACT

I

II

III

IV

V

INTRODUCTION 1.1 About the study 1.2 Scope of the study 1.3 Statement of the problem 1.4 Objectives of the study 1.5 Research methodology INDUSTRY AND COMPANY PROFILE 2.1 Industry profile 2.1.1 Cement industry in Global 2.1.2 Cement industry in India 2.1.3 Cement industry in Tamilnadu 2.1.4 Cement company in Karur 2.2 Company profile CONCEPTUAL AND THEORETICAL FRAME WORK 3.1 Conceptual and theoretical frame work of inventory management 3.2 Review of literature ANALYSIS OF INVENTORY MANAGEMENT 4.1 Analysis Part-1 Ratio Analysis(Inventory) 4.2 Analysis Part-2 EOQ Analysis SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION 5.1 Findings 5.2 Suggestions 5.3 Conclusion BIBLIOGRAPHY

Chettinad Cement Corporation Limited

Paavai Engineering College

LIST OF TABLES Table No.

Description

4.1.1

Level of inventory

4.1.2

Inventory turnover Ratio

4.1.3

Inventory conversion period

4.2.1

EOQ analysis for the year 2006-07

4.2.2

EOQ analysis for the year 2007-08

4.2.3

EOQ analysis for the year 2008-09

4.2.4

EOQ analysis for the year 2009-10

4.2.5

EOQ analysis for the year 2010-11

Page No.

LIST OF CHARTS

Chart No.

Description

4.1.1

Level of inventory

4.1.2

Inventory turnover ratio

4.1.3

Inventory conversion period

4.2.1

EOQ analysis for the year 2006-07

4.2.2

EOQ analysis for the year 2007-08

4.2.3

EOQ analysis for the year 2008-09

4.2.4

EOQ analysis for the year 2009-10

4.2.5

EOQ analysis for the year 2010-11

Page No.

Chettinad Cement Corporation Limited

Paavai Engineering College

ABSTRACT

The purpose of inventory management is to ensure availability of raw material in sufficient qualities as and when required and also minimize investment in inventories. There is an essential to manage inventories efficiently and effectively in order to avoid excess investment. It is possible for a company to reduce the level of inventories to a considerable extent without any adverse effect on production and sales by using simple inventory planning and control techniques. The reduction of excessive inventories will create a favorable impact on the company profitability. Inventory turnover ratio, inventory conversion period are very helpful to know how effectively plays and control in the organization EOQ analysis will enables the organization to use of EOQ analysis is very effective and useful tool for classifying, monitoring and control of inventories.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHAPTER-I INRODUCTION

Chettinad Cement Corporation Limited

Paavai Engineering College 1.1 ABOUT THE STUDY Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is recurred at different locations within a facility or within multiple locations of a supply or network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of Inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, Inventory forecasting, physical inventory, available physical space for Inventory, quality management, returns and defective goods and demand and forecasting.

Types of inventory Normally the inventory has divided into two types. These, 1.

Merchandising inventory,

2.

Manufacturing inventory.

The manufacturing inventory has been subdivided into three types. These, 1.

Raw materials,

2.

Work in process,

3.

Finished goods.



Raw materials: Everything the crafter buys to make the product is classified as raw materials. That includes leather, dyes, snaps and grommets. The raw material inventory only includes items that have not yet been put into the production process.



Work in process: This includes all the leather raw materials that are in various stages of development. For the leather crafting business, it would include leather pieces cut and in the process of being sewn together and the leather belts and purse etc. that are partially constructed.

Chettinad Cement Corporation Limited

Paavai Engineering College In addition to the raw materials, the work in process inventory includes the cost of the labor directly doing the work and manufacturing overhead. Manufacturing overhead is a catchall phrase for any other expenses the leather crafting business has that indirectly relate to making the products. A good example is depreciation of leather making fixed assets. 

Finished goods: When the leather items are completely ready to sell at craft shows or other venues, they are finished goods. The finished goods inventory also consists of the cost of raw materials, labor and manufacturing overhead, now for the entire product.

1.2 SCOPE OF THE STUDY The study helps the management to improve its profitability through a reduction in nonmoving inventory. It develops the policies for both continuous review of inventory management system. The study helps to show the level of the inventory in the organization. The company will make the proper inventory methods from the suggestions of the study.

1.3 STATEMENT OF THE PROBLEM There are a number of problems that can cause havoc with inventory management. Some happen more frequently than others. Here are some of the more common problems with inventory systems. Unqualified employees in charge of inventory, Using a measure of performance for their business that is too narrow, Not identifying shortages ahead of time, Bottlenecks and weak points can interfere with on-time product delivery, Too much distressed stock in inventory, Excessive inventory in stock and unable to move it quickly enough, Computer assessment of inventory items for sale is inaccurate, Computer inventory systems are too complicated, Items in-stock gets misplaced, Not keeping up with the rising price of raw materials.

Chettinad Cement Corporation Limited

Paavai Engineering College 1.4 OBJECTIVES OF THE STUDY 

To analyze the inventory those are sufficient to perform production and sales activities smoothly.



To study the inventory management followed in chettinad cement.



To identify the existing inventory management and its effectiveness.



To calculate analysis for their performance in inventory management.

1.5 RESEARCH METHODOLOGY Research Design The Descriptive type of research has been applied in the study . This research the researcher has no control over the variables. Only reports what has happened or what is happening. The research can only discover causes but cannot control the variables.

Data collection This study purely based on secondary sources of information. The necessary data calculated from annual report, books, journals and websites.

Period of study This study covers a period of five years from 2006 – 2007 to 2010 – 2011. The accounting year commenced from April and ending with March of the next year.

Area of study This study was conducted in Chettinad cement corporation limited, Puliyur, Karur District.

Chettinad Cement Corporation Limited

Paavai Engineering College Tools for analysis The following tools have been applied in the present study. They are listed below 

Ration analysis (inventory) and



EOQ analysis

Ratio Analysis (Inventory) The percentage of a mutual fund or other investment vehicle's holdings that have been "turned over" or replaced with other holdings in a given year. The type of mutual fund, its investment objective and/or the portfolio manager's investing style will play an important role in determining its turnover ratio.

Economic Order Quantity (EOQ) Economic order quantity is that level of inventory that minimizes the total of inventory holding cost and ordering cost. The framework used to determine this order quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913.The most economical quantity of a product that should be purchased at one time. The EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to the size of the order which gives maximum economy in punches of materials. √ Where

Chettinad Cement Corporation Limited

Paavai Engineering College

CHAPTER-II INDUSTRY AND COMPANY PROFILE

Chettinad Cement Corporation Limited

Paavai Engineering College 2.1 INDUSTRY PROFILE History of the origin of cement It is uncertain where it was first discovered that a combination of hydrate non-hydraulic lime and a pozzolan produces a hydraulic mixture, but concrete made from such mixture was first used on large scale by roman engineers. They used both natural pozzolans (trass or pumice) and artificial pozzolans (ground brick or pottery) in the concretes. Many excellent examples of structures made from these concretes are still standing. Notably the huge monolithic dome of the pantheon in Rome and the massive Bath of Caracalla. The vast system of roman aqueducts also made extensive use of hydraulic cement. The use of structural concrete disappeared in medieval Europe. Although weak pozzolanic concretes continued to be used as a core fills in stone walls and columns.

Modern cement Modern hydraulic cement began to be developed from the start of the industrial Revolution (around 1800) ,driven by three main needs: Hydraulic renders for finishing brick buildings in wet climates Hydraulic mortars for masonry construction of harbor works etc , in contact with sea water.

Varieties of the cement There are some varieties in cement that always find good demand in the market. To known their characteristics and in which area they are most required, it will be better to take a look at some of the details given below.

Chettinad Cement Corporation Limited

Paavai Engineering College Portland blast furnace slag cement (PBFSC) The rate of hydration heat is found lower in this cement type in comparison to PPC. It is most useful in massive construction projects, for example-dams.

Sulphate resisting Portland Cement (SRPC) This cement is beneficial in the areas where concrete has an exposure to seacoast or sea water or soil or ground water. Under any such instances, the concrete is vulnerable to sulphates attack in large amounts and can damage to the structure. Hence, by using this cement one can reduce the impact of damage to the structure. This cement has high these cement one can reduce the impact of damage to the structure. This cement has high demand in India.

Rapid hardening Portland Cement (RHPC) The texture of this cement type is quite to that OPC. But, it is bit more fine than OPC and possesses immense compressible strength, which makes casting work easy.

Ordinary Portland Cement (OPC) Also referred to as grey cement or OPC, it is of much use in ordinary concrete construction. In the production of this type of cement in India, Iron (fe2O3), Magnesium (MgO), Silica (SiO2), and Sulphur, trioxide (SO3) components are used.

Portland Pozolona Cement (PPC) As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The rate of hydration heat is lower in this cement type. Coal waste or waste or burnt clay is used in the production of this category of cement. It can be availed at low cost in comparison to OPC.

Oil Well Cement (OWC) Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing or fixing oil wells. This is applied on both the off-shore and on-shore of the wells.

Chettinad Cement Corporation Limited

Paavai Engineering College Clinker Cement (CC) Produced at the temperature of about 1400 to 14560 degree Celsius, Clinker cement is needed in the construction work of complexes, houses and bridges. The ingredients for this cement comprise iron, quartz, clay, limestone and bauxite. A part from these, some of the other types of cement that are available in India can be classified as: 

Low heat cement,



High early strength cement,



Hydrophobic cement,



High aluminum cement and



Masonry cement.

2.1.1 Cement Industry in Global Cement is a basic ingredient for the construction industry. It is estimated there are 1500 integrated cement production plants in the world. Although the players such a Lafarge or CEMEX, the share of the four largest firms account only for 23% of the overall demand.

Demand World cement demand was 2,283MT in 2005, with China accounting for 1,064MT (47% of total). The expected demand for 2010 is estimated at 2,836 MT. China will increase its demand by 250MT during the period, an increase higher than the total yearly European demand.

Chettinad Cement Corporation Limited

Paavai Engineering College The Demand of Cement

Demand for cement in MT

2005

2010

Growth rate

North America

170

200

2.9%

Western Europe

208

236

2.2%

Asia/Pacific

1500

1900

5.2%

Other regions

405

500

4.7%

World cement demand

2283

2836

4.7%

Source: www.cementhistory.com, www.google.com.

Chettinad Cement Corporation Limited

Paavai Engineering College Top 25 Cement companies in the world S.NO

Name of the Company

1.

Aditya Birla Group-Grasim

Name of the Country India

2.

Al-Ghurair Group

Dubai

3.

Ambuja Cements Limited

India

4.

Anhui Conch Cement Company

China

5.

Arabian Cement Company

Egypt

6.

Ararat Cement Co.

South Africa

7.

Cement Cruz Azul Cement Co.

Armenia

8.

CEMEX Co.

U.S.A

9.

China National Cement Materials Group Corporation

China

10.

Cimpor Cement corp.

China

11.

Companhia Siderurgical National S.A

Brazil

12.

Concrete Casting Cement Company

Pacific Alloy

13.

CRH plc

America

14.

Eagle Materials Inc

U.S.A

15.

Heidelberg Cement Company

Germany

16.

James Hardie Cements

U.S.A

17.

Lafarge

India

18.

Libyan Cement Company

Libya

19.

Monarch Cement Ltd.

U.S.A, California

20.

Norcem

Germany

21.

Pretoria Portland Cement Company

South Africa

22.

Ready Mix Inc

India

23.

Rinker Group

Australia

24.

Semapa Group

Europe

25.

Smith-Midland Cement Company

U.S.A, Milford

Cementwww.google.com, industry in India Source: www.ask.com, www.linkedin.com, en.wikipedia.com Chettinad Cement Corporation Limited

Paavai Engineering College 2.1.2 Cement Industry in India The cement industry in India has undergone a major shift over the last 6 years. The Indian cement industry is the second largest producer of quality cement. Indian cement industry is engaged in the production of several varieties of cement such as, ordinary Portland cement (OPC), Portland pozzoland cement (PPC), Portland blast furnace slag Portland cement (PBFSPC), sulfate resistance Portland cement (SRPC), white cement, etc,. They are produce strictly as per the Bureau of Indian standards (BIS) specifications and their quality is comparable with the best in the world. The industry occupies an important place in the national economy because of its strong linkage to other sectors such as, construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes. S.NO

1.

2.

3.

Name of the company

ACC Limited

Ambuja Cements Limited

Andhra Cements Ltd

Details of the company

Year of establishment

1994

Head quarters

Maharashtra

Web site

www.acclimited.com

Year of establishment

1981

Head quarters

Gujarat

Web site

www.ambujacement.com

Year of establishment

1936

Head quarters

Andhra Pradesh

Web site

www.andhracements.com

Chettinad Cement Corporation Limited

Paavai Engineering College

4.

5.

6.

7.

8.

9.

10.

Barak Valley Cements Ltd

Bheema Cements Ltd

Binani Cement Ltd

Birla Corporation Limited

Burnpur Cement Ltd

Year of establishment

1999

Head quarters

Assam

Web site

www.barakcement.com

Year of establishment

1978

Head quarters

Andhra Pradesh

Web site

www.bheemacement.com

Year of establishment

1996

Head quarters

West Bengal

Web site

www.binani.com

Year of establishment

1919

Head quarters

West Bengal

Web site

www.grasim.com

Year of establishment

1986

Head quarters

West Bengal

Web site

www.burnpurcement.com

Year of establishment

1962

Head quarters

Tamil Nadu

Web site

www.chettinadcement.com

Year of establishment

1951

Head quarters

Tamil Nadu

Web site

www.dalmiacement.com

Chettinad Cement Corporation Limited

Dalmia Cement (Bharat) Limited

Chettinad Cement Corporation Limited

Paavai Engineering College

11. Deccan Cements Ltd

12. Everest Industries Ltd

13. Grasim Industries Limited

14. Gujarat Sidhee Cement Ltd

15. Heidelberg Cement India Ltd

16. Hyderabad Industries Ltd

17.

Year of establishment

1979

Head quarters

Andhra Pradesh

Web site

www.deccancem.com

Year of establishment Head quarters

1934

Web site

www.everestind.com

Year of establishment

1948

Head quarters

Madhya Pradesh

Web site

www.grasim.com

Year of establishment

1973

Head quarters

Gujarat

Web site

www.gujaratsidhee.com

Year of establishment

1958

Head quarters

Karnataka

Web site

www.mycemco.com

Year of establishment

1946

Head quarters

Andhra Pradesh

Web site

www.hil.in

Year of establishment

1962

Head quarters

Maharashtra

Web site

www.indianhumepipe.com

Year of establishment

1994

Head quarters

Uttar Pradesh

Web site

www.jkcement.com

Maharashtra

Indian Hume Pipe Company Ltd

18. J. K. Cement Limited

Chettinad Cement Corporation Limited

Paavai Engineering College

19. JK Lakshmi Cement Ltd

20. Kalyanpur Cements Ltd

21. Katwa Cements Ltd

22. Kesoram Industries Ltd

23. Madras Cements Limited

24. Mangalam Cement Ltd

25. NCL Industries Ltd

26. Nirman Cements Ltd

Year of establishment

1938

Head quarters

Rajasthan

Web site

www.jklcem.com

Year of establishment

1937

Head quarters

West Bengal

Web site

www.kalyancemenet.com

Year of establishment

1993

Head quarters

Karnataka

Web site

www.katwagroup.com

Year of establishment

1919

Head quarters

West Bengal

Web site

www.kesocorp.com

Year of establishment

1954

Head quarters

Tamil Nadu

Web site

www.madrascements.com

Year of establishment

1976

Head quarters

Rajasthan

Web site

www.mangalamcement.com

Year of establishment

1979

Head quarters

Andhra Pradesh

Web site

www.nclind.com

Year of establishment

1983

Head quarters

Bihar

Web site

www.nirmancements.com

Chettinad Cement Corporation Limited

Paavai Engineering College

27. OCL India Ltd

28.

Year of establishment

1949

Head quarters

Orissa

Web site

www.ocl.in

Year of establishment

1955

Head quarters

Andhra Pradesh

Web site

www.panyamcements.com

Year of establishment

1992

Head quarters

Andhra Pradesh

Web site

www.prismcement.com

Year of establishment

1990

Head quarters

Rajasthan

Web site

www.rosezinc.com

Year of establishment

1981

Head quarters

Andhra Pradesh

Web site

www.sagarcements.in

Year of establishment

1991

Head quarters

Delhi

Web site

www.sainikcem.in

Year of establishment

1985

Head quarters

Andhra Pradesh

Web site

www.sanghicement.com

Year of establishment

1956

Head quarters

Gujarat

Web site

www.saurashtra.com

Panyam Cements & Mineral Inds Ltd

29. Prism Cement Ltd

30. Rose Zinc Ltd

31. Sagar Cements Ltd

32. Sainik Cement Inds. Ltd

33. Sanghi Industries Ltd

34. Saurashtra Cement Ltd

Chettinad Cement Corporation Limited

Paavai Engineering College

35. Shiva Cement Ltd

36.

Year of establishment

1985

Head quarters

Orissa

Web site

www.shivacement.com

Year of establishment

1983

Head quarters

Gujarat

Web site

www.digvijaycement.com

Year of establishment

1983

Head quarters

Andhra Pradesh

Web site

www.anjanicement.com

Year of establishment

1985

Head quarters

Andhra Pradesh

Web site

www.srivasavi.com

Year of establishment

1981

Head quarters

Andhra Pradesh

Web site

www.chakracement.com

Year of establishment

1983

Head quarters

Maharashtra

Web site

www.stresscrete.com

Year of establishment

1946

Head quarters

Tamil Nadu

Web site

www.ramcocement.in

Shree Digvijay Cement Company Ltd

37. Somani Cement Company Ltd

38. Sri Vasavi Inds. Ltd

39. Sri Chakra Cements Ltd

40. Stresscrete India Ltd

41. The India cements Ltd

Chettinad Cement Corporation Limited

Paavai Engineering College

42. Udaipur Cement Works Ltd

43. UltraTech Cement Limited

44. Vinaycements Ltd

45. Visaka industries Ltd

46. Zuari cement corporation Ltd

Year of establishment

1993

Head quarters

Rajasthan

Web site

www.udaipurcement.com

Year of establishment

2000

Head quarters

Maharashtra

Web site

www.ultratechcement.com

Year of establishment

1986

Head quarters

Assam

Web site

www.vinaycements.com

Year of establishment

1981

Head quarters

Andhra Pradesh

Web site

www.visaka.org

Year of establishment

1985

Head quarters

Andhra Pradesh

Web site

www.zuaricement.com

Source: www.google.com, info.shine.com, www.indiacatalog.com

Chettinad Cement Corporation Limited

Paavai Engineering College 2.1.3 Cement Industry in Tamilnadu The cement industry of India hopes the most in Tamilnadu. The Tamilnadu is the state which has produces the quality cement in India. The Tamilnadu government was formed a company name is “Tamilnadu cement corporation limited (TANCEM) in the February 1976 as public limited company. The TANCEM was formed two cement plants in Tamilnadu. These, 1. Alangulam cement works. Alangulam, virudhunagar districts. 2. Ariylur cement works. Ariyalur, perambalur districts. The following table shows the details of cement companies in districts of Tamilnadu. These,

S.No

Name of the company

Details Year of establishment

1

Chettinad Cement Corporation Limited

1962

Corporate office Chennai

Plant Places

Karur, Dhindukal, Ariyalur

Brand name

Chettinad.

Year of establishment

1946

Corporate office Chennai. 2

The India cements Ltd Plant Places

Ramanathapuram, Sangakiri, Ariyalur.

Brand name

Sankar cement, Coromandel cement.

Chettinad Cement Corporation Limited

Paavai Engineering College Year of establishment

3

4

Madras cement Ltd

Tamilnadu cements corporation Ltd

1950

Corporate office Chennai. Plant place

Ariyalur.

Brand name

Ram co cement.

Year of establishment

1979

Corporate office Chennai (Govt).

Plant place

Ariyalur.

Brand name

Arasu cement

Year of establishment

1976

Corporate office Madurai. 5

Janathacem industries limited Plant place

Rajapalayam,madurai.

Brand name

Janatha cement, agsar cement.

Source: www.indiacatalog.com, www.ask.com, en.wikipedia.com

Chettinad Cement Corporation Limited

Paavai Engineering College 2.1.4 Cement Company in Karur District Chettinad Cement Corporation limited, karur is the one of most popular cement manufacturer in Tamilnadu. The Chettinad cement work plants other than karur district, 1. Karikalini cement works, Dhindukal district, 2. Ariyalur cement works, Ariyalur district, The Chettinad cement corporation limited, Karur is the head company in Chettinad cement companies. They are produced 5,00,000 tons of cement per year. They are used those cement for their own company use such as, 1. Chettinad builders pvt ltd, 2. Chettinad house pvt ltd, 3. Chettinad group of companies.

2.2 COMPANY PROFILE History of the company The history of the group house of chettinad is linked with the 9 decades old saga. In 1912 took birth the House of Chettinad through a visionary idealist, born entrepreneur Dr. Rajah Sir Annamalai Chettiar who believed in Social Transformation through business. The founder of the House of Chettinad envisioned, his companies providing the stimulus for Industrial Growth and conceived business as a means of improving the living standards of people. The corporate credo of the House of Chettinad “STRIVE, SAVE AND SERVE” is the very thought of our founder. IN order to continue fulfilling his dreams and aspirations. To reach greater heights and the reins were taken over by equally visionary businessmen his son, Dr. Rajah Sir Muthiah Chettiar and grandson Dr. MAM. Ramaswamy. The house of Chettinad reached new heights with generations of hard work, dedications and remains the stamp of quality, integrity and reliability under the versatile, pragmatic and visionary leaderships.

Chettinad Cement Corporation Limited

Paavai Engineering College Present position of the company Today, a 8500 million business group has ventured and diversified in varying fields including manufacturing (Cement, Silica, Quartz, Grits), services (construction Transports, Steel fabrication, Ship management and stevedoring.

Clearing and forwarding) Trading, power

generation, plantation, farms, logistics. Education, sports management, literature, art and music fields have also been contributed vastly. It is a matter of great pride and satisfaction that the group finds worldwide patronage and earns precious foreign exchange for the country. The group aims to broaden its horizons and reach and the zenith in this millennium under the yond, dynamic, enthusiastic, able leadership of Mr. MAMR Muthiah. The future of the companies in the house of chettinad is based on the time tested and proved guidelines of total customer orientation, technology in the service of man and business as an instrument of social service. To these timeless truths, we remain stead fast forever.

Chettinad Cement Corporation Limited

Paavai Engineering College Management of Chettinad Cement Corporation Limited CHAIRMAN

:

MR.M.A.M.RAMASWAMY

MD

:

SRI.M.A.M.R.MUTHAIAH

STARTED

:

1962

DIRECTORS

:

SRI.RAMANATHAN PALANIAPPAN SRI.R.KRISHNA MOORTHY SRI.SP.S.T.PALANIAPPAN SRI.K.GANAPATHY&C.S.PARI Dr.T.PRABHAKARA RAO, IAS (TIIC NOMINEE)

COMPANY SECRETARY :

SRI.S.HARIHARAN

TYPE

:

PUBLIC

CO-SECRETARY

:

SRI.S.HARIHARAN

AUDITORS

:

M/S.P.B.VIJAYARAGRAN&CO M/S V.SOUNDARARAJAN&CO M/S KRISHAAN &CO

REGISTERED OFFICE

:

Chettinad Cement Corporation Ltd, 5th Floor, Rani Seethai Hall, 603 Anna Salai, Chennai - 600 006. Telephone No: +91-44-28292727 Fax No : +91-44-28291594 e-mail : [email protected]

PRODUCTION PLANTS

:

PULIYUR, KARIKKALI, ARIYALORE.

WEBSITE

:

www.chettinad.com

Chettinad Cement Corporation Limited

Paavai Engineering College VISION With almost a century of continuous growth and prosperity behind us we envisage our future as another opportunity to which greater heights and to perfect the art of perfectionism upholding the vision of our founder Dr. Rajah sir Annamalai Chettiar STRIVE, SAVE AND SERVE. The nature ethics and style of business believe that nothing can supplement the idealism which motivates the business we fall back on the time tested. Principles of total customers orientation technology in service of man and business as an instrument of social service to this timeless truth we remind steady fast forever.

MISSION To achieve & sustain cost leadership in the cement market. The harness technology to its full potential in a safe & clear environment in the entire business cycle & integrate quality with continuous improvement. To became a vibrant learning organization by building skills and competitiveness of employees for growth. To be the best and most respectable corporate citizen.

Product profile of Chettinad Cement Corporation Ltd. 

Pavithram: Unique cement manufactured at Puliyur works having high quality for special concrete applications.



Chettinad Grade 53: Superior finely ground cement, suitable for plastering works, giving a silky finished look. For RCC applications laser controlled manufacturing would yield best result.



Chettinad Grade 43: Multipurpose cement, suitable for plastering and binding.



Chettinad PPC: A finely blended cement, providing very fine result for plastering work, devoid of hair line cracks and giving excellent appearance to the building.



Sulphur Resistant Cement: Finds applications in the construction activity in the coastal areas to save from corrosiveness due to salty environment.

Chettinad Cement Corporation Limited

Paavai Engineering College Organizational chart of Chettinad Cement Corporation Ltd.

Chairman

Managing Director

Board of directors

President

Vice president

Senior general manager

Additional General Manager

Chettinad Cement Corporation Limited

Paavai Engineering College

Deputy General Manager

Senior Manger

Senior Assistance Manager

Supervisor

Sales Officer

Chief Security Officer

Vigilance Officer

Accounts Officer

Junior Officers

Chettinad Cement Corporation Limited

Paavai Engineering College MANUFACTURING DETAILS  Mines-Puliyur Works Limestone is sourced from our mines at palayam which is located 40kms from the factory. The mines are equipped with the latest machinery and technology including for sequential blasting. The mined limestone is then crushed through primary and secondary crusher.

 Mines-Karikkali works Limestone Mines are located at about 3 kms. from the factory. The mines are fully mechanized and have also a terminator for mechanized breaking of individual boulders. The Crusher is located at Mines and crushed limestone is transported by long belt conveyors to factory.

 Stacker and Reclaimer-Puliyur Works The crushed limestone is then sent through the X-Ray analyzer and approved for further process only on meeting quality standards backbone of the quality control.

 Stacker and Reclaimer- Karikkali works The entire quantity of crushed limestone passes through the online cross belt analyzers’ and is stacked at the pile in the factory. Three numbers of separate stacker-reclaimer are available with truck tipplers for proper stacking and Reclaiming of corrective raw materials, fuels and additives. Stacker Reclaimers help to achieve high degree of stacking and ensure maximum level of consistency for the input materials to raw mill, coal mill and cement mill.

Chettinad Cement Corporation Limited

Paavai Engineering College  Raw Mill-Puliyur Works The limestone from the reclaimed is mixed with additive of bauxite and Iron ore and transported to the vertical roller mill through weigh feeders (which control the additive addition). The operator takes corrective steps on viewing any deviation. The loesche-German make vertical roller mill is similar in principle to the tilting grinder with gigantic roller and operated by the hydraulic system, to give fine blended raw material. From the loesche mill the raw material is the taken to two silos to produce Varity of cement.

 Raw Mill- Karikkali works Pre-stacked limestone of stockpile is ground in the VRM along with corrective materials with required ratios are made to produce raw meal and that is stored in Blending cum Storage Silo. There are separate hoppers with weigh feeders for continuous and regulated addition of each raw material. The mix passes through the cross belt analyzers which analyze the mix chemistry and solve the mix ratio every minute to have very good consistency in the raw mix.

 Kiln-Puliyur Works The finely grounded blended raw material is sent to a five stage kiln. Kiln is a key process in the manufacture of cement where the calcinations & chemical reaction take place. Coal fired burner (Controlled through latest solid & low feeder) is used to heat the air to 1400°c and is fed from one end of the kiln. The data accusation and control center meticulously monitor the entire process including the temperature.

 Kiln- Karikkali works Raw meal extracted from silo is fed to the kiln where it is sintered at about 1400o C to clinker. This process is called preprocessing which consists of a five stage suspension heaters with precalciner, the kiln and the clinker cooler. Clinker cooler with CIS and CFG for maximum heat recuperation and the cooled clinker is transported to a storage silo.

Chettinad Cement Corporation Limited

Paavai Engineering College  Cement Mill-Puliyur Works The clinker is then ground, depending upon the grade, the additive is added. For all grades of cement 5% gypsum is added to control setting of cement we use Japanese technology in fine grinding with vertical roller mill from anode Kobe, Japan, laser practical size analyzer is used to monitor fineness of the cement for yielding very good quality cement.

 Cement Mill- Karikkali works Finally, grinding is done in OK Vertical Roller Mill for optical particle size distribution and less power consumption with excellent ease of operation for feeding, grinding and classification. To maintain quality of various types/grades of cement, there are separate hoppers with weigh feeders for the addition of fly ash, gypsum, etc. Quality of final product is monitored and controlled every hour by testing samples in the XRF analyzer. Final products are stored in cement silos.

 Packing House - Puliyur woks The four automatic packing machines have been installed, together they have the capacity to deliver 4800 tons per day of packed cement. These packing equipments are very accurate and any fault can be rectified as each bag is verified before the next is filled. These are also crosschecked by the Electronic weighing scale used to note the load carried by the Lorries.

 Packing House - Karikkali works There are 2 nos. of Electronic Rot packer which automatically pack cement in bags, each with a capacity of 150 tons/hour. Packed cement is loaded into trucks/wagons with automatic loading machines.

Chettinad Cement Corporation Limited

Paavai Engineering College WET PROCESS TECHNOLOGY

Argilseeous

Calcareous Material

Limestone

Material Clay

Crushing

Water Washing

Storage Tank

Storage Tank

Mixing IN Correct Production

Slurry Formation

Correction Basin

Pumping

Rotary Kiln

Coal Dust

Chettinad Cement Corporation Limited

Paavai Engineering College

Formation Of Clinker

Clinker Cooler

Grinding In Ball and Tube Mill

Gyp sum

Storage In silos

Weighing and packaging in Bags

Distribution

Chettinad Cement Corporation Limited

Paavai Engineering College DRY PROCESS TECHNOLOGY

Calcareous Material

Argilseeous

Limestone

Material Clay

Crushin g

Crushing

Grinding

Grinding

Storag e

Storage

Mixing In Correct Proportion

Storage of raw materials

Coal Dust

Rotary Kiln

Formation of Clinker

Chettinad Cement Corporation Limited

Paavai Engineering College

Clinker Cooler

Gyp sum

Grinding In Ball and Tube Mill

Storage in Silos

Weighing and Packing in bags

Distribution

Chettinad Cement Corporation Limited

Paavai Engineering College ACHIEVEMENTS OF CHETTINAD CEMENT CORPORATION LTD. S.No

AWARDS

YEAR

National Safety Award (for outstanding performance in Industrial Safety in

1

achieving lowest frequency rate in Industry)

1976

Runners up Highest % reduction in frequency rate

1977

2

Merit Awards from Regional Directorate of Workers Education

1972

3

Tamil Nadu Film Arts Association, Chennai Shield

1978

National Productivity Award (Best Productivity Performance in Cement

4

Industry issued by NPC)

1985

Second Best

1986

Best

1995

Best

1996

Second Best

1997

National Safety Award (Mines)-(for lowest injury frequency rate Metal Mines Mechanized Open Cast).

5

1986

Longest Accident Free Period.

1986

Best performance of the year.

1989

Conservationist of the year (for outstanding progress in the field of

6

Conservation of Energy, Metal Components & Machinery)

1987

NCBM National Awards (Improvement in Energy Performance).

7

Second Best

1994

Best

1995

Best

1998

TNEB Energy Conservation Award - (One among the 15 Energy Efficient

8

H.T. Industries of 2000 KVA)

1998

NCBM National Award

9

Second Best for Energy Efficiency Performance

1998

Source: Annual report of Chettinad Cement Corporation Limited

Chettinad Cement Corporation Limited

Paavai Engineering College MILESTONES OF CHETTINAD CEMENT CORPORATION LIMITED Sl. No. 1

MILESTONES

YEAR

0.4 MTPA cement production capacity with wet process plant installed at Puliyur.

1967

Modernized into dry process plant to a capacity of 0.8 MTPA with a kiln 2

capacity of 2000 TPD commissioned with modern vertical roller mills for

1989

fuel & limestone grinding. 3 4

2 Nos. of 5.4 MVA Capacity WARTSILA DG set installed. 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed at Poolavadi Udumaplet Taluk.

1990 1994

5

ISO – 9002 Certificate received.

1995

6

Stacker & Re-claimer for Limestone installed.

1996

7

Belt Elevator for Raw mill and Kiln feed installed.

1996

8

9

A) Impact Crusher for lime stone crushing at mines installed. B) Bag filter for coal mill grinding system. Vertical roller mill for cement grinding installed. Additional ESP installed for Kiln/ Raw mill to handle excess process gases.

1997

1998

CIS/CFG Cooler installed. Low pressure cyclone installed. 10

Latest Technology LV-Tech classifier installed in Raw Mill. The plant

2000

capacity increased to 1.2 MTPA cement. 11

Green field Cement plant with capacity of 0.9 MTPA was commissioned at Karikkali.

2001

12

Rock breaker (Terminator) installed in mines.

2001

13

ISO 14001:2004 is implemented.

2003

14

Environment Management Service Certificate option.

2004

15 16

1 No. 15MW Coal based Captive Power Plant commissioned in 12 Months at Karikkali. Fly Ash Silo construction work completed at Puliyur and Karikkali.

2004 2005

Chettinad Cement Corporation Limited

Paavai Engineering College 17

Roller press with ball mill for cement grinding with capacity 0.7 MTPA installed at Karikkali.

18

19

20

21

2006

Vertical roller mill for cement grinding installed. Additional ESP installed for Kiln/ Raw mill to handle excess process gases. Karikkali plant capacity increased to 2.0 MTPA by increasing of blended cement production. Bag House installed in Raw Mill/Kiln Circuit in addition to the existing ESP at Puliyur. Energy dispersive X-Ray specto meter was put into service for increasing the output and economical mines operation & conservation of minerals.

2006

2007

2007

2007

Advance Research laboratories, Switzerland make X-Ray Spectrometer – 22

Sequential type was commissioned for augmenting clinker production and

2007

its quality. 23

24

25

26

27

28

Seethainagar Mines crusher capacity was upgraded for supply of 40% Karikkali plant requirement of limestone. Coal based 15 MW capacity CPP was commissioned during Feb-2008 at Puliyur Works. Automation & control sections PLC's OS software up gradation and PLC's capacity. KHD make Burner Management System for kiln operation to improve quality of clinker and to save thermal energy. Coal based 2 x 15 MW capacity CPP was commissioned during Sep-2008 at Ariyalur. Green field Cement plant with capacity 2.75 MTPA was commissioned during Dec-2008 at Ariyalur.

2007

2008

2008

2008

2008

2008

Video conferencing facility was commissioned between Puliyur, Karikkali, 29

Ariyalur and Head Office for more effective and faster communications and

2008

project monitoring.

Chettinad Cement Corporation Limited

Paavai Engineering College

30

Brown field Cement plant with capacity 2.75 MTPA was commissioned at Ariyalur during October-2009.

2009

Coal based 1 x 15 MW capacity CPP was commissioned during Jan2010 Erection and Commissioning of 2 Cement Plants in World Record time at ariyalur – 30 months from Bhoomi Pooja to commissioning highest 31

production capacity for cement in a single location at Ariyalur Three No. 15

2010

MW coal based captive power plants commissioned in 18 months at Ariyalur Chettinad Cement Technical team rated No1 by FLS Denmark at Ariyalur. 32

Roller press with ball mill for cement grinding with capacity 0.5 million commissioned during February -2010 at Puliyur.

2010

Brown field Cement Plant with capacity of 2.5 MTPA was commissioned 33

at Karikkali in March 2011 along with coal based 30MW captive power

2011

plant within the same premises Work is under progress for a new Green field production line of 2.5 MTPA 34

cement with 1 No. of 30MW Coal based captive power plant in Kallur Village, Chincholi Taluk and Gulburga Dist of Karnataka state and expected

2011

to be commissioned in year 2012.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHAPTER-III CONCEPTUAL AND THEORITICAL FRAME WORK

Chettinad Cement Corporation Limited

Paavai Engineering College 3.1. CONCEPTUAL AND THEORITICAL FRAME WORK OF INVENTORY MANAGMENT Inventory management is a process of evaluating and controlling method for inventory or stock level of the company. The purpose of inventory management is to diagnose the information contained in the stock book of the company, so as to judge the stock level and control methods of the firm. The analysis and interpretation of inventory management is essential to bring out the stock needed. The inventory management is an attempt to determine the stock and meaning of the stock book statement data so that forecast may be made of the future cost control of the company. The stock evaluation helps to understand how best the organization is functioning with good stock control. The analytical tools generally available to an analyst for this purpose are as follows, 

Inventory turnover analysis



EOQ analysis

OBJECTIVES OF INVENTORY TURNOVER ANALYSIS, EOQ ANALYSIS The objectives of inventory turnover analysis EOQ analysis is to provide information about the stock level and control when purchase of raw materials of an enterprise that is useful to a wide range of purchasing power of raw materials. We have discussed in the previous paragraphs the utility of the components of inventory turnover and EOQ. Later we will us discussing how they are made use of by stock department o To study the stock book of the company o To evaluate the stock position of the company. o To find out the efficiency in utilization of stock materials to produce the goods.

Chettinad Cement Corporation Limited

Paavai Engineering College

USES OF INVENTORY TURNOVER ANALYSIS, EOQ ANALYSIS It is helpful in assessing the stock position and productivity position of a concern. The main objectives of a inventory turnover analysis are to assess 

The present and future stock capacity of a concern.



To give corrective solution for the inventory problem.



To differentiates the investment with EOQ and invest without EOQ for purchasing of the raw material

INVENTORY TURNOVER RATIOS

Inventory turnover ratio A ratio showing how many times a company's inventory is sold and replaced over a period.

Inventory turnover period How often interest is calculated and added on to your investment. If you have two conversion periods, it means that interest is calculated every six months. The inventory conversion period for calculate the interest for credit sales to their agents

ECONOMIC ORDER QUANTITY Economic order quantity is that level of inventory that minimizes the total of inventory holding cost and ordering cost. The framework used to determine this order quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in 1913.The most economical quantity of a product that should be purchased at one time. The EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to the size of the order which gives maximum economy in punches of materials. √ Where

Chettinad Cement Corporation Limited

Paavai Engineering College 3.2 REVIEW OF LITERATURE Bharathi pathak 1991 The bulk of the banking business in the country is in the public sector comprising the state bank of India and its seven associated banks and twenty nationalized commercial banks till 1991, the Indian banking industry was operating in a highly regulated and protected regime. But with the acceptance of Norseman committee recommendation, competition has been injected into the banking industry in two forms. The study has been found that HDFC Bank emerged as a leader in this financial analysis of the year ended 2000-01. It closest competitor was ICICI Bank. Financial performance of the other three, no doubt, lagged behind them, but it by no means, depressing. These Bank obviously, have to focus more improving parameters like credit quality and cost control for the emerge as the top performance. R. Hamsalakshmi-M.Manicham 2000 “The study, it has been found the liquidity position and working capital positions were favorable and good during period of study. Regarding turnover ratio, efficiency in management of fixed assets and total assets must be increased. Regarding return on investment and return on equity was proved that the overall profitability position of the software companies had been increasing at a moderate way. Dr R.Dharmaraj 2003 ”The study airtical “positing in Indian management industry ’’ have concluded that for the last five year, there has been proliferation of international and domestic providence of mutual funds. He says that this increased growth is due to the increasing cash flows among innovative young companies through India.

.Bharathi pathak, Finance India Dec 2003 R. Hamsalakshmi-M.Manicham, Finance India Sep2 2009 Dr R.Dharmaraj Indian journal of finance volume4 Allen and Carolinian (2003)

Chettinad Cement Corporation Limited

Paavai Engineering College Dr Harish kumar 2008 A capital adequacy ratio was constant over a period of time. During the study period. It was observed that the return on net worth had negative correlation with the debt equity ratio. Inters income to working funds also had a negative association with interest coverage ratio and the non performing to net advance was negatively correlated with interest coverage ratio. J R Raiyani 2009 During the periods of high inflation depending on conventional accounting wisdom. May results in firm’s financial information losing its meaning and creation of unrealistic expectation among information users. Dr.Kavitha Chavvali 2009 Inventory analysis of gold exchange trade funds. Mathew T.Jones and Maurice ousted (2007) revised and evaluated pre world war ii current date for countries by treating gold follows on a continuous basis. The historical data of saving and investment was taken over a time period of 1850- 1945. N.Prasanna 2009 Stock performance Aitkin 1997 the external effect foreign direct investment on export with example of Bangladesh where entry of a koala multinational in garment exports led establishment of a member of domestic export firms creating the country’s largest export industry. Awedh 2005 defend that inflator does not have really an effect on the profitability measured by return on equity of foreign banks exerting in Lebanon. In the same way, the author steers that the level of inflation affect more than the return on assets of Lebanese bank than foreign banks in Lebanon. Dr Harish kumar single,The icfai journal of inventory management (vol vii Feb. 2008) J R Raiyani, The infaciS university journal of inventory research (vol viii, No 2 Feb. 2009) Dr.Kavitha Chavvali, Indian journal of inventory (vol 3 No: 2 dec 2009) N.Prasanna, Indian journal of inventory (vol 5 No: 1 Jan 2008) Dr.R.B.Bhatasna, Indian journal of inventory (vol 5 No: 2 Feb 2011)

Chettinad Cement Corporation Limited

Paavai Engineering College Dr Sushil kumar Mehta 2010 The financial performance mutual funds schemes. Jayadew (1996) attempted of evaluate the performance of two growth oriented mutual funds on the basis of monthly return. It was found that master gain performed better according to Jensen and trey nor measures and basis of sharps ratio. Monika uppal 2010 Financial performance factors a survey of the literature shows that the foreign bank performance is affected by factors like the economic and financial environment. Among these factors one can equate the growth rate of gross domestic product, monetary market rate, inflation rate and foreign exchange rate. (Williams 1998).

Dr Sushil kumar Mehta, Indian Journal of inventory vol: 4 No: 2 Feb, 2010 Monika uppal, Indian Journal of inventory vol: 5 No: 1 Jan 2011

Chettinad Cement Corporation Limited

Paavai Engineering College

CHAPTER-IV ANALYSIS OF INVENTORY MANAGEMENT

Chettinad Cement Corporation Limited

Paavai Engineering College

ANALYSIS PART-1 RATIO ANALYSIS (INVENTORY)

Chettinad Cement Corporation Limited

Paavai Engineering College TABLE - 4.1.1 LEVEL OF INVENTORY

Qty in thousand tones S.No

Particulars

2006-07

2007-08

2008-09

2009-10

2010-11

3330.80

5169.86

8392.21

11109.76

11265.50

1387.83

2154.11

3496.76

4629.10

4693.96

(stacker 15 Per cent)

832.70

1292.47

2098.05

2777.44

2816.40

TOTAL(clinker)

5551.33

8616.44

13937.02

18516.26

18775.86

2

Work in process

5386.48

8451.74

13822.02

18351.46

18611.09

3

Finished goods

6251.55

9316.59

14522.32

19216.54

19416.11

Total

17189.36

26384.77

42331.36

56084.26

56803.06

Raw materials Lime stone (stacker 60 Per cent) 1

Iron ore (stacker 25 Per cent) Clay ash

Source: Annual report of Chettinad Cement Corporation Limited

The inventory level was found to be increased trend from 2006-2007 to 2010-2011. The overall inventory level position for the five years is satisfactory.

Chettinad Cement Corporation Limited

Paavai Engineering College CHART - 4.1.1 LEVEL OF INVENTORY

INVENTORY LEVEL OF THE COMPANY(in thousand tons) 25000

20000

15000

10000

5000

0 2006-07

Raw materials

2007-08

2008-09

2009-10

2010-11

Work in process

Finished goods

Chettinad Cement Corporation Limited

Paavai Engineering College INVENTORY TURNOVER RARIO .

The inventory turnover ratio measures the number of times a company sells its inventory

during the year.

TABLE - 4.1.2 INVENTORY TURNOVER RARIO Cost of goods sold S.No

Year

1

2006-07

2663028

487428

5.46 per cent

2

2007-08

2844494

503184

5.65 per cent

3

2008-09

3094850

819401.5

3.78 per cent

4

2009-10

4010580

945491.5

4.24 per cent

5

2010-11

4521886

822538.5

5.50 per cent

(` in lakhs)

Average stock (in tones) Inventory turnover ratio

Source: Annual reports of Chettinad Cement Corporation Limited The inventory turnover ratio was high in the year 2006-07 after that 2007-08 the inventory turnover ratio was decreased. The present value of inventory turnover ratio is good.

Chettinad Cement Corporation Limited

Paavai Engineering College CHART - 4.1.2 INVENTORY TURNOVER RATIO

6 5.652989761 5.49747641

5.463428445

5

4.241793818 4

3.77696404

3

2

1

0 2006-07

2007-08

2008-09

2009-10

2010-11

Chettinad Cement Corporation Limited

Paavai Engineering College INVENTORY CONVERSION PERIOD The inventory conversion period is the time required to obtain materials for a product, manufactured it, sell it.

TABLE – 4.1.3 INVENTORY CONVERSION PERIOD Inventory conversion

S.No

Year

No. of days

Inventory turnover ratio

1

2006-07

365

5.46 per cent

66

2

2007-08

366

5.65 per cent

64

3

2008-09

365

3.78 per cent

96

4

2009-10

365

4.24 per cent

86

5

2010-11

365

5.50 per cent

65

period (in days)

Source: Annual reports of Chettinad Cement Corporation Limited The inventory conversion period is normally indicates the wealth of the company. The company wants to concentrates with its inventory conversion period.

Chettinad Cement Corporation Limited

Paavai Engineering College CHART – 4.1.3 INVENTORY CONVERSION PERIOD

120

100

96 86

80

66

65

64

60

40

20

0 2006-07

2007-08

2008-09

2009-10

2010-11

Chettinad Cement Corporation Limited

Paavai Engineering College

ANALYSIS PART-2 EOQ ANALYSIS

Chettinad Cement Corporation Limited

Paavai Engineering College TABLE-4.2.1 EOQ ANALYSIS FOR THE YEAR 2006-07

EOQ

Total investment with EOQ

Total investment without EOQ

Saving inventory cost

65

1230

81794

138615

56821

1.25

144

980

142345

145225

2880

42

2

144

767

111982

135915

23933

13000

34.5

1.75

153

716

110801

133927

23136

Gypsum

13500

35

1.25

144

869

126223

130688

4465

Bauxite

11500

36.5

1.5

150

748

113322

116173

2851

Annual requirement

O

C

P

Iron Ore

31500

36

1.5

Lime Stones

15000

40

Clay Ash

14000

Sulphur

Item

Source: Annual report of Chettinad Cement Corporation Limited The company’s annual requirement for the year 2006-07 is 101000 tons of raw materials. They using investment with EOQ spent ` 787168. When the same in without investing EOQ is ` 882551. So the company saved ` 169432 in the year 2006-07.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHART-4.2.1 EOQ ANALYSIS FOR THE YEAR 2006-07

145225

160000 138615

142345 135915

140000

133927

130688 126223

120000

111982

116173 113322

110801

100000 81794 80000

60000

40000

20000

0 Iron Ore

Lime Stones

Clay Ash

Sulphur

Gypsum

Bauxite

Total investment with EOQ Total investment without EOQ

Chettinad Cement Corporation Limited

Paavai Engineering College

TABLE-4.2.2 EOQ ANALYSIS FOR THE YEAR 2007-08 Total investment without EOQ

Saving inventory cost

Annual requirement

O

C

P

EOQ

Total investment with EOQ

Iron Ore

33500

35

1.5

75

1250

95626

169675

74049

Lime Stones

13500

41

2

154

744

116064

140115

24051

Clay Ash

16500

55

1.55

154

1100

171050

171050

0

Sulphur

14000

35

1.5

163

808

132916

153304

20388

Gypsum

12500

36

2

154

671

104676

153304

20388

Bauxite

11000

37

2.5

160

571

92787

118752

25965

Item

Source: Annual report of Chettinad Cement Corporation Limited The company’s annual requirement for the year 2007-08 is 103700 tons of raw materials. They using investment with EOQ spent ` 590000. When the same in without investing EOQ is ` 921215. So the company saved ` 195739 in the year 2007-08.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHART-4.2.3 EOQ ANALYSIS FOR THE YEAR 2007-08

180000

169675

171050

171050

153304

160000

153304

140115 132916

140000

118752

116064

120000

104676 100000

95626

92787

80000

60000

40000

20000

0 Iron Ore

Lime Stones

Clay Ash

Sulphur

Gypsum

Bauxite

Total investment with EOQ Total investment without EOQ

Chettinad Cement Corporation Limited

Paavai Engineering College

TABLE-4.2.3 EOQ ANALYSIS FOR THE YEAR 2008-09

EOQ

Total investment with EOQ

Total investment without EOQ

Saving inventory cost

65

1260

83789

153905

7046

167

805

135642

151515

15873

38

1.75 165

807

134567

166445

13878

14000

37

1.75 164

769

127462

154384

26922

Gypsum

15000

35

165

648

108540

166775

58235

Bauxite

11200

36.5 1.75 170

684

117476

128191

10715

Annual requirement

O

C

P

Iron Ore

13500

34

1.5

Lime Stones

13500

36

1.5

Clay Ash

15000

Sulphur

Item

2.5

Source: Annual report of Chettinad Cement Corporation Limited

The company’s annual requirement for the year 2008-09 is 98500 tons of raw materials. They using investment with EOQ spent ` 68646. When the same in without investing EOQ is

`

800543. So the company saved ` 114076 in the year 2008-09.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHART-4.2.3 EOQ ANALYSIS FOR THE YEAR 2008-09

180000 160000

166775

166445 153905

135642

140000

154384

151515 134567

128191

127462

117476

120000

108540

100000 83789 80000 60000 40000 20000 0 Iron Ore

Lime Stones

Clay Ash

Sulphur

Gypsum

Bauxite

Total investment with EOQ Total investment without EOQ

Chettinad Cement Corporation Limited

Paavai Engineering College

TABLE-4.2.4 EOQ ANALYSIS FOR THE YEAR 2009-10

Item

Annual requirement

O

C

P

EOQ

Total investment with EOQ

Iron Ore

34000

36

1.5

95

1271

123231

217605

94374

Lime Stones

12500

37

1.75 174

727

127770

146226

18456

Clay Ash

14000

40

1.5

175

864

152496

164575

12079

Sulphur

16000

38

1.75 174

834

146575

187161

40586

Gypsum

18000

36

2.75 175

686

121938

212190

90252

Bauxite

17000

37

1122

203082

205062

1980

1

180

Total Saving investment inventory cost without EOQ

Source: Annual report of Chettinad Cement Corporation Limited The company’s annual requirement for the year 2009-10 is 111500 tons of raw materials. They using investment with EOQ spent `875092. When the same in without investing EOQ is `1132819. So the company saved `2577276 in the year 2009-10.

Chettinad Cement Corporation Limited

Paavai Engineering College

CHART-4.2.4 EOQ ANALYSIS FOR THE YEAR 2009-10

250000 217605

212190 203082

205062

187161

200000

146226 150000 123231

164575 152496

146575

127770

121938

100000

50000

0 Iron Ore

Lime Stones

Clay Ash

Sulphur

Gypsum

Bauxite

Total investment with EOQ Total investment without EOQ

Chettinad Cement Corporation Limited

Paavai Engineering College

TABLE-4.2.5 EOQ ANALYSIS FOR THE YEAR 2010-11

EOQ

Total investment with EOQ

Total investment without EOQ

Saving inventory cost

1.75 105

1268

135358

268736

133378

1.25 185

869

161852

167588

5736

195

551

109099

157770

48671

40

3.25 185

608

114455

187225

72770

17000

40

1.25 194

1043

203646

221110

17464

18000

39

2.75 200

715

144965

242235

97270

Item

Annual requirement

O

Iron Ore

38000

37

Lime Stones

13500

35

Clay Ash

12000

38

Sulphur

15000

Gypsum

Bauxite

C

3

P

Source: Annual report of Chettinad Cement Corporation Limited

Chettinad Cement Corporation Limited

Paavai Engineering College The company’s annual requirement for the year 2010-11 is 113500 tons of raw materials. They using investment with EOQ spent ` 869375. When the same in without investing EOQ is ` 1244664. So the company saved ` 375289 in the year 2010-11.

CHART-4.2.5 EOQ ANALYSIS FOR THE YEAR 2010-11

Chettinad Cement Corporation Limited

Paavai Engineering College 300000 268736 242235

250000 221110 203646 200000

187225 167588 161852

150000

157770 144965

135358 109099

114455

100000

50000

0 Iron Ore

Lime Stones

Clay Ash

Sulphur

Gypsum

Bauxite

Total investment with EOQ Total investment without EOQ

Chettinad Cement Corporation Limited

Paavai Engineering College

CHAPTER-V SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS RATIO ANALYSIS (INVENTORY)

Chettinad Cement Corporation Limited

Paavai Engineering College  In inventory level of the company, the in inventory level has been increased year by yea. There is no problem in the inventory level of the Chettinad Cement Corporation Limited. 

In inventory turnover ratio the ratios of the year has been finded as low in the years of 2008-09 and 2009-10. After those periods the inventory turnover ratio has slightly increased in the year 2010-11. Even though that level is quite low when compare with 2007-08.



In inventory conversion period is finded as good level. Even though they wants to keep the inventory conversion period as low.

EOQ ANALYSIS



In EOQ analysis for the year 2006-07 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.



In EOQ analysis for the year 2007-08 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.



In EOQ analysis for the year 2008-09 to 2010-11 is good. For this year they followed EOQ with investment for purchase of goods.



In EOQ analysis for the year 2009-10 to 2010-11 is good. In this year the EOQ with investment and EOQ without investment are same.



In EOQ analysis for the year 2010-11 to 2010-11 is good. All years of EOQ is followed only investment with EOQ.

5.2 SUGGESTION RATIO ANALYSIS (INVENTORY)

Chettinad Cement Corporation Limited

Paavai Engineering College 

In inventory level of the company shows the increase of the raw materials, workin-process and finished goods. The inventory level of Chettinad Cement Corporation Limited is well.



In inventory turnover ratio finded some problems. They want sell their product to outside also. Now they use their cement which are produced in Chettinad Cement Corporation Limited for their own purpose. They want to sell that to others also then only the ratio will be increased.



Chettinad Cement Corporation Limited sells the 25 per cent of the cements produced, remaining they used for own purpose. For sales to others they allowed more days as credit to their agents.

EOQ ANALYSIS



In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.



In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.



In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.



In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. The EOQ was finded as same in the concept of EOQ with

Chettinad Cement Corporation Limited

Paavai Engineering College investment and EOQ without investment, even though they followed EOQ with investment. 

In EOQ analysis there is no problems finded in findings for the Chettinad Cement Corporation Limited. Even though they want to keep that situation in upcoming years also. Then only they can retain position.

5.3 CONCLUSION

Chettinad Cement Corporation Limited

Paavai Engineering College The study covers the inventory management for effective inventory control. I have used a technique Economic Order Quantity Analysis named as EOQ Analysis for find out the rate with EOQ and without EOQ investment for purchasing of good in the manufacturing the cement in Chettinad Cement Corporation Limited. Hence the inventory management of the organization quite good. During the year 2006-2011 from this study I concluded that organization would be efsfective inventory management. The study will be use for Chettinad Cement Corporation Limited in various ways.

Chettinad Cement Corporation Limited

Paavai Engineering College

BIBLIOGRAPHY

BIBLIOGRAPHY Chettinad Cement Corporation Limited

Paavai Engineering College BOOKS  Asohok Banerjee - Financial Accounting – A Managerial Emphasis – Excel Books – 2005  Collis – Business Accounting – Palgrave Macmillan – 2007  Khan MY Jain P.K – Management Accounting : Text, problems and cases 4th Edition – Tata McGraw Hill – 2007  Pandikumar – Management Accounting – Excel Books – 2007  Ramachandran N Kakani Kumar Ram – Financial Acccounting For Management – Tata McGraw Hill – 2006  Robert N.Anthony David F.Hawkins Kenneth A.Merchant – Accounting Text and Cases – Tata McGraw Hill – 2007  S.K Bhattacharyya Jhon Dearden – Costing for Management – Vikas Publishing – 2002

 S.N Maheswari S.K Maheswari – Accounting for Management – Vikas Publishing – 2006

WEBSITES  en.wikipedia.com  Info.shine.com  www.ask.com  www.chettinad.com  www.google.com  www.indiacatalog.com  www.inventoryquzz.com  www.reportjunction.com  www.scribed.com  www.yahoo.com

Chettinad Cement Corporation Limited