Rakshika Patel

A SUMMER INTERNSHIP PROJECT REPORT ON
INVENTORY MANAGEMENT
AT
SUBMITTED TO: CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN
GUJARAT TECHNOLOGICAL UNIVERSITY
UNDER THE GUIDANCE OF: INTERNAL GUIDE MR.NISARG JOSHI PROFESSOR OF CPIMR
SUBMITTED BY: RAKSHIKA PATEL ENROLLMENT NO.: 127680592075 MBA SEMESTER II BATCH NO.: 2012-14
SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)
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Date: 03-08-2013
Institutes Certificate
Certified that this Summer Internship Project Report Titled inventory management at GACL is the bonafide work of Ms. Rakshika v. patel (Enrollment No. 127680592075), who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.
Prof. Nisarg Joshi
Dr. Ashvin Dave
Dr. Arti Trivedi
(Faculty-MBA)
(Coordinator - MBA)
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STUDENTS DECLARATION
I, Patel Rakshika Vinodbhai (Enrollment No. 127680592075) hereby declare that the report for Comprehensive Project Inventory Management at Gujarat Alkalies And Chemical Ltd. is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged.
Date: 03-08-2013 Place: Ahmedabad Rakshika Patel
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PREFACE
EXPERIENCE MAKES MAN PERFECT TRAINING IS BRIDGE BETWEEN THE THEORY AND PRACTICE"
As it is said that study with knowledge you know only theoretical work and with experience you know the exact practical functioning and meaning The objective of the practical training at this level is to let the student know the work culture in an industrial environment and prevailing business practice and develop them on a practical basis as well as theoretical. New technologies arising are helpful to get a batter practical knowledge and experience. Management study can never be completed without practical training and perfection is the basic necessity of a management student. Hence, training provides a golden opportunity with the working environment. Training gives meaning to the knowledge of student, industrial training is the first step of student toward the giant world and helps student to prepare themselves for the future and supply their knowledge in practical life. Fortunately, we got golden opportunity to visit and complete our training at Gujarat alkalies and chemicals limited at Ranoli, vadodara. Hence, we got chance to see the department and imbibe a lot learning of the subject. We learn that management is manage + man +t (time, task, etc.). We all agree with this statement and wish to include that successful management of complex organization cant be possible through intuition of trial and error. So, theoretical knowledge should be supplemented by practical experience. The main objective of practical at BBA level is to develop skill in students by helping them to gain real life knowledge about the industrial environment and business practice.
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ACKNOWLEDGEMENT
Here, we get the golden opportunity to express our sincere gratitude to the people who supported me in completing this project successfully.
First of all, I would like to thank Mrs. Aarti (Associate director, MBA Program, Gujarat technological University Of Ahmadabad) for giving me this opportunity to explore and gain knowledge in the field of corporate world.
It gives a pleasure being a part of Gujarat Alkalies And Chemicals Ltd. in span of six week (01-06-2013 to 15-07-2013). We owe our sincere gratitude to Mr. Rajkumar (Officer, H R Department.) for giving us the permission to undergo training in such an esteemed organization and also for providing guidelines without which this project could not have been completed.
We would also like to thank Mr. N.R.Desai and Mr. Nisarg Joshi for acting as a guide and mentor during the entire duration of my project.
And at the last but not least we would like to pay my acknowledgements to all the corporate executives for taking out their precious time from their busy schedule and providing me with relevant information which contributed significantly in my project analysis.
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TABLE OF CONTENT:
SR. NO. I 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 II III. 3.2 3.2.1 IV V 5.1 5.2 5.3 5.4 5.5 5.6 VI. VII VIII IX X. XI PARTICULARS Introduction of the company History Of The Company Company Profile Board Of Directors ISO Certification, Vision And Mission New Logo Of GACL Corporate Image SWOT Analysis: Department At GACL Product Profile Milestones Of GACL National Awards: 5 s model Policy of company Introduction of Finance Department Introduction of Inventory Management Introduction of topic Inventory Management at GACL Literature review Research methodology Subject of the study Objectives of the study Research designs Source of data Period of the study Limitation of the study Data analysis and interpretation Finding Recommendations Conclusion References Annexure PAGE NO. 7-38 8-11 12-15 16-17 18 19 20-23 24 25 26-27 28-30 31-34 35 36-39 40-49 50-78 51-58 59-78 79-83 84-86 85 85 86 86 86 86 87-96 97-98 99-100 101-102 103-106 107
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HISTORY OF THE COMPANY
Gujarat Alkalies And Chemical Ltd. (GACL) is one of the largest producers of the caustic soda in the country. Gujarat Alkalies and Chemicals Limited (GACL) was incorporated on 29th March, 1973 in the State of Gujarat by Gujarat Industrial Investment Corporation Limited (GIIC), a wholly owned company of Govt. of Gujarat, as a Core Promoter. GACL has two units located at Vadodara and Dahej, both in the state of Gujarat. The Company commenced its operations in 1976 with 37,425 MTPA Caustic Soda Plant based on the then, state-of-the-art Mercury Cell process at its Plant which is situated 16 km North of Vadodara near Village Ranoli on the main Railway track route between Ahmedabad and Mumbai. Right from the inception, GACL has been following the strategy of continuous capacity expansion in core areas. The first stage expansion of the caustic soda plant raising the capacity to 70,425 MTPA was undertaken in October, 1981 followed by a diversification program to produce 200 MTPA of sodium cyanide in December, 1982.
In 1984, the second stage expansion to increase the capacity of caustic soda plant to 1,03,425 MTPA was undertaken. Simultaneously, the company undertook the diversity project for manufacture of 10,560 MTPA of chloromethane using chlorine, a co-product of the company and in 1991, the capacity of the chloromethane production was doubled.
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As power is the major input for production of caustic soda and constitutes about 65%-70% of the cost production, the company along with other corporation likes GSFC, Petrofils Cooperative Ltd. And Gujarat Electricity Board promoted a gas based power unit in vadodara under the name of Gujarat Industrial Power Company Ltd. (GIPCL).during the year 1985. As a promoter of GIPCL, the company gets low cost power, as the plant is gas based and is depreciated. Since production of caustic soda is highly power intensive, in order to reduce power cost and to eliminate mercury pollution, the company during the year 1989 converted one of its cell house producing caustic soda from mercury cell technology to environment friendly membrane cell technology, thereby eliminating the total use of mercury. The capacity of caustic coda was also increased to 13200 MTA The convention of second mercury cell membrane cell was carried out during march, 1994, thereby eliminating the total use of mercury from the complex for production of caustic coda and increasing the capacity of the plant along with this conversion to 17000MTA including potassium hydroxide facility As part of this Membrane Cell Conversion Project, a new facility for manufacture of 16500 MTA of Potassium Hydroxide Lye based on Membrane Cell was also set up. The Company has further set up facility for converting part of this Caustic Potash Lye into Potassium Carbonate with a capacity of 13200 In order to add further value to its products, the company had set up manufacturing facility for production of 11000 MTA Hydrogen Peroxide (100%) at Vadodara Complex during the year 1996 to utilize Hydrogen gas, which is a co-product from Caustic Soda Process.
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In 1995, as a part of diversification program and to meet the growing demand of its products in the State of Gujarat and nearby areas, the Company had set up a plant for manufacture of Technical Grade Phosphoric Acid with capacity of 26400 MTA (85% Phosphoric Acid) at a new location at Dahej, District Bharuch. The Company also set up Membrane Cell based grass root Caustic-Chlorine Unit with a capacity of 100000 MTA at Dahej. Along with this, a captive 90 MW co-generation Power Plant was set up so as to ensure uninterrupted and low cost power for its captive operations. It has integrated manufacturing facilities for caustic soda, chlorine, hydrogen gas, hydrochloric acid, chloromethane, hydrogen peroxide, phosphoric acid, carbonate, sodium cyanide, sodium Ferro cyanide. The dahej unit also has 90 MW captive power plants (CPP) for regular and economical power supply.
The year 2000, Gacl started the production of caustic potash flakes in Baroda. In 2001, there was increase in production capacity of H2O2 to 1259 MTPA. For the year ended 31.03.2009, the company achieved its highest ever turnover (including excise duty) of rs.1,564.13 cr., an increase of about 18.28% from rs.1,322.39 crore in the corresponding previous year. Other income, for the financial year 2008-09 had been rs.43.25 crore, as compared to rs.69.75 crore of the previous year. other income includes rs.18.22 crore being VAT credit under sales tax incentive scheme of the government of Gujarat and allowed as remission under Gujarat value added tax act,2003,rs.3.79 crore compensation for CTC(Carbon Tetrachloride)phase out under Montreal protocol system and rs.6.79 crore for receipt of dividend.
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DOW-GACL joint venture: Gujarat Alkalies And Chemicals Limited (GACL), a Company promoted by Govt. of Gujarat and leader in Caustic Chlorine in the country with a basket of 26 diversified products, and Dow Europe GmbH, have signed a Memorandum of Understanding for exploring a long term and strategic business relationship in the area of chlorinated organic based on the inherent strength of both the Companies. On 16th April, 2008, the company signed a joint venture agreement with DOW Europe GmbH for setting up a 200,000 TPA chloromethane plant at dahej at an estimated cost of rs.600 crore with 50-50 equity partnership. A joint venture company viz., Dow-GACL Sol Venture Ltd. Has been incorporated on 1st julty, 2008. The new company is expected to start its manufacturing operation by mid 2012. Dow-GACL Sol Venture Limited the Joint Venture with DOW Europe GmbH for setting up a 2,00,000 TPA Chloromethane Plant at Dahej at an estimated Cost of `750 Crore with 50:50 Equity partnership is progressing as per schedule and the engineering activities of this project are going on at full stream. The project is expected to be commissioned in 2013. Other projects: The company has already announced its plans for a 90-100 MW captive power project, 200000TPA caustic soda project, 14000 TPA hydrogen peroxide project, 150000 TPA Polygons project at an investment aggregating to about rs.2600 crores over a period of next three to four years besides JV participation between three state PSUs viz., GSFC, GNFC and GACL for Phenol/Acetone/Poly Carbonate Projects. The Company is also considering putting up a 600 TPD Chlor-Alkali Project, 20000 TPA Sodium Chlorate Project, 100 MW Captive Co-generation Power Plant, 8000 TPA Hydrazine Hydrate Project and 150 KTPA Polygons project at an investment aggregating to about `2,600 Crores over a period of next three to four years. Further a mega project for Phenol/Acetone/Poly Carbonate is being envisaged in the form of a Joint Venture company of GSFC, GNFC and GACL
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COMPANY PROFILE
Name:
Gujarat Alkalies and Chemicals Limited.
Registered office:
P.O. Petrochemicals-391346 Dist. Vadodara, Gujarat, India Phone-+91-265-2232681-2 Fax-+91-265-2232130
Vadodara complex:
P.O. Petrochemicals-391346 Dist. Vadodara, Gujarat, India. Phone-+91-265-2232681-2 Fax-+91-265-2232130 P.O. Dahej-392 130 Tal-Vagra, Dist. Bharuch, Gujarat, India. Phone-+91-2641-256315-6-7 Fax-+91-2641-256220 Joint Venture, Public Service Unit (PSU).
Dahej complex:
Form of organization:
Size of the organization:
Large Scale organization.
Company secretary and General manger (legal): Shri V. L. Vyas Gujarat Alkalies and Chemicals Limited Phone no: 0265-2230212 Fax no.: 0265-2231208 Emil-id: investor_relation@gacl.co.in
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Auditors:
Messrs Prakash , Chandra Jain & Co. Chartered Accountants, Vadodara Messrs Amarchand & Mangaldas . & Suresh A. Shroff & Co., Mumbai.
Solicitors:
Cost auditors:
Messrs R. K. Patel & Co, Cost Accountants, Vadodara.
Registrar & share transfer agents :
MCS ltd. (unit: GACL) Neelam apartment, 1st floor 88, sampatrao colony, productivity road, vadodara 390 007 Gujarat (India) Phone : (0265)-2339397, 2314757, 2350490 E-mail : mcsbaroda@yahoo.com.
Total manpower strength at GACL: Manpower is the real strength of any organization & that is so in GACL also. The total manpower strength at GACL includes both management & Non- Management Category. AT BARODA Management Level Non- Management Trainees & contractual AT DAHEJ Management Level Non- Management Trainees & contractual STRENGH 392 employees 435 employees 100 employees STRENGH 151employees 441 employees 108 employees
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Thus, the total manpower strength at GACL has 1627 employees. Competitors: Main competitors of GACL: Atual product limited. Comfad alkalies limited. Southern petrochemicals limited. Modi alkalies and chemicals limited. Century chemical limited. Gwalior rayon & chemical limited. Gujarat heavy chemical limited. National alkalies and chemical limited. Punjab alkalies and chemical limited. Standard alkalies and chemical limited. Tata chemical limited. Saurastra chemical limited. Punjab national fertilizer & chemical limited Banks: State Bank of India(SBI) Central Bank of India(CBI) AXIS Bank. IDBI Bank. UCO Ltd. Indian Bank. HDFC Ltd.
Dealers list: Network of dealers for GACL, area wise: Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Total Dealers Region Vadodara Ahmadabad Surat Vapi Saurastra Maharashtra North India Andhra Pradesh Bangalore Madhya Pradesh Kolkata Rajasthan Chennai No. of Dealers 12 20 01 03 02 16 13 01 01 01 01 01 06 78
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Customers: Fertilizers Gujarat State Fertilizer Corporation Gujarat National Fertilizer Corporation IFFCO Deepak Nitrite Deepak Fertilize Pharmaceuticals Dr.Reddys Aurdide Pharma Torrent Ranbaxy Sun Pharma Lupin Laboratory Textile Arvid Mills Ltd. Ashima Industries Ltd. Indian Rayon Corporation Limited. Baroda Rayon Corporation Limited. Agro- Chemicals Gujarat Agrom Chemicals Limited. Meghumani Organic Targo Arti Industries Bilag Chemicals Refinery IOC Limited. IPCL Reliance Hajira And Jamnagar Detergent HLL Godrej WF Limited Nepal Lever Nirma Papers JK Papers BILT Rams New Print Tamil Nadu Pulp Industries.
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BOARD OF DIRECTORS
Name Address (R) Address (0) Phone Nos.(O)FFICE/(T)LX/ (G)RAM/(F)AX/(M)OBILE/ (R)ESIDENCE O-07923250301 / 23250303 F-079-23250305 E-mail: csguj@gujarat.gov.in
Dr. Varesh Sinha I.A.S Chairman, GACL
15, Sumangalam Society, Drive-in Road, Near Asia School, Thaltej, Ahmedabad 380 004
Chief Secretary Government of Gujarat Block No. 1, 3rd Floor, New Sachivalaya, Gandhinagar - 382 010
Shri D. J. Pandian I.A.S
KH-214, Sector - 19, Gandhinagar 382019
Principal Secretary Energy & Petrochemicals Department, Government of Gujarat, Block 5, 5th Floor, New Sachivalaya Gandhinagar - 382 010 Principal Secretary Finance Department Government of Gujarat Block No:4, 5th Floor New Sachivalaya Gandhinagar - 382 010
O-079-23250772-3, 23235571 F-079-23250797, 23251755 E-mail: secepd@gujarat.gov.in
Dr. Hasmukh Adhia I.A.S
12, Judges Bunglow Bodakdev Ahmedabad 380 054
O-079-23250611/13 F-079-23250605 R-079-26840009 M-99784 05430 E-mail: secfd@gujarat.gov.in
Shri G. C. Murmu I.A.S
Plot No. 11 Sector-2 Gandhinagar 382 019
Chairman & Managing Director, Gujarat Industrial Investment Corporation Ltd, 8th Floor, Block No-11, Udyog Bhavan, Sector 11, Gandhinagar-382 011
O-079-23237712/13, 23249641/441, 23252215 F-079-23232316 F-079-23236230 R-079-23254849 M-94273 06119 E-mail: giicmail@wilnetonline.net gcm1@rediffmail.com website : www.giicindia.com
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Jolly Maker Apartment No. 2 Flat No. 21 Cuffe Parade Colaba Shri G. M. MUMBAI-400 Yadwadkar 005 Nominee of IDBI Ltd. Plot No. 120 Iscon Mega City Near Sterling Hospital BHAVNAGAR364 001
Chief Genaral Manager, Large Corporate Group IDBI Bank Ltd. IDBI Tower, 9th Floor, WTC Complex Cuffe Parade, Colaba MUMBAI-400 005
O-022-22154139 66552184 F-022-22186966 M-098980 05959 E-mail: gm.yadwadkar@idbi.co.in
M-098111 08447, 098739 57590 R-0278-6499072 E-mail: sdlala1924@gmail.com
Dr. Sukh Dev
Shri J. N. Godbole
604-A, Cottage Land CHS, Plot No. 16/A, Sector 19/A, Nerul (East) NAVI MUMBAI 400 706 . "GACL House", 41-A, Urmi Society, Productivity Road, Vadodara - 390 007 Managing Director, Gujarat Alkalies and Chemicals Limited, PO-Petrochemicals-391 346, Dist - Vadodara
R-022-27720565 M-098210 53454, 09324 053454 F-022-27708148 E-mail: jayantgodbole1945@rediffmail.com jayantgodbole1945@gmail.com
O-0265-2232801, 2230030 F-0265-2232130 E-mail: md@gacl.co.in
Shri M. S. Dagur I.A.S Managing Director
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ISO CERTIFICATION, VISION AND MISSION
ISO CERTIFICATION
GACL has got quality certificates under ISO CETIFICATION. ISO certification is given by BIS body. For this first of all initial application is sent to the concern body. On the basis of this application after initial auditing they will give ISO certificate. IS/ISO 9001-2000 is for proper maintenance and documentation. IS/ISO 14001-2004 is for SHE policy i.e. safety, health and environment. IS/ISO 18001-2000 is for occupational safety and health hazards.
VISION
To continue to be identified and recognized as a dynamic, modern and eco-friendly chemical company with enduring ethics and values
MISSION
To manage our business responsibly and sensitively, in order to address the needs of our Customers & Stakeholders. To strive for continuous improvement in performance, measuring results precisely, and ensuring GACL's growth and profitability through innovations. To demand from ourselves and others the highest ethical standards and to ensure products and processes to be of the highest quality
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NEW LOGO OF GACL
What new logo of GACL says? Taking into consideration the aspect of the global warming and need to address to the cleaner and green environment the logo of the GACL company has been conceived to
represent a responsible corporate. The abbreviated GACL goes in different fashion. G represents, globe, which encompasses the vision, mission and objectives that the corporation tries to achieve. A represents, the core competence of the company as a manufacture of alkalies and related chemicals. C represents chemicals. L represents limited liability. Promoting green technology retries GACLs motive to envision a green earth and a clean environment. The green attitude of company is addressing the aspects of global warming. The colors blue and yellow reflects the rising temperature that can adversely affect some region with excessive rainfall while some others with beat waves and drought.
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CORPORATE IMAGE: GACL is a forward-looking company, set up in the year 1973. 30 years is a long time. Long enough to test the character of any organization. Be it recession, inflation, increased competition or changing governments, we've lived it all. And for sure, all the turbulences have made GACL a stronger and a progressive company. Our stern resolve to manufacture quality chemicals and trek customer satisfaction to a new height has yielded unbelievable results. From an initial capacity of 37,425 TPA Caustic Soda, we have grown to be the largest producer in India, with a capacity of 3, 58,760 TPA. Spread over 2 complexes at Vadodara and Dahej. Knowing that the time ahead may prop-up newer hurdles, GACL has already started to diversify and expand its existing infrastructure to consolidate its supremacy in ChlorAlkali and other integrated downstream products. PEOPLE: OUR VALUED ASSETS
World-class technology and self-reliance are baseless without brains that work ardently to produce high quality chemicals. People are our real assets, whom we nurture and harness to get the very best out of them. Our conviction is: People make the organization. A sense of belonging is a must for dedication and loyalty. Employees give their best when the company cares for them. Ethical and transparent operations have contributed to a very great extent in bringing a turnaround at GACL. Excellent labor relationship helped the company in achieving very high manpower production turnover per employee per annum. This is also a result of a thin and lean workforce, which is lead by the professional management. GREEN ALL THE WAY Nature bestows human race with umpteen benefits. Clean air, Lush green trees, GACL's commitment towards the environment is undying. Safe and unadulterated nature is high on our list of priorities; we are an organization with Green Attitude.
A dedicated senior executive heads a Safety and Environment Department to maintain high standards of safety and a harmonious relationship between environment and technology. The company has planted more than 1, 00,000 plants and it keeps maintaining
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the same. With tree plantation being a regular feature, it plants 1000 sapling every year. Rainwater harvesting and collection is a part of routine activity at GACL. This water is then utilized for the maintenance of green belts. The vermin culture concept has been implemented in the premises to convert waste generated by the canteen, gardens and plants to vermin compost. GACL has been a pioneer in adopting the environment friendly and energy efficient technologies. It converted to Membrane Cell Technology from Mercury Cell Technology way back in 1989 and since 1994 all the plants are running on Mercury free Membrane Cell Technology. As a matter of strategy, the company has placed sensors at strategic locations in and around the complex to monitor ambient air quality. For disposal of solid waste, GACL has secured dedicated landfill site conforming to the hazardous Waste Management Act. Being a member of Effluent Channel Project, it releases its liquid effluent in this channel and adheres to the necessary parameters of the Gujarat Pollution Control Board before discharging it into the channel. World Class Technology Technology moulds generations. Our endeavor to continually upgrade technology has allowed us to optimize resources, thus bringing down the cost of production and increasing revenues. Acquired through the best and prestigious collaborations means that they meet international specifications for our products Besides, our manufacturing plants are ecofriendly, which ensure that the environment is well looked after. The location of both the plants 'Vadodara' and 'Dahej' has dual advantage of proximity to the raw material suppliers and the end users. While the capacity utilization is about 70% in the Caustic Soda Industry, GACL's plants are working at almost 100% capacity.... thereby utilizing the assets to the fullest extent. Further the company takes pride in having honored its commitments without fail. The company has made its presence felt across the globe even against stiff competition by exporting products to USA, Europe, Australia, Africa, Far & Middle East countries, China & South Asian Markets. GACL has adapted to the age of information technology for fast and uninterruptible information exchange. Both plants of Vadodara and Dahej are connected by VSAT and lease lines. This provides on-line information at any given point of time.
SELF-RELIANCE Various factors that influence the success of any corporation, the self-sufficiency rank the foremost. We at GACL understand this all too well. Power, being a major input to the electrolytic Caustic Soda process, we promoted a joint captive power plant, Gujarat Industries Power Company Limited to meet our energy requirements for Vadodara Complex.
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Our complex at Dahej is also integrated with a captive co-generation plant of capacity of 90 MW. Cost effective natural gas was substituted as fuel in place of Naphtha for Captive Power Plant. The plant load factor has increased and surplus power is supplied to State grid. This has helped achieve economies of operations. SPREADING OUR WINGS The unshakeable desire to deliver quality products to our customers means that our products are well accepted, both in India and the world over. Domestic customers are assured of prompt delivery of quality products at their doorsteps through our well-established network of dealers and consignment stockiest. Overseas customers are serviced directly or through agents. Caustic-Chlorine being it's prime product, the company has diversified into value added products like Sodium Cyanide, Chloromethane, Hydrogen Peroxide, Potassium Carbonate, Phosphoric Acid, etc. These value added products provide dual benefit to the organization by hedging against cyclical fluctuations in the Chlor-Alkali Industry. GACL sells 24 products today, maintaining its leadership in Caustic-Chlorine industry with 16% market share and has emerged as a major player in the segment of value added products. THE ZEST TO INVENT The mercurial nature of the chemical industry demands continuous invention and innovation. We have a well-equipped R & D centre, recognized by the department of Science and Technology, Government of India, working on new and safer processes/ technologies, value added products and import substitutes. We are the proud recipients of national awards for:
Excellence in research and development from the department of Science and Technology, Government Of India. Pollution Control and Environment Protection from Chemtech Foundation for developing a process for manufacturing Sodium Ferro cyanide from the waste stream Sodium Cyanide process. Novel energy conservation and integration programme in chemical plant from the Indian Chemical Manufacturers Association. GACL is a pound recipient of "National Energy Conservation Award" by Bureau of Energy Efficiency (BEE), Ministry of Power, Govt. of India for three consecutive years since 2004. At Dahej, the system to recover Calcium Chloride from waste of the Phosphoric Acid Plant reduces the discharge of aqueous effluent to the sea.
QUALITY MATTERS We are committed to utmost customer satisfaction, which is the driving force for progress. Adhering to international standards, with no laxity in any sphere, we are successfully a favored supplier for our range of products. To consolidate this and to gain international credibility, we had obtained quality system certificate under IS/ISO 9001:2000, ISO 14001:1996 and IS 18001:2000 .
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GROWTH STRATEGY To remain the largest producer in chlor-alkalies. To maintain highest quality & be the first choice of the customer To remain in the lowest production through captive power To have downstream value added product & flexibility of product for better margins & winder market.
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SWOT ANALYSIS
Strengths: > > > > > > > > > > > Single largest producer of caustic soda in the country with the production capacity of 27000 TPA, having industry share of 13.75% Leader in chlor_alkali industry Low cost power from GIPCL Baroda. Integrated downstream plants In house research and development Dedicated manpower Proximity to raw material source and market. Excellent industry relation. Strong and committed workforce. The company has been awarded ISO 9001:2000 certificate from 20 th Nov. 2003. National awarded by government of India 1993 for contribution of R&D department of the company in the pollution control environment protection.
Weakness: > > > > High price Highly power intensive as power Companys products in commodity group and therefore the price are purely market driven The supply of natural gas for the power plants varies depending upon availability.
Opportunities: > Foreign market demand for companys product in foreign market is high therefore GACL has golden opportunity to gain share market by exporting its products to foreign countries. Excess capacity in power plant will help in setting up downstream projects for increasing the capacity of caustic soda production
>
Threats: > > > > The chlor_alkali industry is cyclical in nature. The industry has faced overcapacity in the country Dependence on the performance of consuming sectors. Threat of the impact of the slowdown Indian economic growth
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DEPARTMENT AT GACL:
1.) Technical department Production department Engineering department Quality control department Safety &environmental department Research and development department
2.) Non-technical department Purchase department Marketing department Export department Dispatch department Human resource department Security department Secretary department Management system (MS) department Finance department
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PRODUCT PROFILE
Caustic Soda Group Caustic Soda Flakes Caustic Soda Lye Caustic Soda Prills Sodium Hypo Chlorite Liquid Chlorine Compressed Hydrogen Gas Hydrochloric Acid Caustic Potash Group Caustic Potash Flakes Caustic Potash Lye Potassium Carbonate Chloromethane Group Methyle Chloride Methylene Chloride Carbon Tetrachloride Chloroform Sodium Group Sodium Cyanide Sodium Ferro Cyanide
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Hydrogen Peroxide Group Hydrogen Peroxide Bleach win Phosphoric Acid Group Phosphoric Acid Calcium Chloride Flakes Calcium Chloride Powder Others Dilute Sulphuric Acid Scale win Aluminum Chloride Anhydrous New Products Poly Aluminum Chloride Stable Bleaching Powder
Power and salt are major raw materials for the manufacture of caustic soda using electrolyte process. Major reasons for location is: GACL has ensured self located to west cost & therefore has advantage of being close to source of major raw material i.e. salt. GACL has also an advantage in terms of quality & price for selling its products. The raw materials used for production is also manufactured by GACL itself. GACL sells its products to companies producing chemicals, fertilizers, pharmacy co. etc. GACL also export its products to countries like Tanzania, Nepal, Sri Lanka, Turkeys, Mauritius, etc.
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MILESTONES OF GACL
YEAR 1973 1973 1976 1981 1982 1982 1986 1987 1989 1992 1994 1995 1996 1998 2000 2001 2003 2004 2005 2006 EVENTS Inception of the company Foundation store of caustic chlorine plant Commissioning of 37425 MTA caustic chlorine plant Expansion of caustic chlorine plant Commissioning of 2nd stage expansion of caustic chlorine plant Commissioned Sodium Cyanide plant with a capacity of 2000 TPA. GACL went in for a diversification project to manufacture Chloromethane. Commissioned Caustic Soda Flaking unit with a capacity of 26400 TPA. First revamp to energy efficient and environment friendly Membrane Cell technology. Commissioned Sodium Ferro cyanide plant (100 TPA) based on in-house Research & Development. Converted balance manufacturing facilities to Membrane Cell & expanded its Caustic Soda capacity to 153500 TPA. Commissioned caustic potash plant with a capacity of 16500 TPA. Expanded caustic flaking unit to 53000 TPA. First certification IS/ISO 9002:1994. Phosphoric Acid Plant started production at Dahej. Hydrogen Peroxide plant commissioned. Commissioning of 300 TPD of Caustic Soda & 90 MW power plants at Dahej. Commissioning of Caustic Potash/Flakes, Vadodara. Increase in H2O2 Capacity to 12540 MTA. Up gradation of ISO Certificate from 9002:1994 to 9001:2000. ISO 14001:1996 Certificate for Vadodara Complex and Dahej Complex. Commissioning of Calcium Chloride plant at Dahej. IS 18001:2000 Certificate for Vadodara Complex and Dahej Complex. Commissioning of poly aluminum chloride plant at dahej complex
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2007 Commissioning of poly aluminum chloride at Vadodara with same capacity Commissioning of hydrogen peroxide at Dahej with capacity of 12540 TPA Commission Anhydrous aluminum chloride with capacity of 16500 TPA 2008 Commissioning of wind power project at Moti Sindhodi , Kutch on 13/02/2008 with 23.75 MW. Rs.122.02 crores 2009 Commissioning of second phase of wind mill project of 39 MW at Gandhidham Started on12/01/2009. In the month of February 2009 all WTG have been commissioned 2009 RA-10 commissioned in the month of October in MC-11 2009 Dr. M fitter commissioned on 21/11/2009 2009 G-58 electrolyses (E-1, 2, 8 and partly) are commissioned on 15/12/2009. 2009 One more electrolyses commissioned for 50 TDP production of CSL stated at Dahej CSL plant 2010 21-MW wind mill project commissioned on 22/03/2010 2010 50 TDP Caustic Soda De-bottlenecking Project 2010 200 TDP Waste Heart Caustic Evaporation Project 2011 25 TDP CaCl2 plant at Sodium Cyanide complex of Vadodara has commissioned on 20/01/2011 2011 25 TDP stable bleaching powder plant at Dahej is commissioned on 02/03/2011 2011 42 TDP Hydrogen Peroxide plant (Phase 11) is commissioned at Dahej on 27\06\1
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NATIONAL AWARDS
GACL got following national awards:
1. Gujarat Chemicals Association - Excellent achiever Award for valuable contribution in Chemical Industry received in February, 2010 2. Indian Chemical Council Award for Excellence in Energy Conservation and Management-2008 received in December, 2009. 3. The Gujarat Safety Council Award for Zero Accident during the year 2008 for Vadodara and Dahej Complexes received in December, 2009. 4. Certificate of Honor for achieving more than 30 lakh accident free man hours of operation in Vadodara Complex from The Gujarat Safety Council received in December, 2009. 5. Certificate of Appreciation for achieving 10 lakh accident free man hours of operation in Dahej Complex from The Gujarat Safety Council received in December, 2009. 6. Century International Quality ERA Awards for the year 2009 by Business Initiative Directions received in December, 2009. 7. Certificate of Merit for Export Performance and Promotion for the year 2009 received from Federation of Gujarat Industries, Vadodara.
Sr. No
Name of the Award
Purpose of the Award
Name of the Organization
Date of receiving the Award
1. sector. 2.
YEAR 2008 National energy conservation award (2nd prize for vadodara unit) in chlor-alkali
GACL got an award named amity corporate excellence award for excellence
working of organization by amity international business school.
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Year 2007 3. AIOE industrial relations award 2005-06 corporate initiative in the field of industrial relations. All India origination of employers, Govt. of India Vadodara corporation. 5 January 2007
4.
Genentech corporate excellence award 2007 Gujarat state safety performance award National award
Chemical sector of vadodara unit.
22 February 2007
5.
Shield and certificate of honor for accident free days
Govt. of Gujarat
2007
6.
Excellence in cost management-2006 for manufacturing unit in the category of public sector.
Institute of cost and work account of India ICWAI, Govt. of India Bureau of Energy Efficiency (BEE),Min. of Power, Govt. of India
2 July 2007
7.
National Energy Conservation Award - 2007 : Second Prize in the Chlor-Alkali Sector
For consistent performance on energy conservation.
14 December 2007
Year 2006
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8.
AIOE Industrial Relations Award 2005-2006
Corporate initiative in the field of industrial relations, social security and promoting Bi-partism
All India Organization of Employers
05 January 2007
9.
National Energy Conservation Award 2005: National Level (Chlor-Alkali Sector) 1st prize (Vadodara Complex) & Merit Certificate (Dahej Complex)
Energy Conservation at Vadodara Complex by His Excellency the President of India.
Bureau of Energy Efficiency (BEE),Min. of Power, Govt. of India
14 December 2005
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10.
Merit Award for ICWAI (Vadodara)
National Merit Award for Excellence in Cost Management 2004
Institute of Cost & Works Accountants of India (ICWAI), New Delhi
12 March 2005
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5 S MODEL
The 5 S model of GACL for obtaining better & improved results into : A neat and clean factory Higher productivity Reliable delivers Improved safety Meet deadlines Constant growth Profit Maximization Higher quality
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POLICIES OF COMPANY
QHSE Policy Purchase policy Energy Policy HIV/AIDS Policy Information Technology Policy Human resource Policy Training & Development Policy Corporate Social Responsibility Policy Supply Chain Policy
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FINANCE DEPARTMENT
Organizational hierarchy:
Chief Execut ive General Office Manager rs Departmental General Manager Chief Manager
Senior Manager
Senior Officer
Officer
Junior Officer
Senior Assistant
Junior Assistant
Clerk
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FINANCE DEPARTMENT:
In GACL finance department is divided into 10 sections: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Central Accounting Section, Banking Section, Loan Section, Insurance Section, Sales Accounting Section, Bill Passing Section, Establishment Section, Costing & Budgeting Section, Inventory Accounting Section, Internal Audit Section (outsourced)
(1) Central accounting section: This section verifies the accounts maintained by all the departments. Central accounting section is the heart of finance department. It prepares P&L A/C and balance sheet from the information collected from all the finance sections. Financial statements and accounts are prepared on monthly, quarterly, & annual basis and are sent to SEBI. Profitability is calculated on day-to-day basis and is reported to managing director. The other functions of this section are: Verify the accounts maintained by all the departments and make financial analysis of the statement and also give suggestion and recommendation. It also maintains fixed assets register and also calculate depreciations. It also works upon different rations and does ratio analysis. A dividend analysis is done here. This section is also involved in annual report preparation and provides all the required information to the management. Prepare profitability statement every day to check, whether the company is going correctly as per the targets (2) Banking section: Banking section checks out the details of the banking transactions and maintains the balance of bank a/c. The basic tasks performed by this section are: It prepares bank reconciliation statement. It collects cheque from the marketing department. It makes payment to the suppliers. GACL users E-payment for ease of payment. The cash credits are monitored by this section. So, that interest payment can be controlled. Credit limit of the company dep0ends on the negotiated days contract.
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GACL CO. enjoys cash credit facilities through working capital limit Up To Rs. 130 crore with 7 banks. To secure cash credit, co. has to decide cycles. GACL has 60 days cycle based on nature of production. GACL gives credit management appraisal report to bank to secure cash credit. Cash credit limit is for 1 year co. has to renew cash credit limit every year based on operation expenditure. (3) Loan section:
This section deals with all the financial institutions and banks for the financial requirement of the company. It applies for short term or long term loan of the company and repayment is also taken care of. Tasks performed by this section are as follows: a.) Preparation of project report and corporate plan of company to obtain financial assistance for companys new project. The project is only approved after proper market appraisal, technical appraisal, financial appraisal, economical appraisal, managerial appraisal. The report includes the present and future estimates. b.) Give project report to financial institution for acquiring finance. This section will negotiate with bank for payment term & rate of interest and make long term arrangements for new project. For this GACL prepare financial projection i.e. how it can generate profitability. Total profit= existing project profit = new project profit. Then GACL CO. send application to bank, bank will see & if interested it will call co. to provide financial assistance. Terms & conditions of banks will have to be followed like: Repayment schedule will have to be submitted. Other charger will have to be paid. Submit the securities in case if secured loan or assets are borrowed. Company can borrow 3 types of loans: Long term loan Short term loan External commercial loan(EC) GACL right now can avail 5-7% short term loan and raise commercial papers4.31%/4.40% for the period of 90 days. Being GACL the government co. it can borrow from GSFC (Gujarat state financial service).
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c.) Credit rating exercise. To rate the credit limit of company, co. appoints any government authority. GACL has appointed CARE (credit and analysis research limited) for this purpose. And it will negotiate with banks for interest rate etc. d.) Timely payment. This section also looks after the timely repayments of loan borrowed. If timely payment is not done all assets will get converted into NPA (non-performing assets) and company would be declared as a default in CIBIL (4) Insurance sections: Tasks performed by this section are: 1.) To cover companys assets. To cover maximum coverage with minimum insurance cost, there are two policies for covering assets: a.) Fire policy: It mainly covers plants & machinery along with extra covers of natural disasters e.g. Flood cover etc. b.) IAR policy: (Industrial all risk policy) It covers plant & machinery with maximum risk coverage. There is no requirement for taking extra covers as there are no exclusions in this policy. Machinery breakdown, water supply stoppage etc is also included in this policy. GACL has taken IAR policy. (Industrial all risk policy) 2.) Motor vehicle policies. For plant vehicles and Non-plant vehicles like, ambulance, fire tenders etc. 3.) Other miscellaneous policies. a.) Stock policy and work in progress policy. b.) Sales turnover policy(material inward-outward) c.) Group personal accidents policy d.) Cash policy(for protecting hard cash with cashier) e.) Fidelity guarantee policy(protection of cash in transit) f.) Sate indemnity policy g.) D&O policy(directors & officer liability policy) h.) Public liability policy (due to production hazards nearly area gets affected.) i.) Visitors insurance policy(group) We trainees were covered under this cover. j.) Export credit guarantee (ECGC) policy. When foreign supplier becomes weak this policy can be enchased. Every year there is renewal of all policy expecting ECGC policy (its renewed after 2 yrs.) k.) House building advance policy: If employees wish that GACL should take policy for their house loan then this policy is taken. Premium would be paid as 50% by company.
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(5)
sales accounting section:
The section deals with accounting of sales transactions. It maintains the details of sales and debtors account and related adjustment. It also maintains collection period (age analyses) and it is very necessary from the management point of view. It deals with external parties such as government bodies, manufactures, direct dealers, sub dealers, and traders etc. The main functions of this section are: Completes all the formalities related to sales tax, excise duty. Recover money from the purchaser. Age analysis (collection period) Internal and external audit Compliances( submit report to management) (6) Bill passing section:
This section makes the payment of routine expenses like payment for purchase as per order made by purchase department and of the new project. All the bills related to plant, come to this department for the sanction. For e.g. purchase are checked and approved. For local purchase bill GRV (goods receipt voucher) is needed. Only after the bills have been approved payments will be made. Functions are: (a) Goods receipt voucher (GRV) is issued for materials received. Materials include- raw materials, stock, salt etc. Details of GRV: lorrys receipt, challis 9suppliwers proof), suppliers name, departments indent, excise gate pass, etc. Accepted GRVs billing: Details: material code, unit, quality received, Inspection-accepted/rejected, Remark etc. (b) Purchase order: It is issued by purchase department at time of purchasing. Details are: description of material, quality, unit, rate terms & conditions (if any charges, excise duty, taxes, insurance etc.), delivery schedule3, etc. (c) payment recommendation advice Recommendation of bills passed by suppliers is done in this section. Purchase journal voucher is prepared then bill is passed and payment is made at the end. Bank payment voucher is made by this section which includes -bill no., partys name& address. Bank payment voucher is sent to the bank where cherub is issued to the party. Partys a/c is credited at the end. (7) Establishment section:
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This section works with the HR department. It calculates the salary for all the employees including both management and non-management cadre. They prepare form 16 which is prepared under section 203 income tax acts, 1961 and form 12b. They also look after at the employees claim and pension & leave encashment, gratuity at a time of retirement. Provident fund scheme of GACL as per employee provident fund & miscellaneous act 1952 a. Employees own contribution-12% Basic+ DA b. Companys Own Contribution-12% Basic+ DA -8.33%(pension fund) c. That is out of the companys contribution 8.33% is deposited in the employees pension fund on salary up to rs.6500/-i.e. max rs.541/- and remaining 3.67% is deposited in the employees provident fund. d. VPF (Voluntary provident fund) contribution is maximum 10% of basic + DA. e. Refundable loan rs.30000/-, non-refundable loan for new house, repairing, education, marriage gift etc. f. EDLI(employee deposit linked insurance) scheme in case of employees death amount to be paid to nominee is Rs. 60000/The provident fund of GACL is invested in state and central government. Securities and bonus, the interest earning of which are credited to the EPE at the rate of interest declared by the central provident fund commissioner or the MD. In GACL there is a provision of withdrawing 90% of total contribution before one year from the date of retirement. It is tax free provision E.g. salary Rs. 10,000/Employees contribution 12% basic +DA Companys contribution 12% basic +DA i.e. 1200 i.e. Rs.1200
PF (1200-541) = Rs.659 8.33% of max rs.6500/i.e. Rs.541/- or rs.541/Total contribution to provident fund: = Emp.s contribution+ cos contribution = 1200+ (1200-541) = Rs.1859/-
PENSION FUND
In GACL, there is super annulations policy with LIC of India

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On behalf of employees 15% of Basic + DA are kept with LIC up to 60 years it is tax free provision. Employee gets 9.45% interest per annum. Employee can have this benefit only after completion of 10 years service. It is only for management employees and not for trainees. This is for sustaining employees in the company. After confirmation of service, one can become its member (not the ones who are on probation period.)one can claim LIC to start pension + to withdraw 1/3rd of it only once in lifetime. For new employees who are highly qualified, if they don`t want to be the member of super annotation scheme, can receive rs.120/- per month for this, but it would be taxable. (8) Costing & budgeting section: This section makes the estimation of cost the company and makes the budget in advance and tries to reduce the cost and improve efficiency. This section prepares the monthly cost incurrence budget and monitors it. Company has to ascertain the variable cost, semi variable cost and fixed cost of manufacturing activities. This is because it helps to calculate the right price of the products and also for calculating breakeven point. This section provide the perfect data of cost of production (9) Inventory accounting section: This section maintains all the information of inventories regarding incoming, consumption, closing stock, and on that basis monthly and annual report are made product wise and it is presented before the management board. (10) Integral audit section: This section is outsourced by the GACL Company. In this internal auditor do audit of all the work done by various head of department and see that whether the transactions are recorded as per the accounting standards or not. Auditors are appointed by managing director of GACL. Auditors: Messrs Prakash , Chandra Jain & Co. Chartered Accountants, Vadodara Messrs R. K. Patel & Co, Cost Accountants, Vadodara.
Cost auditors:
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Working capital management: Banks SBI HDFC AXIS Sanction limit cash credit 5500.00 1000.00 1000.00 % Interest 10% 11.25% 10.25% (Rs. In lakh s)
Wor king IDBI LC 500.00 capit CBI LC 600.00 10% al man UCO 1000.00 10% age IB 2500.00 9.75% men CBI 900.00 8.94% t at TOTAL 13000.00 GA CL at setting up the working capital required by the company in the financial year. The amount of Working capital required by the company is financed by state bank of India. The company has to provide the income statement and the balance sheet to the state bank of India and after analyzing the financial statement the bank sets the limit of working capital financed by the company through cash credit which is availed form different banks at a lower rate of the prevailing market arte through negotiations. GACL is efficiently managing its working capital trough the effective Management of inventory, cash and receivables. The payment and collection system of the company also plays an important role in the optimum working capital management of the company. The payment is made through the purchase department in consultation with the finance department and the collection is done by marketing department and the majority of the payment is received through e-banking which ensures the fast collection of receivables.
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Cash management: Cash is managed at GACL in a very simple way. There is a monthly statement of receipt and payments in which all the receipt and the payment is included. This statement is divided into 3 parts. Revenue receipts. Revenue payments Financial payments The first part of the statement is revenue receipt in which the collection of sales is included which is taken from the marketing department. The various payments for material energy, sales tax, marketing commission etc. Is in the revenue payment category and these figures are taken from the respective departments. All the financial payments are included in the third part of the statement and the payments of interest and capital expenditure is also included in this part.
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INVENTORY MANAGEMENT
Meaning of inventory management
In any business or organization, all functions are interlinked and connected to each other and are often overlapping. Some key aspects like supply chain management, logistics and inventory form the backbone of the business delivery function. Therefore these functions are extremely important to marketing managers as well as finance controllers.
Inventory management
Purchase Direct sales Brach transfer Point of sale Finance
Inventory management is a very important function that determines the health of the supply chain as well as the impacts the financial health of the balance sheet. Every organization constantly strives to maintain optimum inventory to be able to meet its requirements and avoid over or under inventory that can impact the financial figures. Inventory is always dynamic. Inventory management requires constant and careful evaluation of external and internal factors and control through planning and review. Most of the organization has a separate department or job function called inventory planners who continuously monitor, control and review inventory and interface with production, procurement and finance department.
Definition of inventory management

Inventory is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time. Any organization which is into production, trading, sale and service of a product will necessarily hold stock of various physical resources to aid in future consumption and sale. While inventory is a necessary evil of any such business, it may be noted that the organization hold inventories for various reasons, which include speculative purposes, functional purposes, physical necessities etc.
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From the above definition the following points stand out with reference to inventory All organizations engaged in production or sale of products hold inventory in one form or other. Inventory can be in complete state or incomplete state. Inventory is held to facilitate 3future consumption, sale or future processing/ value addition All inventoried resources have economic value and can be considered as assets of the organization.
Types of inventories
Manufacturing unit requires daily different types of inventory such as raw material and component used for the product. Semi finished product Finished product-for customer delivery and satisfaction Spare parts. Raw materials Raw materials are those basic inputs that are converted into finished product through the manufacturing process Raw materials inventories are those basic units which have been purchased and stored for future production Work in process Work in progress inventories are semi manufactured products. They represent product that need more work before they become finished product for sale. Finished goods Finished goods inventories are those completely manufactured product which are ready for sale. Component and spare parts Component and spare parts inventory constitute a small part of total inventory and does not involve significant investment.
Type of inventories by function

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Input
Raw materials Consumable required for processing e.g. fuel, bolts & nuts etc. required in manufacturing Maintenance items/ consumables Packing materials Local purchased items required for production
Process
Work in process Semi finished production in various stages, lying with various department like production, WIP stores, QC, final assembly, packing etc. Production waste and scarp Rejections and defectives
Output
Finished goods Finished goods at distribution centers throughout supply chain
Finished goods in transit Finished goods with dealers Spare parts stocks & bought out items Defectives, reject and sales returns Repaired stock and parts
Motives for holding inventory

Transaction motive It emphasizes the need to realization of inventories to facilitate smooth production and sales operation. Precautionary motive It emphasizes the need to hold the inventories against the risk of unpredictable changes in demand and supply of ever and other factors. Speculative motive It influences the decision to increase or the inventory levels so as to take advantages of price fluctuations. The three motives are to be balance properly to arrive at the optimum level of inventory in order to effective control.
Need for inventory management

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1. Meet variation in production demand Production plan changes in response to the sales, estimates, orders and stocking patterns. Accordingly the demand for raw material supply for production varies with the product plan as well as batch quantities. Holding inventories at a nearby warehouse helps issue the required quantity and item to production just in time. 2. Cater to cyclical and seasonal demand Market demand and supplies are seasonal depending upon various factors like seasons; festivals etc and past sales data help companies to anticipate a huge surge of demand in the market well in advance. Accordingly they stock up raw materials and hold inventories to be able to increase production and rush supplies to the market to meet the increased demand 3. Economies of scale in production Buying raw materials in larger lot and holding inventory is found to be cheaper for the company than buying frequent small lots. In such cases one buys in bulk and holds inventories at the plant warehouse 4. Take advantages of price increase and quantity discounts If there is a price increase expected few months down the line due to changes in demand and supply in the national or international market, impact of taxes and budgets etc, the companys tend to buy raw materials in advance and hold tocks as a hedge against increased costs. Companies resort to buying in bulk and holding raw material inventories to take advantages of the quantity discounts offered by the supplier. In such cases the savings on account of the discount enjoyed would be substantially higher that of inventory carrying cost. 5. Reduce transit cost and transit times In case of raw materials being imported from a foreign country or from a far away vendor within the country, one can save a lot in terms of transportation cost buy buying in bulk and transporting as a container load or a full truck load. Part shipments can be costlier. In terms of transit time too, transit time for full container shipment or a full truck load is direct and faster unlike part shipment load where the freight forwarder waits for other loads to fill the container which can take several weeks. There could be a lot of factors resulting in shipping delays and transportation too, which can hamper the supply chain forcing companies to hold safety stock of raw material inventories. 6. Long lead and high demand items need to be held in inventory Often raw material suppliers from vendors have long running into several months, coupled with this if the particular item is in high demand and short supply one can expect disruption of supplies. In such cases it is safer to hold inventories and have control.
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Accounting method for inventory management:
Specific Identification Weighted Average Cost Moving-Average Cost FIFO and LIFO. Inventory Turnover is a financial accounting tool for evaluating inventory and it is not necessarily a management tool. Inventory management should be forward looking. The methodology applied is based on historical cost of goods sold. The ratio may not be able to reflect the usability of future production demand, as well as customer demand.
Business models, including Just in Time (JIT) Inventory, Vendor Managed Inventory (VMI) and Customer Managed Inventory (CMI), attempt to minimize on-hand inventory and increase inventory turns. VMI and CMI have gained considerable attention due to the success of third-party vendors who offer added expertise and knowledge that organizations may not possess.
Relevant Inventory Costs:
Ordering costs Receiving and inspections costs Holding or carrying costs Shortage cost
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Benefits of inventory management
In a report by Stylus, he highlighted the following as some of the benefits of inventory management (Stylus, 2008):
Inventory management systems can help reduce the time to respond to changing market demand of products and can help control excess stock
IMS provide a means for business to effectively manage or control their inventory IMS helps businesses to constantly analyze their business processes such as sales and purchasing in order to make efficient inventory decisions
Stylus systems also reported that inventory management systems IMS can provide total insight on stock transactions
Stylus systems also stated that IMS can provide hands on knowledge on inventory which might lead to increased sales and efficient customer services.
INVENTORY CONTROL
According to business link in an article, an organization has an efficient inventory control only when they have the "right amount of stock in the right place and at the right time" (Business link, 2006). Inefficient Inventory control can leads slower sales and disappointed customers.
Inventory control basically deals with reducing the total cost of inventory. Inventory control is very relevant for businesses, especially businesses dealing with a large variety of products. As site by Hossein Arsham, Inventory management or control can be used to streamline warehouse processes in order to track orders and shipment (Arsham, 2006). Other important applications of inventory management systems are in manufacturing, shipping, and receiving. As stated by Arsham, there are three main factors in inventory control decision making process (Arsham, 2006).
1. The cost of holding the stock: this is the cost associated carrying inventory over time and involves having items in storage. This includes interest, taxes, insurance, spoilage, breakage and warehousing cost like light, rent.
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2. The cost of placing an order: this is the cost of ordering and receiving inventory which include shipping cost, preparing invoices, determine how much is needed and moving goods. 3. The cost of shortage: this cost involves what is lost if the stock is insufficient to meet all demand. This normally happens when demand exceeds the supply of inventory on hand. Merchant OS argued that "the easiest way to manage inventory is with a computer inventory management system" (Merchant, 2010). The systems below help to reduce the time spent in managing inventory: Point-of-sale terminals: this system updates stock level automatically and provide a more error free sales transaction Barcodes and barcode readers which proved a way to effectively input inventory and "stock takes" faster into the system Job costing and inventory systems which are systems that also automatically update stock counts as orders are being made. Electronic Supplier product catalogs: allows the use of electronic devices like CD/DVDs to record inventory data. These systems ensure accurate inventory records through the use of electronic and wireless technologies that provide error free data. These systems are very efficient in that they: Keep only up-to-date records of items and remove all sold items from the system It is possible to Review stock reports periodically to check the products status and identify low demand products. Periodically check record to ensure the level of accuracy of the system and to check against physical stock quantities.
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Methods of Inventory Control
Today, the growth of businesses has provided a necessity to develop a more complicated and highly analytical form of inventory management. The above inventory management systems became difficult and inefficient. As a result, computer systems to control inventory was introduced. These systems include:

Point-of-sale terminals: this stores information of each item that is used or sold. Off-line point-of-sale terminals: this transmits sales information directly to the supplier's computer system. The supplier then uses this information to ship necessary items automatically to the retailers The last method for inventory control is carried out by an external agency. As sited by Floyd Hedrick, it involves removal of unwanted products from stock which can be returned to the manufacture. This however has to occur after an agreement and frequent scheduled visit by the manufacturer's representative to the large retailer in order to record stock count and writes the reorder. The main aim of the above systems was to provide a more efficient system that will be able to identify the cost of each inventory. According to the report, two main control values are used:
1. The Economic order quantity (EOQ) that is the size of the order 2. The reorder point which is the lowest quantity that a stock or an item can be before more quantity is ordered. The Economic Order Quantity (EOQ) is a formula that is used mainly for calculating the annual cost for ordering an item. It is widely used by most businesses and involves the actual cost of placing an order, the cost of carrying inventory as well as the annual sales rate.
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Inventory management at GACL

Many of the items company need for day to day maintenance and operations. The time to procure these materials may be longer due to various reasons and it is not possible to procure these materials when instantaneously required. It is therefore necessary to keep stocks of such items. Even for those items which are readily available in the market, it may not be economically to buy these items every time as buying in piecemeal involve additional cost to the administration. Therefore it is cheaper to buy in bulk and stock some of these items and supply indenters through such stocks. On the other hand inventory is very valuable resource for uninterrupted production and on the other hand excess of inventory holding locked up capital. Optimum level of stock is necessary for GACL. As it is having continuous production optimum inventory is maintained so that production is not affected due to shortage of raw materials. GACL is using ABC analysis technique for the purpose of inventory management. GACL is having more than one supplier for its raw materials as the quality required by GACL is large which cannot be supplied by a single supplier. The procurement of raw material is done through yearly rate contracts which are finalized in the beginning of the financial year. They consumed and valued the inventory by following weighted average method. GACL uses its stocks for getting credit for working capital from financial institutions. So inventory management is very important issue for continuous production as well as financing its working capital. Process of purchasing inventory: As per GACL, material management is for effective utilization of material resources to achieve organizational goal. There are four function of material management: 1.) Purchasing 2.) Stores management, 3.) Inventory control, 4.) Scrap disposal (obsolete/surplus item)
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Purchasing:
The use of scientific approach along with buying is purchasing. Purchasing is handled by the purchase department. SCOPE This Purchase Procedure described shall be followed for procurement of all the items required for operation & maintenance as well as for capital items. A broad list is given below: a. Raw Materials & Auxiliary chemicals b. Packing materials c. Project items, specifically indented to purchase department. d. Capital Items e. Steel & cement f. Consumable items g. Replacement of equipments & Spare Parts h. Items required for repairs and maintenance of building, plant & machinery etc. and other equipments i. Contracts for clearing, handling, loading and transportation of incoming materials j. Procurement of materials under Annual Rate Contract k. Safety Items, Employee Welfare Items & others items of administrative nature This purchase procedure meets requirement for purchase functions for Purchase Department, in general and procedures for purchase of salt, raw materials, aux. chemicals and packing materials, imported materials as well as procedures for Administrative jobs & Maintenance jobs. No item, other than specified in this procedure should be purchased directly by the user department. However, in exceptional cases, user department may carryout purchase activities directly. Approval of competent authority is to be obtained for the purchase activities carried out directly by user department. RESPONSIBILITY: The purchase functions shall be the responsibility of head of department of the Materials Management Department. All indents for purchases duly processed in accordance with the procedure laid down, herein after, should be forwarded to Head of Department [Materials Management], for necessary action. The indentors from various departments shall not send enquiries, invite quotations, or enter into correspondence or negotiations with suppliers. However, in case of extreme urgency, user department may enter into correspondence asking only technical clarifications/confirmations with all copies of the same to Purchase Department. This can be exercised only with due approval of head of department of the concerned user department. Project Group during Project execution stage, may carry out purchase functions themselves as per the procedure described in Chapter-24.However project items for which indents will be generated, the purchase procedure as mentioned in subsequent chapters for general items will be followed.
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As per the present practice, purchase function for following are taken care by the department concerned in view of nature & urgencies of the activities. However, for transparency & better coordination there shall always be a committee with nominee of Finance department & Purchase department at appropriate level. 1) Contracts for transportation of finished goods: Marketing Department. 2) Printing of balance sheet & Chairmans Speech for annual general meeting: Secretarial Department. 3) Procurement activities for A.G.M.: Secretarial/Admin Department. 4) Miscellaneous Administrative items Like Crockery, Calculators, Visiting Cards, and Greeting Cards: Administration Department Procedure shall be followed for various services by the designated departments authorized to carryout activities for purchase and service / sales contracts. The basic steps that have to be carried out for procurement of any raw materials or required equipment are as under: 1.) Vendor qualification & registration vendors list. The selection of suppliers for various requirements can be done by following means: I. II. III. Presently available updated approved vendors list. Suggested suppliers by the inventors for items not covered under approved vendor list. Introduction letters from new suppliers through websites or by the visits of their representatives approaching GACL.
The responsibility of registration of suppliers shall be with Material Management (MM) Department. They will prepare a list of Approved Vendors capable of supplying various types of equipments, materials and services, confirming to specific requirements of the departments concerned. The list is to be approved by head of department (Material Management) & head of department of respective user department. Purchase department shall update this list from time to time based on past performance of the suppliers and recommendation/concurrence of head of department of respective user department for existing & newly registered suppliers. The Approved Vendor List shall be compiled for the following groups but not limited to them. a) Industrial Salt b) Other Raw Materials & Auxiliary chemicals c) Packing materials d) Imported materials including spare parts etc e) Mechanical Items indigenous f) Electrical Items indigenous g) Instrument Items indigenous h) Civil items Indigenous i) Calibration contractors for weighing machines j) Administrative Items, TK Office & Security items k) Safety & Environment Connected items
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l) Computer & MIS related items m) Printing & Stationery items n) Any other group/requirement relevant to purchase functions o) Annual rate contract for supplies & services Main functions of purchase department are: Registration of new suppliers. Evaluation of performance. De-registration / holiday of suppliers: Supplier may be put on holiday for a specified period with the approval of head of departments of MM & the user departments. Review & updating of Vendor List 2.) Purchase Indent. The indents shall be complete & clear in all respects with regard to item description/specifications, its unique relevant item code number, physical dimension as applicable, with relevant drawings whenever required to be enclosed, indent no. & date, project head, budget head, cost center, capital/revenue/min-max, technical evaluation required or not, vetting of purchase order required or not, imported or local, last purchase order reference, stock quantity, pipe line quantity, current year consumption quantity & last year consumption quantity, required date of delivery, estimated value, indentors signature, approving authoritys signature, suggested vendors (For items not covered in approve d vendor list) special remarks etc., The third party inspection certificate requirement / guarantee / warrantee certificate requirements shall also be mentioned in the indents. The suggested vendors shall be only for the items which are not listed in vendor list. For all other items vendor list shall be strictly followed by Purchase Department. There are two categories of purchase indents: A) Regular indents to be raised by user department directly. B) Min-Max to be raised by Stores department for engineering items of consumable nature and where some minimum stock is required to be maintained in the stores. For items not covered under Min-Max list the indentors from various departments will raise indent for purchase in the form of designated computerized Purchase Indent as enclosed at Annexure-III and forward it to Purchase Department. For items covered under Min-Max list, Stores Department will raise computerized indent emerging out of planning/review based on past consumption, inventory levels, minimum/record level etc., and forward to Purchase Department. The Indenting Department shall also raise indents for items, though covered under Min/Max that may be required in abnormal quantities and/or for specific jobs/schemes on the basis of requirements given by concerned users.
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3.) Enquiry. SENDING ENQUIRIES GENERAL: Upon receipt of the indents from various indentors enquiries shall be issued by the Purchase Department., as per the procedure laid down below. The normal practice that shall be adopted is closed limited tendering system. Vendors to whom enquiries are to be sent are selected from the Approved Vendor List or otherwise based on the provisions laid down in Chapter-2. An enquiry in relevant prescribed standard format (Annexure-IV) for enquiries for indigenous suppliers is prepared in detail on the selected vendors in general. In case of urgency, enquiry can be sent by Fax or E-mail also. For Imported items, enquiry can be prepared as per Standard format (Annexure-V) or letter form or Fax/E-mail form. The enquiry shall include detailed technical specifications, general commercial terms and conditions along with required delivery period, mode of transport etc., for the items/material for which enquiry is floated. The enquiry is signed by competent authority as per delegation of powers. The duly signed enquiries are then sent to the selected vendors as per vendor list. All the enquiries should be sent, by courier/Speed post with recorded delivery. Wherever Courier/Speed post services are not available, enquiry may be sent by Regd. A.D. Acknowledgement details should be available, so as to ensure that enquiry is received by all bidders. The enquiry is subject to the Terms and Conditions printed on the overleaf of enquiry sheet or as may be specified in the main format as per requirement from time to time. In all enquiries, offers shall be invited in two parts in two separate sealed envelopes: Part-I Technical Unpriced bid containing the following: Complete technical specifications of items offered. All the commercial terms & conditions like payment terms, delivery period, guarantee etc. Part-II: Priced bid quoting the following: Unit rates of each item & total value Applicable taxes & duties. Packing, forwarding & freight charges However, for normal routine items like fuses, gaskets, fasteners, lighting fittings, relays, other hardware items, consumables etc. and/or for small value items up to Rs.50000=00 parties are not required to submit separate technical un priced bids and only commercial offers can be considered. While issuing the enquiries it should be ensured that it shall not be issued to the vendor who are deregistered or put on holiday. It shall be clearly indicated in enquiry a) Negotiations may or may not be held. Therefore parties should quote best prices based on which order can be finalized. (Further negotiations, if required, may be held with limited parties based on offers received). b) Deviations from standard commercial terms of GACL will have negative impact on consideration of the selection of the offer. The offer can either be rejected or can be loaded suitably on prices, at the discretion of the management. NO. OF SUPPLIERS TO WHOM ENQUIRIES TO BE SENT
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As far as possible it should be attempted that, minimum number of enquiries to be issued should be five vendors and minimum number of bids to be opened should be three. The idea for prescribing a minimum number of enquiries is to create competition amongst bidders so that the company is able to procure the material at the most economical prices. However in certain cases the number of approved vendors available may be less and in such cases, the enquiry can go to less than five vendors. However for Proprietary items, the enquiry shall be sent to single party. If for certain items more than one technically suitable vendor are not available, the enquiry can be sent to a single party. For cases other than proprietary, if enquiry is to be sent to a single party, prior approval of head of department (MM) should be obtained giving reasons thereof. In case of Proprietary suppliers, enquiry can be sent, on approval of head of department (MM) to other likely substitute suppliers too, for price comparison purpose and/or as part of substitution/vendor development EMERGENCY REQUIREMENTS In cases of emergency situation, to meet any eventualities and to ensure that plant operations do not suffer for want of material, Purchase Department can procure material without any indent & without inviting bids/offers. Such purchases shall be from Approved Vendors on verbal order basis, with or without repeat order considerations. The proposal for regularization on post-facto basis should be put up to head of department of the purchase department & head of department of user department if the order value is above Rs.50,000/-. 4.) Evaluation of offers & considerations For comparative statement: On receiving the technical and price quote, the technical department would consider all the specifications mentioned by the vendor and evaluate it against the companys requirement. If it meets then only, it will be accepted for negotiations. 5.) Annual Rate Contract Some of the spares & general consumable items like Mechanical Seals. Bearings, Valves, Fuses, Contactors etc are required on regular basis. Therefore it may be beneficial and also administratively convenient to enter into rate contract for procurement of materials or services. The user department shall forward a list/Indent for the items for which Annual Rate Contact is required to be entered. The list/Indent may be forwarded well in advance (about 90 days) to enable Purchase Department to complete purchase procedure for timely issue of Contact/Purchase order. User Department will also give details about Min & Max quantity to be maintained in Stores all the time.
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The list of Min-Max Items should be reviewed every year by User Department & Stores Department keeping in view following: (i) Consumption pattern (ii) Replacement schedule (iii) Use of machinery for which spares are meant (iv) The lead time for procurement For Min-Max list items indent will be raised by Stores Department. For other items, Indent will be raised by User Department as and when requirement comes up. The tenders in this case shall be issued or enquiries sent to vendors depending on the quantum of annual value of purchase and who are on Approved Vendor List. It should be ensured as far as possible that at least 3 bids/offers are obtained except for proprietary Items. The rate contract should normally be entered into for a period of not less than one year. If prices are steady and have not fallen downward by mutual consent the rate contract can be extend for further period of one more year. However, it shall be ensured that the supplier/vendor has fulfilled the conditions and provisions of existing Annual Rate Contract (ARC) in respect of quantities of suppliers/services. The bids/offers received for rate contract shall be processed in the same manner as laid down for procurement of other materials. As & when indents are received from either Stores or User Department, Purchase Department shall issue Purchase Order against ARC and no separate procurement procedure is to be carried out for individual indents. For Annual Rate Contracts, No Finance Concurrence is required. As concurrence will obtained on the proposals approved based on actual requirement from time to time. ARCs are for rate approval to cut down procurement lead time. 6.) Finalization of orders: For order value less than Rs.5.00 Lacs Based on the technical recommendations and prices quoted by parties, Purchase Department will prepare proposal recommending placement of order on the lowest party (L1) among the technically acceptable parties. Details of last purchase price, if available, is also to be mentioned and in case of significant change in the prices as compared to last prices is there, reasons for the same should be recorded properly. However, when the lowest offer even though technically confirming the specifications is not accepted, complete justifications for accepting the other than the lowest offer should be recorded in writing. with the lowest bidder for further reduction. In case the lowest bidder does not accept companys terms & conditions, delivery period etc., purchase department can negotiate with second lowest (L2) bidder if required. Final proposal will be put up for approval to committee as authorized by Management & as mentioned in APPENDIX-II.
For order value more than Rs.5.00 Lacs & Specific Items:
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For items having order value more than Rs.5.00 lacs, limited parties i.e. three parties (L1, L2 & L3) will be called for negotiations. Negotiations will be attended by head of department of mm department & head of department of Finance Department or their representatives (G.M. / Sr. manager / manager) negotiations to be attended by at least by one head of department of any department i.e. Purchase, Finance or User Department. For large value of Rs.20 Lacs or more Sr. ED / ED may also attend the negotiations. During the negotiations, all the parties will be called at a time & relative position i.e. status L1, L2, L3 will be declared. Parties will be asked to give their revised price/discount within stipulated time in sealed envelopes. If any party does not submit their revised offer within specified time, the same shall not be considered & original offer will only be considered. In cases where parties ask for submission of final bid by next day, negotiating committee may decide, if it feels necessary, for transparency to declare prices of all the parties and parties may be asked to submit revised bids in sealed envelope. These sealed envelopes shall be opened in the presence of purchase representative & finance representative after receipt of all the revised bids. No revised bids are to be accepted in open condition. After negotiations a revised comparative statement will be prepared jointly by Purchase representative & Finance representative. Based on revised comparative statement, Purchase Department will prepare proposal recommending placement of order on the lowest party (L1). Details of last purchase price if available is also to be mentioned and in case of significant change in the prices as compared to last prices, reasons for the same should be recorded properly. The proposal will be put up to the approving Committee as authorized & mentioned at Appendix II In case purchase department or the committee strongly feels the need to recommend placement of order on party other then L1, in the interest of the company, detailed reasons with proper justifications need to be given. The general guidelines by Government on reservation of items & price preference to SSI units and purchase preference to PSUs are not possible due to commercial nature of GACLs business. If they are found to be L1, they shall be considered on their merit only. Upon receipt of financially concurred proposal, the purchase department shall initiate the activities for placement of order to the successful bidder. In case, of any further clarification regarding validity extension, terms and conditions etc. are required, then these may be obtained from the party. After receipt of related clarifications, the formal Specifications of each item with acceptable deviations, prices of each item, total order value, payment terms, other charges, taxes & duties, delivery schedule etc. If required, purchase order can be vetted by Finance department/User department. The Purchase Order should be checked, verified and signed by the competent authority of Purchase Department as per Delegation of Powers and formally issued to the party. If necessary, order / letter order is also issued to the successful party followed later on by the detailed formal purchase order, so that the supplier can commence order execution activities & delivery period can be maintained. The advance payment shall also be released based on LOI as delivery commitments are from the date of LOI.
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The Purchase Order should be prepared in quadruplicate and copies are distributed as follows. Original Party: 1st copy ____________ Purchase Department 2nd copy ____________ Finance Department 3rd copy ____________ User/Indentor The Purchase Order shall be accompanied by all relevant Annexure/ Enclosures/Drawings as may be necessary. Wherever required the Standard GACL format for Advance Bank Guarantee and Performance Bank Guarantee shall also be attached. Repeat orders without inviting fresh bids may be placed against Previous Orders within one year from the date of issue of original order. No repeat order shall be placed against the Purchase Order, which was placed at higher price in the interest of early delivery. Normally, the quantity and value of repeat order should not exceed 150% of the quantity and value which existed in the original order and as a practice such repeat order should be placed only not more than three times in since the original order was placed. Repeat Orders shall be placed with proposals approved by prevailing Delegation of Powers only. However in case of urgency, Head of Department (MM) may approve repeat Order for higher quantity and value. For items of proprietary nature, repeat orders can be released for any value, after obtaining confirmation from supplier for acceptance of last prices including other terms & conditions (except delivery) as per last order. Purchase Department should ensure that there is no downward market trend during the period of repeat order 7.) Inspection of material: If inspection of material is required at vendors shop prior to dispatch, the same shall be mentioned in the indent & purchase order. The Purchase department shall coordinate with user department about the requirement of inspection of material at vendors shop prior to dispatch. If inspection at vendors shop is required, User Department shall depute the inspectors for inspection of the material with intimation to purchase Department, Purchase Department will coordinate further with vendors for the inspection. In other cases inspection of material shall be carried out after receipt of material at site. As and when material is received Store Department Shall intimate concerned Indentor/User Department for inspection of the material. Indentor/User shall carry out preliminary inspection within three days of receipt of material at site. If any test certificates, Analysis report or any other documents are required for acceptance for material, Use Department shall inform Purchase Department to arrange the same. Purchase Department will take up the matter with vendor for submission of test certificates/Analysis Report or any other documents as per the requirement of the inspectors. After completion of the inspection in all respect the material will be accepted or rejected by user department.
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In case the material is required to be tested the same shall be issued to User Department for testing in the laboratory. Only after successful test material will be accepted by the User Department. Overall procedure of inspection shall be completed normally in five days but in exceptional case this period can be extended depending upon the material and inspection/testing requirements. In some of the cases the material can be made acceptable after some modifications/repair. In such cases after Inspection, material can be taken of modifications/repair. After completing modifications/repair, if material is found to be acceptable, material will be accepted. If the reasons for requirement o modifications/repair are attributed to the supplier, the cost incurred by the company towards Repair/ modifications will be recovered from the supplier 8.) Clearing and transportation of material: The stores section of Materials Management Department will be responsible for clearance of material from Railways, Transporters and Airlines and their transportation to the GACL plant/sites. Upon receipt of the dispatch documents/LR, the stores will hand them over to the handling contractors for arranging transportation of material. On receipt of material at plant/site, the stores shall arrange for inspection from indentor/user. It should be ensured that the materials received are inspected in 3 working days of their arrival at the plant/site and the goods accepted are taken on charge. The indentor shall ensure inspection within this period. Necessary follow up shall also be done by stores for clearance of Goods Receipt Vouchers (GRV) with Indentor/user Department Purchase Department shall ensure that all necessary documents needed for inspection shall be made available from Supplier to user department. If the packages received at a railway station or road carriers go down, are broken, open delivery should be obtained. The stores shall ensure that suitable endorsement shall be obtained on the carriers receipt of the damages/shortages of material at the time of delivery.
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9.) Damages/shortages/rejected material If upon inspection, materials are rejected, the stores department will raise Goods receipt voucher for rejection in full/part quantity and forwards a copy of Goods Receipt Voucher to Purchase Department for further action. A record is also to be made in the Register of Material Rejection and Dispatch Register maintained for rejected material. The stores shifts the rejected material to Rejection Location, puts identification tags and in case of rejected items which cannot be stored at rejection area due to any limitations, same are stored at appropriate location with suitable marking on the rejected item itself. The stores will send Rejection Memo to the supplier and ask them to lift the materials. Subsequently the Purchase Department will take up the issue of rejected material with the supplier. On receipt of written intimation from Purchase Department for items for which payment is made in advance through bank / against Performa Invoice, Stores shall return/hands over the rejected material to supplier or offer it for re-inspection, if required. The intimation to the vendor and Insurance Company for material receipt of short/damaged or rejected material should be sent as early as possible after the material is rejected but in any case not later than a week from the date of their receipt at plant/site. For this a copy of intimation issued by the stores will be sent to Finance Department for lodging the insurance claim and to the Purchase Department for following up the replacement supplies or obtain the non delivery quantity or for making suitable recovery from the vendor. The Material Department shall be responsible for following up with the vendors for the replacement of the material rejected or supplied short. In case of Insurance Claim, Purchase Department will intimate Vendor to resupply item on chargeable basis. This shall be based on the comments by Indenting Division o damages/short supply of material. The comments shall be obtained by Stores from the Indenting Division. 10.) Insurance claim The Finance Department on receipt of intimation issued by stores shall lodge Insurance Claim. The Finance Department shall coordinate with other departments wherever necessary and collect the details of materials and other costs as may be required for the processing of insurance claim. After settlement of Insurance claim with Insurance Company, Finance Department shall inform immediately to Purchase Department as well as to Stores Department about the same.
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11.) Payment: Payment Recommendations Advice and other finance related Purchase Activities shall be as under: Purchase department shall rise Payment Recommendation Advice to the Finance within 7 days of receipt of invoice and clearance of GRV whichever is later. Purchase department shall ensure receipt of invoice immediately within 10 days of receipt of materials. In case where there is a difference from amount recommended and Finance Department is convinced of some additional deduction, the same shall be done in consultation with Purchase Department. Finance department shall arrange to release payment, as far as possible, as per the payment terms. Payment through bank shall be released within 7 days of receipt of intimation from bank and payment recommendation advice. Necessary Forms such as Form C, Form H, Form 26, Form 40 etc. shall be released in time, preferably with payment. Finance Department Shall keep record of Form C, Form H, Form 26,Form 40 etc pending for issue due to procedural problems. For imported items, wherever payment shall be through Letter of Credit, purchase department shall send note to Finance to establish L/C immediately on receipt of Order acceptance/Performa Invoice etc. Finance department shall take up the matter with Bank to establish L/C as per agreed format with the supplier at the earliest (in 3 working days) to avoid any adverse implication on price/delivery schedule. For custom duty, purchase department will send note to Finance department after Bill of Entry (BOE) is passed by Customs Department or intimation of passing of BOE. Payment for Custom duty shall be made expeditiously by finance department (1 or 2 working days) to avoid any demurrage. Advance payment to parties, & payment through Bank etc. shall be made expeditiously, to meet urgent requirement of material & to avoid demurrage charges. In case of payment against dispatch documents through bank, alternatively dispatch document can be exchanged against payment (cheque) directly with party as and when required. Cheque can be made ready based on Performa invoice. No order amendment shall be required in such cases.
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Stores
The raw materials are stored in the store section. Raw materials of all 26 products manufactured by GACL are stored in stores section. No specific storage section facility is required for the materials. General spares include all the mechanical and electrical process instruments. When the trucks full of goods enter the gate following document are required: Challan Lorry/ railway receipt Gate pass
After goods inward receipt voucher inspection is done, a raw material is checked by the engineers. Quality is checked and measured. Goods receipt voucher is approved if raw materials are as per specification and are stored in the stores section. If any raw material is rejected then the reject voucher is prepared. Similarly material return voucher is prepared and issued to the respective plants. Scrap materials are disposed from the plant by the store section. Mineral state transport corporation (MSTC) is dealing with purchase and sale of scrap goods to which it is charging 3.306% commission from GACL on scrap realization.
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Process of stores:
Requirement of raw materials from different plants and department Indent by purchase department Receive materials from the party Checking materials Prepare inward and goods received voucher Properly arranging material for inspection Material inspection by the engineer or senior officer Approval by the engineer on a GRV Putting material on its location Issue of material as per the requirement of different plants and departments
Serial Number and Expiry Date Of Goods Movements of Goods Within or Between Locations
Information of Received Goods
Inventory Control
Total Sales/ Purchase Items
Value and Status of Stock
Removal or Other Disposition of Goods
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Tools and techniques used for inventory management

Effective inventory management requires an effective control system for inventories. The following are the important tool and techniques of inventory management. SAP (system application product): It is GUI(graphical user interface) based It is a wed based ERP product It is well interlinked We can trace the user and their histories Object wise permission is granted to users It is user friendly and useful for the learners. Management system of GACL Indent Goods receive voucher (GRV) method Issue of material for production Store the finished goods. Types of indent Receiving requisition Classifying items as per purchasing norms Selecting proper source of supply Comparing price estimates from various source of supply Placement of order Follow up Types of GRV method Raw material Stores and stocks/ general stores Salt(SL) KCL Misalliances Engineering service Natural gas
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1.) ABC ANALYSIS

This techniques, popularly known as always better control or the alphabetical approach provides maximum overall protection against stock outs. The techniques were developed by ford decay of general electric company, USA in 1940s. ABC is a basic analytical management tool, which enables top management to place the effort was the result will be greatest. A class item: No of items which constitutes 21% of total raw material produced and 70% of the total billing amount is classified as A class items. B class Item: No of items which constitutes 29% of total raw material produced and 20% of the total billing amount is classified as B class items. C class item: No of items which constitutes 50% of the balance amount of total raw material produced and 10% of the total amount of the total billing amount is classified as C class items. The annual consumption analysis of any organization would indicate that a handful of top high value item is less 10% of the total number will account for a substantial portion of about 70 to 75 % of the total consumption value and these few vital items are called A item which need careful attention of material managers. Similarly a large number of bottom item over 70% numbers of items called trivial many, account only for 10% of the consumption value are known as C class items. Table below suggest that approach for both ABC analysis and non-vital division. Particular A&B items are expensive C are cheap Vital Handle with care Have plenty Non-vital Have very few Have necessary quantities
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Application of ABC analysis

No doubt that ABC analysis is a best technique but this concept cannot be applied equally to all industries. Its applicability in process industries are undoubted were A category item are not any and are controllable but in case of other industry were A class items are many, the techniques may not be successful in these industries. ABC analysis has been found very helpful especially for these industries were raw material/ components/subassemblies were in small in numbers and in high value, the control is been limited to that cording ordering schedule, stocking and issues. It is said in Japan that A & B class items are stocked 2-3 days. Thus, investment in inventory is practically negligible. Of course, in India were we having many limitations. In India it is 90% investment in A & B class item and 6 to 7 month stock. The condition in India is very different from developed countries, have transportation and means of communication are so inadequate that it is impossible to predict overall goal. There can be stock out of material in spite of precaution taken. On the other hand there can be over stock of other material.
Advantages of ABC analysis

Preferences for keeping inventory can be placed properly after ABC analysis. Store personnel are placed better with this analysis i.e. their time can be utilized better. Storing, handling and delivering of materials to production department became well.
Limitation of ABC analysis

ABC analysis in order to be fully effective should be arrived out with standardization and codification. It indicates nothing about their profitability or criticality importance is impacted to an item on the basis of consumption value and not on criticality. Hence such a classification can lead for overlooking the need for space parts whose criticality is high but consumption is low. ABC analysis should be reviewed providing so the changes in price and consumption are taken into account. For example, it is common experiences that c class item, diesel in a firm, will become the most high con sumption value item during power Circes and become A class items.
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Inventory Turnover Ratio

Inventory turnover ratio is the ratio of cost of goods sold to average inventory. It is an activity/ efficiency ratio and it measures how many times per period, a business sells and replaces its inventory again. Inventory turnover ratio is calculated using the following formula: Inventory turnover = Cost of goods sold Average inventory Average inventory is calculated as the sum of the inventory at the beginning and at the end of the period divided by 2. Cost of goods sold figure is obtained from the income statement and the value of beginning and ending inventory are obtained from the balance sheets at the start and end of the accounting period. Analysis of inventory turnover ratio: Inventory ratio is used to measure the inventory management efficiency of a business. In general, a higher value indicates better performance and lower value means inefficiency in controlling inventory levels. A lower inventory ratio may be an indication of overstocking which may pose risk of obsolescence and increased inventory holding costs. However, a very high turnover may result in loss sales due to inventory shortage.
ECONOMIC ORDER QUANTITY (EOQ)

The economic order quantity, known as EOQ, represents the most favorable quantity to be ordered each time fresh orders are placed. The quantity to be ordered is called economic order quantity because the purchase of this size of material is most economical. It is helpful to determine in advance as to how much should one buy when the stock level reaches the re-order level. if large quantities are purchased, the carrying costs would be large. On the other hand, if small quantities are purchased at frequent intervals the ordering costs would be high. The economic order quantity is fixed at such a level as to minimize the cost of ordering and carrying the stock. It is the size of the order which produces the lowest cost of material ordered. The framework used to determine this order quantity is also known as Wilson EOQ Model or Wilson Formula. The model was developed by F.W.Harris in 1913, but R.H.Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis.
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FOEMULA OF EOQ Storage (holding) cost per unit = cost per unit storage cost (%) ASSUMPTIONS OF EOQ MODEL Production is instantaneous. There is no capacity constraint and the entire lot is produced simultaneously. Delivery is immediate. There is no time lag between production and availability to satisfy demand. Demand is deterministic There is no uncertainty about the quantity or timing of demand. Demand is constant over time. In fact, it can be represented as a straight line, so that if annual demand is 365 units this translates into a daily demand of one unit. A production run incurs a constant set up cost. Regardless of the size of the lot or the status of the factory, the set up cost is the same. Products can be analyzed singly. Either there is only a single product of conditions exit that ensure reparability of products.
COMPONENTS OF EOQ ANNUAL USAGE: The quantity of the item used in the past year. In the above formula this is expressed as Average Weekly Usage * 52 weeks. This allows us to calculate instances where the item has existed for less than one year. Our formula determines the actual weekly usage from the time it was created.
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ORDERING COSTS:
This is the sum of the fixed costs that are incurred each time an item is ordered. These costs are not associated with the quantity ordered but primarily with physical activities required to process the order such as the cost to enter the purchase order and/or requisition, any approval steps, the cost to process the receipt, incoming inspection, invoice processing and supplier payment. From the time of initiation of procurement process up to the time the materials are reached to factory those costs are called ordering costs. In GACL (RANOLI PLANT) ordering costs are kept at minimum because purchase orders are placed through systems using SAP. CARRYING COST:
This is primarily made up of the costs associated with the inventory investment and storage cost and can include Cost of putting away stock receipts and moving material within the warehouse, Rent and utilities for the portion of your warehouse used to store stock inventory, Insurance and taxes on inventory, Physical inventory and cycle counting, inventory shrinkage and obsolescence, etc. The EOQ calculation takes into account both the Ordering cost and the holding cost to arrive at the EOQ for the item. This then provides information to recommend an economic and realistic suggested order Quantity
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LITERATURE REVIEW OF INVENTORY MANAGEMENT

There are a good number of works that are related to this topic, but Five Studies are of particular relevance and interest. Wanke and Zinn (2004, p.466) states that inventory management approaches are a function Of product, operational and demand related variables such as delivery time, obsolescence, Coefficient of variation of sales and inventory turnover and those logistics managers are more likely to decentralize inventory in order to stock product close to the customer's facility if the Customers demand a reduced delivery time. On the other hand, Imai (1998) states that organizations that have a long lead time of Production, in turn leading to a large amount of inventory, means that there is no flexibility to meet changing customer orders on a day-today basis. Therefore, the problem with this inventory management decision is that when the forecast is off which is usually the case companies may be left with a volume of unsold products or its market may evaporate overnight when consumer preferences change or when a competitor comes up with a new and better product (Imai, 1998, p.26). Therefore, for an organization to adopt the right inventory management approach, this inventory management approach is necessary in order to gain more customers through customer satisfaction, and in order for the third party logistics provider organization to operate effectively through the preferable approach. Imai (1998) has argued that there is a push, pull and just in time inventory management system. The just in time system is based on the pull from the market, and this pull production is based on a short, slim production line with the shortest possible production lead time, which allows the company to respond to the fluctuating orders from the market (Imai, 1998, p.27). This system ensures that the minimum-required number of the popular models is always in stock, (and) in addition to increasing flexibility and reducing inventory to the minimum, the number of operators on the line can be drastically reduced, (and so) as a result, the overall cost of operations can be drastically reduced (Imai, 1998, p.28). Yang et al (2004) has argued that supply chains have evolved from traditional forecast-driven push to demand-driven pull systems over time, and that postponement is playing an increasingly important role in a supply chain. Yang and Burns (2003) argued that postponement fosters a new way of thinking about the supply chain and Van Hoek (1999) identified that postponement is an important characteristic of modern and competitive supply chains. Chan et al. (2002, p.1446) states that many companies have realized that important cost savings can be achieved by integrating inventory control and transportation policies throughout their supply chains.
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Therefore, these companies need to ensure they have an optimal replenishment plan, being an inventory and transportation strategy, in order to minimize total inventory and transportation costs over a finite planning horizon (Chan et al., 2002). These undisclosed companies, as explained by Chan et al. (2002), rely on external third party logistics providers for the transportation of goods from suppliers through warehouses to retailers. This cost structure, representing quantity discounts, volume-based price incentives, and other forms of economies of scale, has a major impact on the replenishment strategy. It usually reflects either incremental or all-unit discount effects, leading to the following types of cost functions (Chan et al., 2002, p.1447). Tarn et al. (2003) has described that when a consumer places an order, the order goes to the fulfillment operation, the distributor, the manufacturer, or a combination of the above (where) it is then picked, packed, handed to a shipper, and delivered to the customer (Tarn et al.,2003, p.350). The consumer who orders quickly expects delivery also quickly, but when the merchandise is not there, a consumer may not return, a lost sale has just been created and this places increased pressure on managing demand and planning up and down the supply chain (Tarn et al., 2003). This loss of sale can be attributed to the inventory management principle of inventory postponement. Wallin et al. (2006) has discussed an example of IKON Office Solutions that integrates imaging systems and services, helping businesses to manage document workflow and enabling them to increase efficiency. Wallin et al. (2006) has elaborated further arguing that IKON is in the business where when office equipment breaks down, the typical consumer demands a quick resolution, often expecting the service technician to have repair parts readily available upon diagnosis of breakdown problem without the need of scheduling a second visit. IKON has approximately 7,000 service technicians in the field, which represents 7,000 store locations of multiple repair parts that are stocked in anticipation of potential usage that is tremendously difficult to predict (Wallin et al., 2006). In the high technology industry, as shown by Wallin et al., (2006, p.53) .h methodology Wanke and Zinn (2004) has described the differences between Dell Computer electing to make to order with their emphasis on the pull demand by only manufacturing and distributing computers in response to a customer order, and in doing so, maintains a minimal investment in inventory, opposed to their direct competitor, Hewlett-Packard, that elects to manufacture products to stock on the basis of a sales forecast.
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This build-to-order system that Dell Computer elects to use, has been adopted by Compaq Computer Corporation, the world's largest PC maker in 1997 (Imai, 1998), and that they will be built after Compaq receives an order joining other industry leaders of Dell Computer and Gateway, which also wait to build until an order comes in (Imai, 1998). Billington et al. (2004), has shown that the uncertainty surrounding inventory-driven costs creates the dual problem that these costs are both difficult to calculate and difficult to forecast (and) one year ahead in the budgeting process is impossible to know for certain which products will be in high demand and which will be in low demand; which components will be delayed; and which suppliers will have quality problems (Billington et al., 2004, p.61). Billington et al. (2004, p.61) uses HP as an example saying that too much inventory of the wrong type or at the wrong place in the chain can increase obsolescence costs; on the other hand, too little of the models in demand can create allocation conflicts and lost sales and that this is the main reason why HP holds safety stock at various points in the supply chain to ensure high service levels Billington et al. (2004). With IBM, Fleischmann et al. (2003) has shown that IBM has recognized the benefits of closed-loop supply chains that integrate product returns into business operations, and that through the area of reverse logistics, there is a return of used products at the end of their normal life cycles, which are a valuable resource. IBM has found that refurbishing, remanufacturing, and recycling, allows it to recapture part of the original value added or the value of materials, thereby extending their profits (Thierry et al. 1995). Kapuscinski et al. (2004) mentions that Dell management is concerned that, although the firm carried almost no inventory, its suppliers might be holding much more inventory than was needed to provide desired customer service. It is through this reason Dell sought recommendations for a sustainable process and decision-support tools for determining optimal levels of component inventory to support the final assembly process (Kapuscinski et al 2004., p.192). Dell typically carries very little inventory with the whole organization concentrating on speeding components and products through its supply chain (Kapuscinski et al., 2004). By employing the concept of postponement and combining it with a holistic view of the supply chain, a small number of best practice companies have managed to increase the performance of their firms and the supply chain as a whole (Pagh and Cooper, 1998, p.13). However, is inventory postponement bettering the high technology industry? Pagh and Cooper (1998) has explained that inventory speculation is traditionally the most often used by companies and that full speculation of all manufacturing and logistics operations is practiced. An example of this in the high technology industry is with Xerox.
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Pagh and Cooper (1998) have shown that since 1990, Xerox has been working on integrating the supply chain from supplier to end customer, with one of these needs being Xerox's standard commodity products such as their plug-and-play products like small workstations, small copiers, telecopiers, etc.). Pagh and Cooper (1998) have shown that these products are now both fully manufactured and distributed in anticipation of future demand.
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RESEARCH METHODOLOGY
Introduction inventory management

Inventories constitute the most significant part of current assets of large majority of companies in India. Inventory is defined as a stock of goods. These goods are maintained on hand at or near a businesss location so that the firm may meet demand and fulfill its reason for existence. If the firm is a retail establishment, a customer may looks elsewhere to have his or her needs satisfied if the firm does not have the required item in stock when the customer arrives. If the firm is a manufacturer, it must maintain some inventory of raw materials and work-inprogress in order to keep the factory running. In addition, it must maintain some supply of finished goods in order to meet demand. Inventories are stock of the product a company is manufacturing for sale and components that make up the production
Research design & methodology

It is a logical and systematic plan prepared for direction a research study. It specifies the objectives of the study, the methodology and techniques to be adopted for achieving the objectives. It is the plan, structure and strategy of investigation conceived so as to obtain answers to research question. Problem statement GACL exhibits outstanding performance in the manufacturing and marketing of caustic soda and other products in the chemical industry. The problem statement for the study to study the management of inventory in GACL Objectives of the study Primary objectives: To study the effectiveness of managing inventory management and the impact of the same on GACL Secondary Objectives: To analyze the various techniques being used to keep control over key materials of the company To analyze inventory turnover ratio To analyze the method used for the valuation of inventories
Importance of the study

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The study will help to find best technique for inventory control in the company Research designs The study is descriptive in nature. Source of data Secondary data are used for the general information of the topic and other data are collected from the finance department and inventory section for the purpose of data analysis. Period of the study The study on inventory management has to be done within 42 days. Sample size Last 5 years data has been selected for study of the inventorymanagement. Universe of the study Universe of the study is at GACL (Vadodara) Tools and techniques used for an analysis. Table Charts Ratio analysis
Limitation of the study

The study has taken in to account only three year for comparative analysis. Time and other resource have proved to be a constraint. It has always not been possible to get the required information. Since the study is based mostly on secondary data, the reliability of information may not be ensued. The interview timings are very short because most of persons become busy in office hours. Primary data is very less used in the study
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Valuation of inventory
On behalf of purchase order: - GACL Company is verifying the inventory on behalf of the purchase order of raw material from purchase department.
Valuation of inventories at Baroda and Dahej Plant has been worked separately. Finished goods are valued at lower of average cost for the year or average sale price for the year or average sale price of last month of financial year Finished goods lying with consignment stockiest are valued at lower of yearly average sale price for the year or average sale price of last month of financial year plus transportation charges and excise paid. By products are valued at lower of average net reasonable value for the year or average net realizable values of last month of financial year. Sale of finished goods in transit valued at actual sales invoices value. Process stocks are valued at weighted average cost. Stock of items trend is valued at lower of the landed cost or realizable value.
Tools and techniques used for inventory management

ABC analysis Classification and codification of items Inventory turnover ratio Economic order quantity
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ABC analysis
This techniques, popularly known as always better control or the alphabetical approach provides maximum overall protection against stock outs. The techniques were developed by ford decay of general electric company, USA in 1940s. A class item: No of items which constitutes 21% of total raw material produced and 70% of the total billing amount is classified as A class items. B class Item: No of items which constitutes 29% of total raw material produced and 20% of the total billing amount is classified as B class items. C class item: No of items which constitutes 50% of the balance amount of total raw material produced and 10% of the total amount of the total billing amount i s classified as C class items.
GACL follows ABC analysis for the inventory management
ABC analysis is used for the management of inventory at GACL. The raw materials are classified as A, B and C on the basis of the cost of the raw materials.
A ITEMS Salt Barium carbonate Soda ash Sodium bisulphate Alfa cellulose Sulphuric acid
B ITEMS Magna floc/fast loc Sodium sulphite Sodium thio sulphite Ammonium nitrate Mono ethline gycol Palladium catalyst
C ITEMS HM-HDPE barrels 200 ltr HDPE bags CSF HM HDPE carboys HDPE bags- KOH flakes HM-HDPE drums Furnace oil Cast iron powder Polythene bags MS drums Alumina trihydrate powder Sugar Prills bags
CLASSIFICATION AND CODIFICATION OF ITEMS

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TYPES OF ITEMS AND ITEM CODE

010203040506070809101112131415161718192021222324252627282930313233343536HCN Sodium raw materials Eng. Items stores and stock Salt Raw material and chemical Mercury Graphite Caustic soda lye Liquid Chlorine and Chlorine Gas HCL Hydrogen Steel Paints Cement Process materials Fuel material Packing material Methane Gas Sulphuric acid Barium Carbonate Hydrated Line Soda Ash Stabilizers (chemicals) Potassium Chloride Rock Phosphate (Dahej) ISO amyl alcohol (Dahej) Megan flock Anti foam Dehydran 490 (Dahej) Sodium chlorate Potassium Hydroxide lye Hydrogen Peroxide Light diesel oil (LDO) Natural gas Aluminum ingots Paraffin wax Alumina tri hydrate powder Consumable Misc items
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D Project code used for inventory 01- CSI 03CCU 05K2co3 10CPL up to separation stage (KoH) 11Sodium Cyanide (SCN) 18Aluminum Chloride (ALU) 21Chloromethane (CLM) 23Poly aluminum chlorides (PAC) 32Hydrogen Peroxide (H202) 39H202Carboys Mfg. Facility 40Potassium hydroxide flakers unit (KOH Flakers) 42Research & development (R&D) 43Chlorinated paraffin wax (CPW) 46Sodium ferrocyanide (SFcN) 50CSL (B) up to separation stage 51CSL (B) after to separation stage 52Chloride 53Hydrochloride Acid (HCL) 54CPL after Separation Stage 70Utilities 71Services 72Factory Overhead
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Inventory Turnover Ratio

Inventory turnover ratio is the ratio of cost of goods sold to average inventory. It is an activity/ efficiency ratio and it measures how many times per period, a business sells and replaces its inventory again. Inventory turnover ratio is calculated using the following formula: INVENTORY TURNOVER RATIO: YEAR Cost of goods sold Average inventory Inventory ratio 2007-2008 56437.68 7020.37 2008-2009 68818.13 8545.11 8.05 2009-2010 80701.96 10010.795 8.06 2010-2011 105088.33 13764.76 7.63 2011-2012 118842.85 15541.09 7.65
turnover 8.04
INVENTORY TURNOVER RATIO

8.2 8 7.8 7.6 7.4 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 7.63 7.65 8.04 8.05 8.06
INTERPRETATION
The higher ratio is better for the company. Here, inventory turnover ratio of GACL has increased from 8.04 times in 2007-2008 to 8.05 times in 2008-2009 and the main reason for this was increase in the cost of goods sold also increase in the inventory. But it decreased in the year 2010-2011 to 7.63 from 8.06 in 2009-2010. Again there is an increased turnover ratio in the year 2011-2012 of 7.65 which shows improvement in inventory management. There is comparison between the ATUL ltd. (Whose one of the major competitor) and GACL ltd
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INVENTORY TURNOVER RATIO OF TWO COMPANIES

YEAR 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 GACL 8.04 8.05 8.06 7.63 7.65 ATUL LTD. 7.30 7.22 6.59 6.99 7.30
10 8 6 4 2 0
8.04
7.3 8.05
7.22
8.06 6.59
7.63
6.99
7.65
7.3
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
GACL
ATUL LTD.
INTERPRETATION The comparison of inventory turnover ratio of GACL and ATUL LTD. Shows that GACL is on the better side in managing its inventories. It has also been seen that the inventory turnover ratio of GACL remained on higher side all these years then ATUL LTD, whose one of the major competitor of the company.
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2.) ECONOMIC ORDER QUANTITY (EOQ) The economic order quantity, known as EOQ, represents the most favorable quantity to be ordered each time fresh orders are placed. The quantity to be ordered is called economic order quantity because the purchase of this size of material is most economical. FOEMULA OF EOQ
Storage (holding) cost per unit = cost per unit storage cost (%) CALCULATION OF EOQ =

The EOQ formula uses the following parameters: D = Average weekly usage taken from all issue movements over previous year. C = Carry factor expressed as a percentage S = ordering cost, as entered H = Holding cost of the item.
Here we thaken three major raw materila of the GACL for producing the product. SALT (MAJOR ITEM) BARIUM CARBONATE SODA ASH
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SALT (MAJOR ITEM) This item is used frequently in the production process. Without this item, the production process will be disturbed. Annual requirement (D) = 3222 Units (MT) Order cost (S) = 2772.57 / order. Holding cost (h) = 25 % Unit cost (C) = 3176.687 Units (MT) EOQ = = =
. ..
Units (MT)
150 Units (MT)

3222 150
Optimal Ordering Frequency = =
= 21.48 / year
BARIUM CARBONATE This item is used frequently in the production process. Annual Requirement (D) = 388080 Units (MT) Order cost (S) = 75 / order Holding cost (h) = 25 % Unit cost (C) = 2154 Units. (MT)
2 388080 75 2154 0.25
EOQ
= =
Units (MT)
= 330 Units (MT) Optimal Ordering Frequency = =

388080 330
= 1176 / year
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SODA ASH This item is used frequently in the production process. Without this item, the production process will be disturbed. Annual Requirement (D) = 356571 Units (MT) Order cost (S) = 115 / order Holding Cost (h) = 25% Unit cost = 176 Units (MT)
EOQ = =
Units (MT)
= 1363 Units Optimal Ordering Frequency = =

356571 1363
= 261.6 / year
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FINDINGS
In spite of global economic slowdown GACL (VADODARA) has been able to manage inventory efficiently generating satisfactory gross margin on product and cash inflows. Resources are moving fast in the inventory as there is very little time interval between production and sales. Form last three years, inventory turnover ratio is continuously increasing. It is the positive sign for the company and the company can continuously increase its sales and ultimately it can gain its maximum profit gradually. ABC Analysis is the best technique for inventory control. According to ABC analysis Inventory can be controlled effectively in the last three years. The company is using Exceed credit period. MRP in SAP system generates efficient purchase requisition to avoid unnecessary blocking of Working capital & to reduce Carrying costs. By using EOQ techniques the company can minimize its overall cost and forecast its optimal order at an every interval.
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RECOMMENDATION
They have to make some innovation in inventory control system for betterment of the company, so there cost will be decrease and effectively handle the procedure of the company The current method of managing inventory is good, but company should improve their current situation because it was lower than some previous respective year. They need to examine data related to inventory because there all the information draws from system which regularly upgrade. There need to check no error in the system and perfectly manage the data. They can find out annually inventory turnover ratio which helps them to manage proper inventory.
For inventory, in order to improve the position, GACL can reduce the level of stocks by resorting to phased materials i.e. purchasing according to requirement and disposing off or recycling the unserviceable inventories. However, the low turnover of stock may also be due to problems with materials. Inventory management is a great concern for GACL especially stores and spares. The purchase manager should take proper steps for procurement of inventories. The procurement for materials requisition processing should be reduced so as to minimize the lead time especially in some major product which most required in the company.
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CONCLUSION
GACL is one of the leading chemical company, therefore good experience got from this company while duration of learning.
As rapidly increase opportunity for chemical sector, this market will increase day by day so company should also focused on this future opportunity. Hence the study at GACL gave a vast learning experience to me and has helped to enhance my knowledge. During the study I learnt how the theoretical financial analysis aspects are used in practice. I have realized during my project that a credit analyst must own multi-disciplinary talents like financial, technical as well as legal know-how. Thus I hope that this learning will definitely help me in my near future.
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REFERENCES
Pandey I M, Financial management, 10th edition., Vikas publication house Pvt Ltd., 2011. Chandra Prasanna, Financial Management (Theory and practice), 7 th edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi. 2012.
pamphlets, brochures, annual reports, provided by GACL Imai, M., Will America's corporate theme song be "Just in Time"? (1998) The Journal for Quality and Participation. Cincinnati: Vol.21, Iss. 2; pg. 26, 3 pgs Kapuscinski, R., Zhang, R.Q., Carbonneau, P., Moore, R., and Reeves, B., (2004) Inventory Decisions in Dell's Supply Chain Interfaces. Linthicum:Vol.34, Iss. 3; pg. 191, 15 pgs
Ballou, R.H. (1999), Business Logistics Management: Planning, Organising, and Controlling the Supply Chain, 4th ed., Prentice-Hall International, London. Billington, C., Callioni, G., Crane, B., Ruark, J.D., et al, (2004) Accelerating the Profitability of Hewlett-Packard's Supply Chains. Interfaces. Linthicum: Jan/Feb 2004. Breugelmans, E., Campob, K., Gijsbrechts (2006), Opportunities for active stock -out management in online stores: The impact of the stock-out policy on online stock-out reactions 2006 New York University. Published by Elsevier Inc. Bucklin, L.P. (1965), "Postponement, speculation, and the structure of distribution channels", Journal of Marketing Research, Vol. 2 No. 1, pp. 26-32
Byoungho, J., (2004) Achieving an Optimal Global Versus Domestic Sourcing Balance under Demand Uncertainty. International Journal of Operations and Production Management. Bradford. Vol.24, Iss 11/12, p.1292 Chan, L.M.A., Muriel, A., Shen, Z-J.M., Simchi-Levi, D. and Teo C-P. (2002) Effective zeroinventory-ordering policies forzthe single-warehouse multiretailer problem with piecewise linear cost structures. Management Science. Linthicum: Vol.48, Iss. 11; pg . 1446, 15 pgs
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Kathleen M. (1989), Building Theories from Case Study Research, Academy of Management Review. Vol. 14, No. 4, pp. 532-550. Ellram, Lisa M. (1996), The Use of the Case Study Method in Logistics Research, Journal of Business Logistics. Vol. 17, No. 2, pp. 93-139. Fleischmann, M., van Nunen, J.A.E.E., and Grave, B., (2003) Integrating Closed -Loop Supply Chains and Spare-Parts Management at IBM Interfaces. Linthicum: Vol.33, Iss. 6; pg. 44
Graman, G.A. and Magazine, M.J., (2006) Im plementation issues influencing the decision to adopt postponement International Journal of Operations & Production Management; Volume: 26 Issue: 10; pg. Handfield, R.B. (2002), "Reducing costs across the supply chain", Optimize, December, pp. 54-60.
Khan S., (2003) Supplier choice criteria of executing agencies in developing countries.The International Journal of Public Sector Management; 16, 4/5; ABI/INFORM Global, pg. 261
Kuo, C-H, Dunn, K.D. and Randhawa, S.U. A case study assessment of perfo rmance measurement in distribution centers. Industrial Management + Data Systems. Wembley: 1999. Vol. 99, Iss. 2; p. 54 Langabeer, J., Stoughton, T., (2001) Demand planning and forecasting in the high technology industry. The Journal of Business Forecasting Methods & Systems. Flushing: Vol.20, Iss. 1; pg. 7, 4 pgs
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WEBSITE
http://www.gujaratalkalies.com/ http://www.gujaratalkalies.com/new/profile.htm http://www.gujaratalkalies.com/new/adm.htm http://www.gujaratalkalies.com/new/products_main.htm http://www.gujaratalkalies.com/new/history.htm http://www.gujaratalkalies.com/new/vision.htm http://www.gujaratalkalies.com/new/purchase_procedure.pdf http://www.gujaratalkalies.com/new/location.htm http://www.gujaratalkalies.com/new/awards.htm http://www.gujaratalkalies.com/new/pre_q_vendor.htm https://en.wikipedia.org/wiki/Inventory http://www.preservearticles.com/2011092314016/what-are-the-main-techniques-ofinventory-material-control.html http://managementstudyguide.com/inventory-management.htm http://en.wikipedia.org/wiki/Economic_order_quantity http://en.wikipedia.org/wiki/Inventory_turnover http://scm.ncsu.edu/scm-articles/article/economic-order-quantity-eoq-modelinventory-management-models-a-tutorial http://www.studymode.com/essays/Inventory-Management-And-ControlSystem-1778983.html http://www.purchasing-procurement-center.com/abc-analysis.html http://blog.technologyevaluation.com/blog/2013/01/10/in-conversation-withrootstock-management/
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A SUMMER INTERNSHIP PROJECT REPORT ON

GUJARAT TECHNOLOGICAL UNIVERSITY

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

Prof. Nisarg Joshi

Dr. Ashvin Dave

Dr. Arti Trivedi

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

Date: 03-08-2013 Place: Ahmedabad Rakshika Patel

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

HISTORY OF THE COMPANY

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

Gujarat Alkalies and Chemicals Limited.

P.O. Petrochemicals-391346 Dist. Vadodara, Gujarat, India Phone-+91-265-2232681-2 Fax-+91-265-2232130

Size of the organization:

Large Scale organization.

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

Messrs R. K. Patel & Co, Cost Accountants, Vadodara.

Registrar & share transfer agents :

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

Dr. Varesh Sinha I.A.S Chairman, GACL

Shri D. J. Pandian I.A.S

KH-214, Sector - 19, Gandhinagar 382019

O-079-23250772-3, 23235571 F-079-23250797, 23251755 E-mail: secepd@gujarat.gov.in

Dr. Hasmukh Adhia I.A.S

12, Judges Bunglow Bodakdev Ahmedabad 380 054

O-079-23250611/13 F-079-23250605 R-079-26840009 M-99784 05430 E-mail: secfd@gujarat.gov.in

Shri G. C. Murmu I.A.S

Plot No. 11 Sector-2 Gandhinagar 382 019

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

O-022-22154139 66552184 F-022-22186966 M-098980 05959 E-mail: gm.yadwadkar@idbi.co.in

M-098111 08447, 098739 57590 R-0278-6499072 E-mail: sdlala1924@gmail.com

Dr. Sukh Dev

R-022-27720565 M-098210 53454, 09324 053454 F-022-27708148 E-mail: jayantgodbole1945@rediffmail.com jayantgodbole1945@gmail.com

O-0265-2232801, 2230030 F-0265-2232130 E-mail: md@gacl.co.in

Shri M. S. Dagur I.A.S Managing Director

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

ISO CERTIFICATION, VISION AND MISSION

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

NEW LOGO OF GACL

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH (768)

GACL got following national awards:

Name of the Award

Purpose of the Award

Name of the Organization

Date of receiving the Award