INTRODUCTION OF THE TOPIC

Every firm aims at maximizing the wealth of shareholders. Earning a steady amount of profit requires successful sales activity. The firm has to invest enough funds in current assets for the success of sales activity. There are different types of inventories that influence the working capital of a firm. They are raw materials, work-in-progress, finished goods, flabby etc. nventories should be managed between the two extreme peaks. t should be neither high nor less. ! well reconciled scientific approach can help the management to plan and control inventory effectively and efficiently. !ccording to the report of "rakash Tondon #ommittee $who conducted a study on the issue of financing inventory and receivables in the light of scarce resources of the country%, commended that most of the ndian ndustries generally finance their inventories with bank credit. Traditionally, the industrial sector of the economy has been accounting for more than && percent to '( percent of the total credit granted by the banking system. ndustries get bank credits advance against inventory. )ormally, credit is made available on the basis of the inventory pledge or hypothecation. *ut of the total value of the inventory pledged or hypothecated, a certain percentage is advanced to the borrower. +owever, a bank may advance loans against the full value of the inventory, the client have. *n an average the bank retain a margin of ,& percent to -& percent. !ccording to this report .flabby/ inventory shouldn0t be permitted and the .profit making/ inventory might be positively discouraged. ! good management always tries to bring down safety inventory as much as periodical statistical checks may 1ustify. Excess inventory is considered as luxury and when consider with normal inventory it get clear that one is stable and the other fluxuates. Even in the normal stage of inventory there should be an excellent system which maintains the minimum level of 2aw materials, process stock, finished goods and stores and thus ensures continuity of production. The term working capital refers to current assets which may be defined as those which are convertible into cash or equivalents within a period of one year and those which are required to meet day to day operations. The working capital refers to the management of current assets and current liabilities. ! firm3s working capital consist of its investments in current assets which includes short term assets such as cash and bank balances, inventories, receivables and marketable securities. 4o the working capital management refers to the management of the level of all those individual current assets. ,5"age

6ainly there are two concepts regarding the meaning of working capital. !s per the first view, working capital is the total of current assets represented by the long term and short term liabilities. This view place more emphasis on the quantitative aspect of working capital rather than its qualitative aspect. t is because of the fact that as all the current assets assist in the conduct of business operations, it doesn3t matter whether they are finance by long term funds or by current or short term liability. *n the other hand, the other view is given more emphasis on the qualitative aspects rather than quantitative aspects of working capital. 4imilarly, the definitions of working capital should be based on the net concept which means that working capital is the excess of current assets over current liabilities. Every business needs funds for its establishment and to carryout its day to day operations. 7ong term funds are used to create production facilities through purchase of fixed assets such as plant and machinery, land and building, furniture etc The need and importance of working capital in a firm cannot be over emphasized. +ardly, we can find a business firm, which does not require any amount of working capital. 8ut it is a fact that the requirement of working capital differs from firm to firm. The need of working capital arises due to the time gap between production and its realization of cash from sale proceeds. There is time gap in the operation cycle of purchase of raw material and its production9 production and sales, and sales and realization of cash. Thus it is necessary to have working capital for the following purposes: ;or the purpose of raw material components and spares. To pay wages and salaries. ;or the purpose of meeting day-to-day expenses and overhead costs such as fuel, power and office expenses etc. To meet the selling expenses such as packing, advertising etc. To provide credit facilities to the customers. To maintain the inventories of raw material work-in-progress, stores and spares and finished stock.

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COMPANY PROFILE

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COMPANY PROFILE

EVEREADY INDUSTRIES LTD

ABOUT US
Eveready ndustries ndia 7td., a =,&( million company, is one of the most reputed ;6#> companies in ndia, with formidable strengths in manufacturing, marketing and distributing a diverse range of products covering 8atteries, ;lashlights and "acket Tea. Eveready is the world33s third largest producer of carbon zinc batteries, selling more than a billion units a year. ts carbon zinc batteries dominate the ndian market with a complete range for all equipment types. ?ith such formidable strengths in the domestic market, Eveready ndustries ndia 7td. launched its products in the >lobal market under the brand name 7!@!. 6aking its presence felt in ,& countries, 7!@! is now a brand to watch out for. Eveready Industries India, 7td $E 7% $previously known as Uni n Car!ide India" Li#ited% is the flagship company of the 8.6. Ahaitan >roup. The brand Eveready has been present in ndia since ,B(&. E 73s principal activities are the manufacture and market of batteries, flashlight cases, electrolytic manganese dioxide and arc carbons. t also manufactures photo-engravers platesCstrips for printing, castings, hard facing and tube rods, carbon electrodes and other D5"age

related products. The company also produces and markets tea. The >roup3s operating facilities are located at Aolkata, #hennai, +yderabad, )* E!, >urgaon and )avi 6umbai. Euring the fiscal year <((< the group sold its wholly subsidiaries Eufflaghur nvestments 7imited and )atex nvestment and 6arketing 7imited. 8atteries accounted for &,F of fiscal <((< revenues9 Tea, -GF9 ;lashlight cases, BF9 Electrolytic 6anganese dioxide, ,F9 "urchased products, ,F and *thers, nominal. E 7 is the world0s third largest producer of carbon zinc batteries, selling more than a billion units a year. E 7 is ndia0s largest selling brand of dry cell batteries and flashlights $torches%, with dominant market shares of about D'F and G&F respectively.

VISION
;or over a century, our corporation has been a partner to consumers with our expertise in portable power and light. Today, we endeavour to be the perfect #ompanion to consumers by providing value-for-money brands with Tangible Eifferentiation in quality Every day, we seek #onsumer "roximity to ensure the en1oyment of better living.

MISSION
*ur core competence will be based on these three core values for the total synergy and future profitable growth of our corporation $UALITY POLICY % PROCESSES Eveready has a totally computerized battery testing facility - the only battery testing laboratory accredited by )ational !ccreditation 8oard for Testing H #alibration 7aboratories $)!87% - where batteries can be tested as per 8 4, E# and IE# standards. Eveready3s research team constitutes highly qualified 4cientists, Engineers, #hemists and Technicians dedicated to maintaining technology leadership in Jinc-#arbon batteries, ;lashlights and related components. The 2esearch #entre has "ilot "lant facilities, !nalytical testing facilities such as !tomic !bsorption 4pectrophotometer $!!4%, "olarograph, K-2ay Eiffractometer $K2E% and a #hemical 7aboratory. The Eveready 2esearch #entre is capable of providing world-class testing and research support to meet stringent customer requirements from across the world. &5"age

Products Eveready ndustries have business interests spreading across batteries, flashlights, lighting solutions, alternative lighting solutions, and packed Tea. Batteries

Jinc-carbon battery: ! zinc-carbon battery which is commonly used for Toys, #ameras, Torches, ?alkman, #E-players, 2adios, clocks and cordless mikes. !lkaline 8attery: Eveready Lltima !lkaline battery is the is one of one of the most popular batteries used in electronic gadgets of modern times. 2echargeable 8attery: 3Eveready 2echarge3 is one of the pioneers as a brand of rechargeable batteries and chargers to be introduced in ndia. 8attery >uide

F&as'&i('ts

digi7EE Torches: These torches use power efficient 7EEs in place of the incandescent bulbs. 8rass Torches: Ieevan 4athi brass torchlight has been a reliable, durable and repairable, making it a must-have evening companion especially in the villages. t is one of the most trusted brands in rural ndia across all product categories.

!luminium H "lastic Torches: These torches have strong durable bodies, slide switches for easy handling and come in a wide range of models and colors.

Li('tin( S &uti ns

#ompact ;luorescent 7amps: n <((M, Eveready forayed into the lighting business with the launch of a range of #ompact ;luorescent 7amps. +alogen 7amps: Eveready offers halogen lamps for outdoor lighting and videoshooting. >eneral lighting serviceCincandescent lamps: ! range of incandescent bulbs in different sizes, voltages and colours are used widely in household and commercial lighting, apart from portable, decorative and advertising lighting.

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Marketing n ,BB<, 2ediffusion NH2, the agency on record, cracked the O>ive me 2ed0 tagline that Eveready ndustry continues to use. n <((D, !mitabh 8achchan was appointed as brand ambassador for a period of two years, during which the agency came up with another O>ive me 2ed0 campaign. ;ollowing the 8achchan ads, it was only earlier in <((B that Eveready released an ad titled O8oxing0. Eveready ndustries has launched an advertising campaign for Eveready Lltima to highlight its latest offering, Eveready Lltima 8atteries. The entire animation has been worked on by creating controlled trails of light concept which is derived out of light painting. 2ecognizable shapes were made with a torch and captured on a digital still camera. The film comprises over -((( such photographs, played back quickly, one after the other, like in a flicker book.

HISTORY
!sk any ndian consumer to name a 8attery and the first brand that comes to mind is Eveready. )ot 1ust among batteries, Eveready is a powerful brand across categories. Eveready has a portfolio comprising dry cell batteries $carbon zinc batteries, rechargeable batteries and alkaline batteries%, flashlights $torches%, #;7s $#ompact ;luorescent 7amps% and packet tea. 2ecently it has also forayed into the mosquito repellant industry. Eveready0s strength is the result of a continuous and well-orchestrated brand development strategy that maximizes the value from each consumer touch-point.

s the iconic urban face of Eveready. The advertising byline of the popular 2ed series of batteries, it is today symbolic of the empowered urban lifestyle that the brand reflects. The original, path-breaking campaign won as many as ,, advertising awards. The current television commercial on Eveready Lltima, which has explored and demonstrated the technique of light painting $through the T@#% has been very well received and is a one of its kind commercial in the entire batteries segment.

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The unmatched consumer confidence is also reflected through the various accolades that the company has got over the years. ;ew highlights have been listed below:

n the #onfederation of ndian ndustry $# %0s O8rand of the year0 <((& shortlist, Eveready made the top ten finalists list, along with brands like )okia, +", Titan, Eabur and five other +industan 7ever 8rands

!s per !# )ielsen, Eveready stood Mth among all ;6#> companies in terms of growth in the year <((D-<((&. The Economic Times0 8rand Equity survey of 8rands by 4ales, !pril <((D, put Eveready at no. << across brands in all categories. 4cores in the # survey done by the independent brand consultancy @ertebrands,

show Eveready scoring a near-perfect BBF total awareness among Target #onsumers.

!s per @ertebrands0 survey, on a ,(-point scale, Eveready scored G on popularity and M.M on contemporariness. *f all consumers surveyed, D,F called it .The *nly 8rand for 6e/.

n the !!LT4 $!wareness,!ttitude,Lshership Tracking 4tudy % conducted by !# )ielsen in the year <((M-<((G , Eveready emerged with a 8rand Equity of M.& out of ,( and the nearest competitor came up with -.M.

The same study by !# )ielsen showed Eveready having D&F market share vis a vis its nearest competitor having -(F $<((M-<((G%.

Eveready products are available under the mother brand name EVEREADY )Batteries and Li('tin( S &uti ns* and also extended brand names like

E@E2E!EN L7T 6! $!lkaline 8atteries% E@E2E!EN 2E#+!2>E $2echargeable 8atteries% E@E2E!EN IEE@!)-4!T+ $8rass Torches%, E@E2E!EN Eigi7EE $7EE ;lash 7ights%, E@E2E!EN #;7 $#ompact fluorescent lamps%, E@E2E!EN "*?E2*) $+omecare products% and E@E2E!EN "2E6 L6 >*7E C I!!>* C TEJ $"ackaged Tea% etc

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EARLY HISTORY
E 7 started its operation in ndia in ,B(&. The first dry cell batteries were imported from the L4! and sold in the ma1or cities of the country. These batteries were primarily used in imported torches. n ,B-B, the company set up its first battery plant in Aolkata. This was followed by another battery manufacturing plant in #hennai in the year ,B&<. ! torch manufacturing plant was set up at 7ucknow in ,B&G. Today it is one of the largest torch manufacturing plants in 4outh East !sia. The plant manufactures the full range of brass, aluminium and plastic torches. n ,B'B, the now infamous factory in 8hopal was opened.

SUCCESS
8y the time of the 8hopal Eisaster in ,BGD, the company was ranked twenty-first in size among companies operating in ndia. t had revenues of 2s < billion $then equivalent to L4=,M( million%. ;ifty-one per cent of the company $known at the time as L# 7% was owned by Lnion #arbide #orporation9 remaining shares were held by <D,((( stockholders. Ten thousand people were employed in five operating divisions that manufactured batteries, carbon products, welding equipment, plastics, industrial chemicals, pesticides, and marine products. E 7 became part of the ?illiamson 6agor >roup through 6c7eod 2ussel 7td in the latter half of ,BBD following the sale of Lnion #arbide #orporation3s stake in L# 7. L# 7 is primarily a dry-cell battery manufacturer at the time, but as part of the ?illiamson 6agor >roup E 7 launched three brands of packet tea under the >reendale 8rand umbrella Tez, Iaago and "remium >old. #oupled with E 70sbrands of packet tea are now easily available in most states in ndia. n ,BBM, the Eveready brand was extended to its packet tea business. 6c7eod 2ussel 7td. eventually merged with Eveready ndustries. E 7 has the licence for the Eveready brand only in ndia, 8hutan and )epal from Energizer +oldings, so it had to create a new brand for export to other markets where Energizer +oldings still has the rights to the Eveready brandP<Q. The brand 7!@! was launched in ,BBB. 7!@! batteries and flashlights have been sold in Eubai, 8ahrain, Iordan, 4udan, Egypt, 8angladesh, 6auritius, 4ri 7anka, !zerbai1an, 6exico, L4, 7ebanon, 4audi !rabia, Ethiopia and )igeria. B5"age

n <((&, E 7 celebrated its ,(( anniversary in ndia. That same year, E 7 separated its bulk tea business and de-merged 6c7eod 2ussell. EE 7 also acquired the ailing 8"7 4oft Energy 4ystem in <((&.

MILESTONES

,B(&: )ational #arbon starts its ndian operations with sale of batteries imported from L4!. ,B<': Ever 2eady #ompany ndia sets up the first arc carbon factory at #anal 2oad, Aolkata. ,B-D: Eveready #ompany incorporated as a private company on ,< )ovember. ,B-B: #amperdown ?orks - first modern battery plant established at #ossipore in Aolkata. ,BD,: Lnion 8atteries merges with Eveready #ompany and the name is changed to )ational #arbon #ompany. ,B&,: 2enamed as Lnion #arbide ndia 7td, a subsidiary of world wide multinational, Lnion #arbide #orporation. ,B&G: #ompany set its torch manufacturing plant in 7ucknow,one of the largest in south !sia. ,B&B: )ame of the company changed to Lnion #arbide ndia 7imited. ,BGD: 8hopal disaster at Lnion #arbide ndia 7TE plant in 8hopal.

The 8hopal Eisaster took place in the early hours of the morning of Eecember -, ,BGD, in the heart of the city of 8hopal in the ndian state of 6adhya "radesh. ! Lnion #arbide subsidiary pesticide plant released D( tonnes of methyl isocyanate $6 #% gas, immediately killing nearly -,((( people and ultimately causing at least ,&,((( to <<,((( total deaths. 8hopal is frequently cited as one of the world3s worst industrial disasters.P-Q The nternational 6edical #ommission on 8hopal was established in ,BB- to respond to the disasters.

,BB&: 4ale of shares of Lnion #arbide #orporation in Lnion #arbide ndia 7td to 6c 7eod 2ussel $ % 7td. belonging to the ?illiamson 6agor >roup and a new name Eveready ndustries ndia 7td $E 7%.

,BB': 6c 7eod 2ussel $ ndia% 7td, merged with E 7, bulk tea business brought into E 7 fold. <(((: 8ishnauth Tea #ompany merged with Eveready ndustries ndia 7td. ,( 5 " a g e

<((&: 8rand E@E2E!EN is a hundred years old. <((B: E 7 acquires controlling stake in Lniross 4! of ;rance, which is a leading rechargeable battery manufacturer.PDQ

Advertise#ent

DISTRIBUTION

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Eveready has a wide distribution network all over the country with ,& branches, D( godowns and D,((( distributors. *ur products are available at grocery, general provision, music, electrical, hardware, stationery, gift Cnovelty stores, at the chemists0 shops and at photo studios and printing centres. 4o much so, that many of our products are even available at the paan and cigarette shops. !ccording to !# )ielsen, Eveready batteries are available in -.- million outlets out of a total universe of M.- million ;6#> outlets. The distribution structure extends coverage out to &(((-population villages. The company employs a strong sales force so that they can operate the extensive sales network successfully. !s Eveready walks ahead in second century of existence, we have the following ob1ectives

To consolidate our benchmark supplier position in all traditional outlets for batteries and flashlights. Employ a systematic and scientific approach towards increasing our reach and quality of reach. To leverage our sales H distribution competencies into identified newer channels To service the outlets with a diversified range of products. This includes batteries, flashlights, homelights, packet tea, mosquito repellents, #;7s and bulbs. To constantly explore new selling arrangements in identified markets to improve effectiveness of servicing

RAN+E OF EVEREADY AL,ALINE BATTERIES

A&-a&ine Batteries Eveready Lltima !lkaline battery is the ultimate energy solution to the power-hungry electronic gadgets of modern times. t is undoubtedly a new benchmark of quality H performance in the category of alkaline batteries. The promise of performance comes with an affordable price tag, making it truly an ultimate choice. Eveready U&ti#a A&-a&ine Batteries are best suited for power-hungry new age gadgets like:

Eigital cameras ,< 5 " a g e

2emote-controlled toys #ertain 6"- players +igh-end portable audio-recording systems etc.

6ore variety of sizes in the Lltima range will be available very soon.

!!! !lkaline - <,,< !! !lkaline - <,,& B@ !lkaline - <,,'

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The time lag between the out flow and the inflow of fund has to be financed with permanent working capital in order to meet the above mentioned current obligations. Bene.its . ' &din( invent ries/ +olding adequate level of inventories will help in smooth production and marketing operations. The manufacturing and merchandising process do not function quickly. To continue with smooth production there should have adequate level of raw materials, work-inprogress and finished goods. n case of a manufacturing concern if it does not hold adequate stock of raw materials, finished goods etc, the purchasing will take place only after they receive the orders from their customers. This will definitely result in delay of execution of orders that may transfer their patronage to some other suppliers. The specific benefit of holding adequate inventory is as follows: ,. !void 7oss of sales: E@E2E!EN "*?E2 #E77 have their customers outside the state of 6adhya "radesh. They do not have many local customers. !lso most of the customers of E@E2E!EN "*?E2 #E77 are spread internationally. f they do not have enough inventory holdings, it will result in loss of their customers which further will result into loss of sales. <. Ruantity Eiscount: - The companies can avail enough quantity discounts if they go for bulk purchase of raw materials and other inventories. -. 2educe *rder #ost: - The firms maintaining adequate inventories can also achieve economies in ordering cost such as typing, checking, approving, and mailing. f a firm places only a few large orders instead of placing many individual small orders it can reduce the variable ordering cost associated with individual orders. D. 2educe the set up cost: - 6aintenance of large inventories helps the firm in bulk production results in reduced set up costs. 8ut holding large inventory is not considered as it creates an uncertainty in technology advancement and change in economic condition. &. !void nterruptions in "roduction: - 7arge inventories help in smooth

production as there is no difficulty Cinterruption in getting inventories. t will ,D 5 " a g e

also help in meeting all the orders placed by its customers in time. t will help them to capture more goodwill and will help in making more sales which will automatically result in large profits. E0 n #ies . ' &din( invent ries +olding of inventories exposes the manufacturing concerns to number of risks and costs like:2isk of holding nventories: - 6ainly there are three risks involved in holding huge amount of inventories. ;irst of all there is a risk of price decline due to increase in market supply of the product, introduction of new product, price cutting by the revival firms etc. 4econdly, there is a risk of product deterioration, which may arise due to holding a product for a too long period or careless storage. 7astly, the risk of obsolescence, which may arise due to the change in customer0s taste, production technique, improvement in the product design H specification etc. #ost of holding inventories: The cost of holding inventories like material costs, ordering cost and carrying cost etc will result a huge amount of expenditure which in case of low demand of product became a huge loss to the firm. nventory control comprises of two ma1or factors like quantity control and value control. t is quantity control because they are concerned with physical control of inventories. 8ut it can be value control because it is concerned with the efficient management of funds in inventories. The financial executives see that too much money is not invested in inventories and every rupee spend in inventories is efficiently and effectively utilized. Aeeping in view the quantity control and value control, inventory control should meet these two conflicting functions of $,% maintaining adequate inventories for efficient operations and $<% maintaining an inventory level that is not detrimental financially. !ccounting aspect and operational aspect are the two aspects of inventory control. The accounting aspect is concerned with maintaining documentary evidence of movements of inventory at every stage right from the time of sales and production budgets are approved to point when inventories are purchased, committed to production process and turned into finished goods. *perational aspect is concerned with maintaining inventories supplies at a level so to ensure that inventories are available for maintaining investment in inventories. The area of inventory management includes or describes the aspects like: ,& 5 " a g e

,. <. -. D. &. '.

Eetermining the size of inventory to be carried. Establishing timing schedules, procedures, and lot of sizes for new orders. #o-ordinating sales, production and inventory policies. !scertaining minimum safety levels "roviding proper storage facilities !rranging the receipts, disbursements and procurements of inventories and developing forms of recording these transactions.

M. G.

!ssigning responsibilities for carrying out inventory control functions. "roviding the report necessary for supervising the overall activity

*b1ectives of studying the inventory management of the selected public sector manufacturing units are: To know whether they are procuring right quantity of inventories at right prices and of right quantity. To know whether they are over invested in inventories. To know whether the inventories are underinvested or not.

The first and foremost ob1ective of inventory management is to ensure continuous supply of materials so that production is not held up for need of materials. 6aintenance of adequate inventories reduce inter dependence among various stages of operation. t permits the manufacturing operations to continue smoothly without interruptions resulting from days in supplies, whereas work-in-progress inventories allow production process to proceed uninterrupted because of a temporary failure at a preceding stage in operations, the finished goods inventories reduce the need of scheduling production according to the sales orders. !nother ob1ective of inventory management is to derive the most efficient utilization of the installed production facilities. 8y inventory management one can exercise control over production and purchase levels. 6aintenance of adequate inventories allows a firm in making long production runs ,' 5 " a g e

and reducing the set up costs associated with each run. "roduction can proceed at a uniform rate when sales are slack, and can be released when demand picks up. The firm may purchase inventories in economic lot sizes so that the overall cost of production is minimized. "roduction variations can also be avoided through proper control over inventories. nventory management ensures continuous production despite fluctuations in sales. 4ince production is based on sales forecasts which are seldom perfectly accurate, it has to be properly planned in order to continue the production. ?hen there is a difference between actual sales and budgeted sales, inventories of finished goods are allowed to accumulate. 4ales in excess of anticipated demand are met by drawing from these accumulated inventories. This helps in avoiding dislocations caused by rush orders. Through nventory management an organization can minimize the wastage of materials in the course of purchasing, storing and production. 8y making prompt execution of orders of customers a firm can give efficient service to customers. 4o through inventory management optimum level of inventories can be maintained at all levels of operating cycle. Through the financial ob1ective of inventory management the financial manager can utilize the capital effectively to set up the maximum and minimum levels of stocks to avoid deficiency or surplus of stock position. *ne of the main ob1ectives of inventory management is to minimize the carrying cost which comprises of the expenses for storing, insurance, storage and cost of funds tied up in inventories. Efficient management of inventories attempts to avail economies in purchasing raw materials, supplies etc. 6inimizing the risk of loss due to price decline, product deterioration and obsolescence between the time of purchase and the time of sale are also an important ob1ective of inventory control. 4ince inventories constitute the most important or significant part of a firm0s total working capital, it is the ma1or component in working capital of a firm. !n analysis of a large number public and private enterprises in ndia reveals that inventories account for nearly '(F of cost of production or investment in current assets. n case of agricultural industries, the percentage of investment in inventories ranges between '( to '& percent of the total investment in current assets. 8ut in cotton, yarn, fabrications etc. inventories amount for more than '& percent of the total investments in current assets. Thus a large part of working capital of a firm is invested in inventories. ! very good management of inventory is good financial management. !n effective inventory management contributes to an effective material management. To manage adequate working capital in a firm, it is better to manage its inventory efficiently. t is often said that more firms fall on account of absurd and ,M 5 " a g e

inefficient inventory management than for any other reason. The central point of inventory management is to avoid over investment or under investment in inventories and to maintain inventories at the optimum level for maximum profits.

t is very essential to have centralized purchasing for a good inventory control system. "urchasing is the most important aspects of inventory management as a substantial part of firm0s finance is committed to materials inventories which affect the cash flow position of the firm. !n efficient and effective stores control is also essential for a good inventory control system. The investments in materials constitute a ma1or portion of current assets and represent an equal amount of cash. The usual inventories maintained by a firm include raw materials work-in-progress and finished goods. Each of these ma1or categories may have a number of such divisions. n order to facilitate prompt recording, locating and dealings each item of inventory must be assigned a particular code for proper identification. nventories in stores are classified either on the basis of their nature or on the basis of their usage. ;or the purpose of selective control on materials, !8# classification of inventories is very useful for the manufacturing firms. 4tandardization and simplification of materials is an important consideration of an efficient inventory system. !dequate storage and handling facilities, adequate inventory records and reports and efficient staffs to maintain the records and other establishment records are very necessary for a good inventory control system. There are three main methods of inventory control. They are determination of economic order quantity, re-order level and !8# analysis. "erpetual inventory system is a system of records maintained by the controlling department, which reflects the physical movements of stocks and their current balance. This system is based on bin cards and stores ledger as they make a record of the physical movements of stocks and also reflect the balance in the stores. This system of inventory control facilitates regular physical checking of stocks without closing down the work for stock taking. The perpetual inventory control system helps in avoiding over stocking and under stocking of inventories, and serves as continuous system of internal check against abnormal loss or wastage. t enables the nventory as one of the most important components of working capital and its proper management cannot be under stressed. ;undamentally, inventory consists of raw material, work in progress and finished goods. The proportion of inventories to fixed assets is quite high ranging from <&F to D&F in ,G 5 " a g e

the manufacturing sector $in cement it is around <&F%. +ence inventory management is crucial for all managers irrespective of functional specialization. 4ince a number of industrial relations disputes in manufacturing industries are linked to production bonus and incentives relating to inventory irrespective of the market need for inventory, the +2 6anager must understand this point well. Every member of the organization feels its impact and yet scant respect is paid to it. This is most unfortunate. ! serious study of sick companies will support this contention. +ence those managers who are involved with 4trategic +2 should take note of some of these important criteria for insuring proper management. ,. <. 6aintaining a proper level of stock !8# analysis to control high value items more intensively as compared to low value items. D. &. "roper ordering policies. "ricing of raw material work in progress and finished goods #ontrol over wastage and obsolescence.

;urther research by industrial economists sheds light on some practices adopted by various industries, which are shown through extracts from their balance sheets. +ere is a quick glance at some of these important indicators. 6anagement has to keep the investment in inventories under control and minimize the carrying costs. Ma1 r Invent ry Rati s Invent ry Turn ver Rati 2)C st . #ateria&s 0 nsu#ed%C st . avera(e invent ry* ?here average inventory S $opening inventory T closing inventory% < This ratio indicates the liquidity of inventory. t explains whether investment in inventories is within proper limits or not. This ratio indicates the velocity with which stock moves through the business. There is no fixed standard for inventory turnover as it depends greatly on nature of industry and on the sales policies followed by the firm. ;or assessing the adequacy of the quantum of capital investment in inventory and its 1ustification, this ratio ,B 5 " a g e

should be compared with other such ratios at industry or firm level. ! high inventory turnover ratio indicates brisk sales and sound marketing efficiency of the firm. ! low inventory turnover ratio indicates blockage of funds in inventory resulting from slump in the business or over investment in stock, or piling up of stock 1ust to take the advantage of expected rise in selling price or to meet the estimated rise in future sales, or incorrect or improper valuation of stock. Too high inventory turnover ratio indicates that the firm is operating with low margin of profit and vice-versa. t is, however, symptom of over-trading. t is not possible to establish a standard ratio of inventory because it will differ from industry to industry. 8ut the following general rules can be taken into consideration for the 1udgment of inventory turnover ratio. ,. <. -. The raw material should not exceed < or D months0 consumption of the year. The finished goods should not exceed < to - months0 sales ?ork in progress should not exceed ,& to -( days0 sales. 3 r- in Pr (ress Turn ver Rati 2 C st . 0 #4&eted 5 r-%Avera(e st 0- . 3IP ;or control purpose it is essential to complete the turnover rate of different items of inventory so that to identify its slow moving inventories and avoid excessive investment of funds in such items. !lso it helps in identifying the fast moving inventories, slow moving inventories and dormant inventories. ;ast moving inventories need a high level of stock, slow moving inventories have a low inventory turnover ratio and since the dormant inventories are seldom demanded and that is why they need a very low stock holding. *bsolete inventories are which no more in demand. 4o that it should be disposed off immediately to avoid carrying cost.

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Invent ry t 3 r-in( Ca4ita& Rati

The inventory to working capital ratio shows the relationship between the investment in the inventories and the net investment in the working capital. Every business organization should have sufficient working capital for the day-to-day running of the business. 4ince the inventory has a direct relationship with working capital its increase or decrease directly affects the working capital of the business. The value of inventory is always unpredictable due to the unexpected changes in the market condition, price fluxuation and other factors. )ormally a low rate is considered to be good as it express the sound financial condition of the business. Invent ry t Current Assets Rati The net working capital is directly related with the changes in the current assets. f the current assets increase the working capital also increases. 4o the components of working capital play an important role. ?hile studying the working capital position of a firm it is very important to see the different components of working capital. 4ince inventory plays a vital role in the total current assets it is necessary to see the inventory position in the total current assets. )ormally less than &(F of current assets are treated as good inventory holdings in any firm.

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OB6ECTIVES OF THE TRAININ+

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OB6ECTIVES OF THE TRAININ+

O!1e0tives . Invent ry Mana(e#ent nventory management is the prime management when we talk about ?orking #apital 6anagement. 4ince the role of inventory in maintaining and determining the liquidity is much important, it should be given prime attention in the management of working capital. To know whether stocks are available or not in the selected units when they are needed To know whether the Eveready P 5er Ce&& are meeting the best policy of .)either to over stocks nor to run out/ To know the investment in inventories, inventory carrying cost and obsolescence losses if any due to mismanagement of inventories in Eveready P 5er Ce&&7 To know whether there is any losses of material due to carelessness of pilferage in Eveready P 5er Ce&& . To find out and bring down the inventory of Eveready P 5er Ce&& carrying cost which is considerable.

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RESEARCH METHODOLO+Y

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RESEARCH METHODOLO+Y
Met' d & (y The research approach for this study was conclusive research. #onclusive 2esearch is designed to help executives to choose among various possible alternatives to make a viable business decision. ;urther this offshoot of conclusive research was of descriptive type, which is an research. The problem for this research was non-operating in

nature the data both primary and secondary data, the source was &( respondents for primary data. ;or the proper analysis of data simple 4tatistical techniques such as percentage were use. t helped in making more accurate generalization from the data available. Data C &&e0ti n #ollect data from manger and other authorized executive of E@E2E!EN "*?E2 #E77 as the secondary data. De.inin( t'e Resear0' O!1e0tives Eefining the ob1ective is often the most difficult step in the research process. ! poorly defined ob1ective can lead to inappropriate research and a waste of valuable time and money. Exploratory or preliminary research is often required to help define the issue to be investigated. 4ales figures from other markets indicated that their brand would appeal to oneng people if the right marketing messages were created. De.inin( t'e Resear0' 4&an +aving defined the ob1ective, 4prite then created a research plan to help gather the information management needed. 6arket research information comes in the forms of "rimary and 4econdary Eata. "rimary Eata is new information collected by a researcher specifically for the pro1ect in hand. This data is often very expensive to gather and may vary in terms of quality 4econdary Eata is information that already exists somewhere else, whether that is inside the company or in an external source e.g. newspapers, magazines, the internet etc. 4econdary data is very useful for providing background knowledge to a problem and is used by most companies as a starting point in a research process. The methodology needed to be in a systematic process so as to come to a fruitful result so a pro1ect plan was prepared in order to complete the pro1ect in time.

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LIMITATION OF THE STUDY

?hile completing this pro1ect there were certain limitations, which made this pro1ect more challenging. 6eeting the concerned person and taking time was ma1or constraint because of their busy schedule. Time was the ma1or constraint. The accuracy of indications given by the respondents may not be consider adequate

Tender syste# 'as !een ad 4ted t 4r 0ure #ateria&s at t'e # st 0 #4etitive rates7 T'ree -inds . tenders are !een . && 5ed !y EVEREADY PO3ER CELL7 T'ese are as . && 5s

*pen Tender 7imited Tender 4ingle Tender

Open tender ,. *pen tender shall be restored to in such cases where adequate numbers of approved vendors are not listed andCor procurement from limited tender is considered not desirable. ;or this purpose all known sources shall be addressed andCor press advertisement and Cor publication on web site, this fact be also advertised in the press. <. Enquiry shall be treated, as an open tender if it is addressed to all approved vendors, not less than six. n case of response from twoCthree vendors, the open tender shall be treated as limited tender.

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Limited Tender ,. 7imited tender would be addressed to at least three approved vendors. The number of vendors to be addressed may be reduced, at the discretion of the head of materials managementCproduct manager incase where approved vendors are not available. <. n case of approved vendors are more than three and all are not addressed, care should be taken that subsequent enquiry is addressed to the vendors on whom earlier orders were placed and selection of other approved vendors is done by rotation with the approval of next higher authority. Single tender The single tender route would be resorted to in exceptional cases. 4ingle tender may be invited from the approved vendors due to any of the following reasons duly certified by the head of the indenting department. a. "roprietary in nature b. "urchase form collaborators or from there recommended vendors. c. #ustomers contract requirements. d. Lrgency of requirements e. 4ource standardization. f. Educational and development orders. g. !vailability of partnerCdieCspecial tooling, with a single vendor. h. @alue of purchasing

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DESCRIPTION/ANALYSI S/INTERPRETATION OF THE STUDY

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DESCRIPTION%ANALYSIS%INTERPRETATION OF THE STUDY

"L2#+!4E *; TE6

Pur0'ase . ! u('t ite#s 0an !e . t'e . && 5in( ty4es. "urchase as per performance 4pecification. $i.e. as per supply EesignCTechnology%.This is called TN"E U K material. "urchase as per E@E2E!EN "*?E2 #E77 design specification this can further categorized into two parts. 6aterial is supplied by supplier but design and technology is given by E@E2E!EN "*?E2 #E77. This is called TN"E UN material. 6aterial as well as design and technology is given by E@E2E!EN "*?E2 #E77. This is called TN"E UJ material.

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HO3 TO MANA+E PRODUCT

PRODUCT MATERIAL DIRECTORY/8
"roduct 6aterial Eirectory identifies the items along with the applicable purchase specifications. This ?ould help in selecting the supplier in advance which meets to our purchase specifications, so that once the indent is received only price can be obtained from the suppliers9 this would help in eliminate the time consumed in clarification on technical matters which would greatly reduce the procurement time. "roduct 6aterial Eirectory identifies the quality control requirements of items as well as supplier checks9 even the procurement of new items would meet >eneral 6anager0s approval. This will avoid the risk of procurement of items from outside sources.

Su44&ier Assess#ent Syste#/ 8

>enerally large firms like E@E2E!EN "*?E2 #E77 have needed the suppliers because it does not manufacture all the items required for competition of its products economically by utilizing the capabilities of suppliers it add overall value to our equipments to meet ultimate need of the customer. The system aims to select reliable suppliers and differentiate between quality conscious professionals from those who are in the business for profit alone. The system weed out such suppliers at initial stage itself, otherwise entry of such suppliers in E@E2E!EN "*?E2 #E77 family would pose a serious problem like delaying and substandard suppliers, contractual litigation, unrealistic price etc, which would consume most of our product time. Thus the system aims to check supplier0s materials nonconformance and reliability at entry stage.

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T'e 4r 0ess . s ur0e se&e0ti n: The process of suppliers selection can be categorized in the following stages.

In. r#ati n sta(e/ 8

The

information about supplier is received in 4upplier Eevelopment #ell

$4E#% through following channel.

4upplier approach directly

nformation received through various disciplines of organization such as EnggC66Ctechnology etc.

Through business catalogCexhibitionsC4eminarsCElectronics media etc. "ress tenders

Assess#ent sta(e 8ased on the details furnished by supplier the 6 4## would receive the same and convey their comments to 4E#. t is mandatory to assess the indigenous supplier for critical N H J category of items by visiting the supplier0s work. 6inimum two trained and certified assessors shall assess the suppliers on the basis of documents assessmentC4ite visit. The 6 4## after scrutiny may come to any of the following conclusion . 4upplier is not up to the mark or there are sufficient suppliers and adding a new supplier would not five any benefit to E@E2E!EN "*?E2 #E77 the 4E# intimate the supplier. 4upplier can be considered but assessment is required by visiting the firm. suppliers can be considered for trail code based on the details furnished.

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En&ist#ent Sta(e 8ased on the 4uggestions of the 6 4## the matter shall be put up for consideration of enlistment of suppliers to apex body of unit termed as L) T 4L""7 E2 2E@ E? #*66 TTEE $L42#% which will decide about the enlistment of status of the supplier. The supplier will be assessed on organization soundness, quality system and technical competence.

SUPPLIER ENLISTMENT PROCEDURE

4upplier enlistment is the most important activity of material management function This is the entry point for supplier in E@E2E!EN "*?E2 #E77 family. ! carefully chosen supplier will be an asset to the organization and an error of 1udgment may create a problem for E@E2E!EN "*?E2 #E77. +ence the decision to enlist a supplier shall be entrusted to an apex body at unit called as L) T 4L""7 E2 2E@ E? #*66 TTEE. The members of the L42#

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Me#!ers . Unit Su44&ier Revie5 C ##ittee

#hairman

"roduct 6aterial +ead

+ead 8* Ruality

+ead "urchase ;inance

Head9Su! C ntra0tin(

Fun0ti na& Head

C nvener

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TYPES OF RE+ISTRATION
#onsidering the total business operations of Eveready "ower #ell involving purchase of raw material C components Ccapital equipment from different types of business organization like manufacture Cauthorized stockiestCagents. ;ollowing categories of enlistment are recommended :* One ti#e ;or item procured rarely like spares of machine tool and equipment, a one time code will be allotted against which only one order is permitted and supplier performance rating is not mandatory. ;* Deve& 4#ent 0 de To establish Cdevelop supplier three orders shall be permitted against trail code against particular material category. +owever in exceptional cases more than three orders can be allowed with permission of >eneral 6anager. <* Per#anent 0 de ?here supplier establishes himself after successful completion of trail order against particular material category. The supplier performance rating shall be reviewed against trail orders and decision to allot permanent code will be taken by L42# considering performance rating.

SUSPENSION OF BUSINESS DEALIN+ 3ITH SUPPLIER

H &d n su44&ier f supplier after evolution on performance rating fall under O#0 category he will be put under Ohold0 and no enquiry will be issued to him for particular category. f a supplier fails or neglects to respond against three consecutive tenders for a particular material category .

De&istin( . su44&iers -D 5 " a g e

,. )o longer has the technical staff, equipment or financial resources, identified at the time of enlistment <. ;ails to abide the condition of enlistment. -. "ersistently violates or circumvents important condition of the contract. D. ;ails to submit statutory documents as and when required.

Bannin( % B&a0- &istin(

,. <. -.

f the supplier declared bankrupt, insolvent ,wound up , dissolved or portioned . f the supplier violates or circumvents the provision of labour lawsCrules and regulations. f suppliers or his malpracticesC fraud. partners Crepresentative are found indulging in

HO3 TO MANA+E STORE

PRICE STORE LEDGER
n E@E2E!EN "*?E2 #E77. price store ledger $"47% or stock ledger are classified according to value and quantity. There are to type of stock are: $,% $<% 2aw material is composed of direct materials and it come under prime cost. 4pare is composed of indirect materials and it come under overheads. "rice store ledgers are not maintained for non- stock items. These items include

Eirectly #hangeable items

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4tationery tems 6edicines and allied stores stocked in company hospitalsCdispensaries.

Eepartmental wise store ledger is maintained and each material has given a separate code. To maintain material code wise, quantity and value accounts and value accounts of various receipts 6aterials are classified into two. N n8# vin(7 S& 5 9# vin(7 ,. )on-moving materials refers to a materials for which no issue has taken place during the preceding financial year. <. 4low moving materials are the materials for which the cumulative issue during the preceding financial years is less then &(F of the average stock of that year. !verage stock of this purpose by is defined as:

Opening stock + Closing stock <

STORE RECORDS
Two set of records are often maintained in E@E2E!EN "*?E2 #E77. for materials issue, materials received and transferred. They are: BIN CARD7 STORE CARD7 BIN CARD

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8in #ard is maintained department wise. 8in card is used by storekeeper to keep quantitative records of all the items, of materials and goods in his store. This documents maintained by the storekeeper. ! bin card is used for each material and receipt, issue or return is recorded in this card. STORE CARD n E@E2E!EN "*?E2 #E77 the 4tore #ard is maintained monthly wise. t is kept in the costing store ledger. The store ledger is generally maintained in the form of loose-leaf cards, because they can be removed and inserted easily.

Eifference between 8in #ard and 4tores 7edger7

8 )#!2E 4T*2E 7EE>E2

t is maintain by the 4torekeeper 4tore Eepartment.

ledger

is

maintained

by

#osting department.

t contains only quantitative details of t contains both quantity and value. materials received, issued and returned. Entries are made when transaction take t is always posted after Transaction. place.

MA6OR DOCUMENT RECEIVED

The mammoth organization like E@E2E!EN "*?E2 #E77 where it has to control and fulfill a number of suppliers .;or regulating the payment of the supplier0s claims, the stores account section of E@E2E!EN "*?E2 #E77 following documents: receives the

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Pur0'ase rders/ "urchase order is an order placed on the suppliers for supply of specified quantity of specific material at a specified rate in accordance with the terms and condition spelt out in the order. The purchase order contains the following essential information: ,% )ame of the supplier. <% Eescription of the material. -% Lnit of measurement. D% Ruality to be supplied. &% 2ate at which the supply is to be made. '% Terms of delivery. M% Eestination and mode of transport. G% Terms of payment. B% mport license number, date and validity period. ,(% Test certificate, insurance, compensation delay supply. St re Re0ei4t V u0'er/ 4tore receipts vouchers are a document through which the receipt of the materials by their stores department and their acceptance is communicated to the store account section and other departments. This document is called inspection cum receiving report in +yderabad division. The concerned receipt cell of store department raises this document after receipt of material from the clearance section. There will be one 42@ for each consignment of a purchase order. This document will also be raised when ever materials issued on loan are returned by the out side parties and received by the stores department. "47 will be maintained only in the unit of issue by the stores department. The stores receipt voucher contains the following information: a. ?ardCsection from which the store receipt voucher is issued or where the stores are to be stocked ultimately. b. )ame of the supplier. -G 5 " a g e

c. #hallan number and date. d. "urchase order number and date. e. )ame of the indenter. f. )ame of the slip. g. 8ill of landing number and data. h. Eescription of the material with material code number. i. Lnit of measurement. 1. Ruantity supplied. k. Ruantity accepted and quantity re1ected. l. 8in card balance. m. 2ailwayClorry freight particular. n. *ther like postage

Su44&ier=s Bi&&/ This is the document commercially recognized and presented by a supplier for the settlement of his claim for the supplier madeCservices rendered or to be madeCrendered Stores Ret rn Note This document would be raised while materials are returned to stores of both direct and indirect material. Su! C ntra0t Return N te The sub-contract department E@E2E!EN "*?E2 #E77 raises 4ub #ontract 2eturn )ote document whenever sub contractor returns materials. This document will not be used in case of finishedC semi finish and work done by sub contractor. Scrap Delivery Note The concerned department when delivering scrap to the concerned holding cell of the store department would raise this document.

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Material Requi ition Slip This document would be prepared to authorize a shopCwork center to draw the required materials from the concerned holding cell. 4hop planning section will arrange to present material requisition slips to the holding cell and get the material delivered at the required work center prior to the planned start of manufacture. Store Tran !er "ouc#er I. a #ateria& is t !e trans.erred .r # ne ' &din( 0e&& t an t'er" t'e #ateria&8 4&annin( de4art#ent 5 u&d raises t'is v u0'er7 Inter unit Tran !er This document is raised by the material planning department to authorize issue and dispatch of required material towards sister division.

INVENTORY CONTROL TECHNI$UES ABC Ana&ysis

This is also referred to as .!lways 8etter #ontrol/ or the alphabetical approach. ABC 0 n0e4t . 0&assi.yin( . ds in an invent ry is very 0 ## n&y used . r e>er0isin( e..e0tive invent ry 0 ntr &7 Under t'is te0'ni?ue ite#s in invent ry are 0&assi.ied a00 rdin( t va&ue . usa(e7 T'e 'i('er va&ue ite#s 'ave & 5er 0 st . sa.ety st 0-s !e0ause t'e 4r te0ti n is very 'i(' 5it' res4e0t t 'i('er va&ue ite#s7 T'e & 5er va&ue ite#s 0arryin( 'i(' sa.ety st 0-7 The annual consumption analysis of the organization would indicate that a handful of top high value items les than ,(F of total number would account for a substantial portion of about M&F of total value. These items are under O!0 category. 4imilarly large number of bottom line items account for about &&F of total quantity for only ,(F of consumption value are categorized as # #ategory. The items lying in between the two are called 8 #ategory. These techniques help to exercise selective control, that is , more attention is given only to less number of items, where a large amount of capital is blocked. 4o that less amount of cost is required for large amount of inventory

ECONOMIC OREDER $UANTITY

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Economic *rder quantity is referred to as he size of the order that gives maximum economy in purchasing the materials. n fact the E*R offers solution to inventory problems. t helps in finding appropriate levels of holding inventories. t facilitates the fixation of ordering sequence and the quantities so as to minimize the total materials cost. t should take into account all the factors, which influence adversely he adequacy of inventory and its consequent costs. !n inadequate inventory reduces it to the extent to which it ensures smooth and efficient operation of the material dept as well as that of he whole organization. T'e 0 sts" 5'i0' in.&uen0e t'e EO$" #ay !r ad&y !e 0&assi.ied 0ate( ries .r # @C st #ana(e#ent= 4 int . vie57 T'e 0ate( ries are ,. cost. <. #ost of +olding the material that includes the inventory carrying cost. T'e F r#u&a The #ost of !cquiring materials that include the ordering cost, inadequate inventory int t5

E*R S 4R2T$ $<RV#p% C 4c%

?here E*R R is generally a year% #p 4c represents Economic *rder Ruantity represents Ruantity of Lnits purchased in a given period $the represents #ost of placing an order, and represents 4torage #ost per unit per year. period

Orderin( C st
t includes all the costs of procurement for a particular item of material. t0s the same for any order placed for that item, irrespective of quantity. t includes

Time spent in preparing bid requests.

Evaluating cost estimates submitted by the suppliers

#lerical expenses for purchasing the purchase orders Telephone costs to discuss delivery arrangements
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 "ercentage of purchasing department overhead !dministrative salary to be charged against a particular order.
Carryin( C sts
The #arrying #osts includes all the costs associated with carrying an inventory. t includes

4torage facilities 4hipping H receiving ?arehousing operations 4ecurity measures Tax H

nsurance

nterest expenses of capital

#ost of *bsolescence #ost of Eeterioration or 4poilage of 4tored 6aterial

Invent ry Re4 rt T Mana(e#ent
The main purpose of this report is to inform the management with the latest stock position of different items. This report should contain all information also necessary for managerial action. *n the basis of these reports management rakes corrective action wherever necessary. The more frequently these reports are prepared the less will be the chances of lapse in the administration of inventories. E@E2E!EN "*?E2 #E77 usually prepare monthly reports and each store maintains separate inventory reports.

Essentia& Features O. + d Re4 rt

"roper title )ame *f 2aw material D< 5 " a g e

Ruantity 2emaining #ost of that "roduct Euration )ew "urchase

VALUATION OF INVENTORY
f management is interested to show more profits then it can choose such a method which will show more stock or vice versa. The following methods for pricing material issues are generally used.

First In First Out method

In this FIFO method the materials, which are received first are issued first. The materials are issued in chronological order. This method is suitable when prices are falling because material issues will be priced at earlier figures while costs of replacements will be low.

Last In First Out Met' d

In t'is LIFO #et' d 'e &ast re0eived #ateria&s are issued .irst7 T'is #et' d is a&s -n 5n as re4&a0e#ent 0 st #et' ds !e0ause t'e &atest 4ur0'ased ( ds 5i&& 0 rres4 nd t 'e 0urrent 4ri0e e>0e4t t'at ( ds 5ere n t 4ur0'ased #u0' ear&ier7 LIFO #et' d is suita!&e durin( risin( 4ri0es !e0ause ( ds 5i&& !e issued .r # t'e &atest re0eived & ts at 4ri0es" 5'i0' are 0& se&y re&ated t 0urrent #ar-et 4ri0e

!verage #ost 6ethod

In avera(e 0 st #et' d . 4ri0in( a&& #ateria&s in st 0- are #i>ed t'at a 4ri0e !ase n a&& & ts is . r#ed7 It #ay !e . t5 ty4es7

,.

4imple !verage #ost 6ethod:

In t'is t'e 4ri0es . a&& & ts in st 0- are avera(ed and t'e #ateria&s are issued n t'at avera(e 4ri0e7

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<.

?eighted !verage #ost method/

In t'is #et' d t'e t ta& 0 st . a&& t'e #ateria&s are divided !y t'e t ta& nu#!er . ite#s in st 0-7 T'is #et' d re0 ver t'e 5' &e 0 st . #ateria&s7 T'is #et' d is suita!&e 5'en 4ri0e .&u0tuati ns are .re?uent&y 0'an(ed7

8ase 4tock 6ethod

In t'is #et' d s #e ?uantity . #ateria&s is assu#ed t !e ne0essary . r -ee4in( 'e 0 n0ern ( in(7 T'e ?uantity is n t issued un&ess t'er5ise t'ere is an e#er(en0y7 T'is #ateria&" 5'i0' is n t issued as is -e4t in st 0-" is -n 5n as !ase st 0-7 T'is #et' d is n t an inde4endent #et' d7 It is used a& n( 5it' s #e t'er #et' d su0' as FIFO" LIFO" and Avera(e C st Met' d et07

4tandard "rice 6ethod

T'e issue 4ri0e . #ateria& is 4redeter#ined . esti#ated in t'is #et' d7 T'e standard 4ri0e !ase n #ar-et 0 nditi ns" usa(e rate" st ra(e .a0i&ities et07 T'e #ateria&s are 4ri0ed at standard 4ri0e irres4e0tive . 4ri0e 4aid . r vari us 4ur0'ases7

6arket "rice 6ethod

In t'e #ar-et 4ri0e #et' d t'e 4ri0e 0'ar(ed t 4r du0ti n are n t 0 sts in0urred n t'e #ateria&s !ut &atest #ar-et 4ri0es7 T'e #ar-et 4ri0es #ay eit'er !e rea&iAa!&e 4ri0es r re4&a0e#ent 4ri0es7 T'e re4&a0e#ent 4ri0es are use . r t'e #ateria&s" 5'i0' are -e4t in st 0- . r use in 4r du0ti n" and rea&iAa!&e 4ri0es are used . r t'e ( ds -e4t . r resa&e7 But t'is #et' d . 4ri0in( is n t !een used !e0ause . t'e nu#!er di..i0u&ties e>isted in it7 It !e0 #es di..i0u&t t se&e0t t'e #ar-et 4ri0e #et' d !e0ause di..erent 4ri0es are 4revai& in di..erent #ar-ets

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OBSERVATION AND FINDIN+S

?e should give special attention on material consumption. The purchase of material should be economical. 6aterial management department should be active regarding decision making. The scrap percentages of material should be reduced.

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CONCLUSION

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CONCLUSION
E@E2E!EN "*?E2 #E77 is maintaining "roduct 6aterial Eirectory which is a control document which facilitates the planning process of material thereby reduces procurement time, non-conformities, #ontractual litigation. This document is prepared by a #ommittee consisting EngineeringCTechnologyCRuality. #ontrolC6anufacturingC6aterial 6anagement which identifies the items to be processed and corresponding supplier list. 6aterial management will have sufficient time to work out the procurement strategy. The value of materials has a direct bearing on the income of a concern, so it is necessary that a method of pricing materials should e such that it gives a realistic value of stocks. The firms follow the traditional method of valuing materials O#ost "rice or 6arket "rice whichever is less0. 8ut there are different methods of pricing material give different values. *pen tender through press advertisement andCor publication in the web site of the unitCcompany may be resorted to for enlisting of vendors for further qualification. Eatabase regarding potential vendors has to be built up on the basis of past experience, catalogues, product directories, advertisement in the newspaper and professional 1ournals.

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Su((esti ns
The capacity of all plants should be increased for better utilization of resources. The sheer scale and range of their operations ensure a place in any ma1or expansion of power generation capacity. ;ears of a sharp increase in the price of power generated by private power companies have made the government replace the earlier policy of negotiated power pro1ects, which allowed costplus pricing of electricity, with a policy that is based on competitive bidding. !dopting different management methods should increase order procurement. "ro1ect engineering management $pem% division is eveready power cell3s power plant Bsyste# inte(rat rB providing total engineering solutions for power pro1ects as well as 4r 0ure#ent and ere0ti n C 0 ##issi nin( . n n8eveready 4 5er 0e&& syste#s H equipment for thermal power stations, thereby enabling eveready power cell to offer complete engineering, procurement and construction $epc% services ;inancial management in overall power sector should be revised to increase the financial condition of Eveready 4 5er 0e&&. Eveready 4 5er 0e&& should look for other related Eveready 4 5er 0e&& activities like production of thruster controlled series capacitors, traction transformer and solid core insulators for railways etc. !dopting different production, management and financial methods should increase export orders. ;inished goods in plant and work in progress involving hydro and thermal sets auxiliaries, compressors and ndustrial turbo sets are valued at actualCestimated factory cost or at BM.&F of the realizable value, whichever is lower. including gas based power plants, boilers, boiler

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BIBLIO+RAPHY

DB 5 " a g e

BIBLIO+RAPHY
B -s/

,. 4harma H >upta, $<((M%;inancial 6anagement,Aalyan "ublication, )ew Eelhi. <. "andey, .6. $<((M% 6anagement !ccounting, @ikas "ublishing +ouse, )ew Eelhi -. Ahan 6y H Iain, ".A., $<((G% "ublishing company, )ew Eelhi. D. #handra,"rasanna $<((G% ;inancial 6anagement,Tata 6c >raw-+ill "ublishing #ompany, )ew Eelhi &. Aothari,#.2. $<((G%2esearch 6ethodology, )ew !ge nternational "ublishers '. 4harma 2.A H >upta 4hashi A9 W6anagement accounting-principles and practice. eight edition, kalyani publisher3s )ew Eelhi. M. 8halla @.AWfmancial management and policyW, first edition, annual ;inancial management, Tata 6c>raw-+ill

publications, )ew Eelhi. G. 6aheshwari 4.) 9W6anagement accounting and financial controlW, thirteen edition, sultan chand H sons, )ew Eelhi$<((<%. B. Aothari #.29W2esearch methodology-methods H techniquesW, second edition, vishwa prakashan Eelhi$,BB(%. ,(. >upta 4unita, 6anagement of ?orking #apita ,;irst Edition.)ew #entury "ublications,)ew Eelhi$<((-%. ,,. #handra "rasana, ;inancial 6anagement, T6+, Dth Edition, ,BBM, )ew Eelhi ,<. >upta 4."., 6anagement !ccounting, 4ahitya 8hawan "ub.,<((<. ,-. Ahan H Iain, ;inancial 6naagement, 6+ -rd Edition, ,BBB. ,D. 4harma 2.A. H >upta 4.A.9 ;inancial 6anagement Aalyani "ublishers, )ew Eelhi <((-.

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,&. "andey .6., ;inancial 6anagement,4eventh Edition,@ikas "ublishing +ouse, )ew Eelhi. 6 urna& Iohn 4agan, .Towards a Theory of ?orking #apital 6anagement,/ The Journal of Finance, 6ay ,B&& pp. ,<,-,<B. I.6. ?arren and I.". 4helton, .! 4imultaneous Equation !pproach to ;inancial "lanning,/ Journal of Finance, @olume <', Eecember ,BM', pp. ,,<--,,D<. @. !ppavadhanulu, .?orking #apital and #hoice of Techniques,/ Indian Economic Journal, Iuly-4ept. ,BM,, @ol. K K, pp. -D-D,.

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