Mahesh 5 Sem

Inventory Management
Karnataka OEM Spares

Pvt.Ltd, Gadag
CHAPTER I
EXECUTIVE
SUMMARY
A.S.Ss College of Business Administration, Gadag.

Page 1
Pvt.Ltd, Gadag
CHAPTER - I
EXECUTIVE SUMMARY
M|s Karnataka OEM &Spares Pvt. Ltd was established in 2005 Gadag, as a small
Scale industry for manufacturing of Tensile and High Tensile Fasteners required by
Hiten Fasteners Private Ltd. This is the mother concern. And ISO 9001:2000 certified
company.
The company manufactures a wide range of tensile & High Tensile Fasteners as
per National and International Standards and also caters to the specific requirement of
our Customers as per their specification.
"Keeping of goods is also a type of management. Whenever requirements comes
from the production department, providing of those required materials in a proper
manner & providing those at the specified period, is the main motto of physical
inventory management."
PROJECT TITLE
A Study on Inventory Management on Karnataka OEM& Spares Pvt. Ltd, Gadag.
NEED FOR THE STUDY

The project work is compulsory made by Karnataka University Dharwad for the
BBA students for the fulfilment of the requirement of BBA degree as part of our
curriculum.
And also to become a sound person and get the practical knowledge about the
industry study on inventory management carried in the organization.

Page 2
Pvt.Ltd, Gadag
OBJECTIVES OF THE STUDY

To know the organizational hierarchy and responsibility ties with their
designation.
To know the working condition of the organization.
To set exposed to the steel industry & their global trends.
To know the services rendered by the organization.
To study the administrative setup of the organization.
To study the inventory management based on the ratios.
To study the different aspects of Inventory Management.
To study the inventory management and its effective control through various
techniques.
To suggest the measures for improving the inventory level.
SCOPE OF THE STUDY

Inventory management being a very important concept in all the companies
having a void coverage often calls for the managerial attention. In the modern times
inventory management has become the integral part of the all companies. So all the
firms give special importance for inventory management. The major objective of the
study is to examine the effectiveness of inventory management system adopted by an
industry; the study mainly focuses on the techniques used by the company to control the
inventory.
METHODOLOGY
Primary Data
1. Interaction with personnel of the company
2. Direct Observation of Inventory
Secondary Data
1. Turnover Statements
2. Monthly Inventory Statements

Page 3
Pvt.Ltd, Gadag
3. Company Records and Internet
FINDINGS:
The following are the main findings of the study:
According to the ratios among the three years the company's position is good in
the last year because company had lot many orders in the hands.
This business is too risky & hard but company is trying to reduce its losses.
Present year profitability condition of the company has increased when it's
compared to other two years.
For net profit also the current year position is very good.
Company is having good sales turnover.
RECOMMENDATIONS
The company can sell the products as per the order received.
An initial count is to be maintained on available stocks.

If it adopts inventory software it will be helpful to avoid recount of stocks.
It can also have highly trained personnel working on inventory

management.
Employees must be able to adjust to changes in demand and supply as
quickly as possible.
There are many inventory management seminars available; sending
inventory managers to these seminars is always a good idea.
LIMITATIONS OF THE STUDY

The Limitations of the study are as follows:
The study depends upon the data which was available in the organization records
and information provided by the organization and its various departments.
Time is not sufficient to study the organizations implementation of policies &
procedures practically in company
The company keeps some of the information with highly confidential so it will
not be discussed.

Page 4
Pvt.Ltd, Gadag
CHAPTER - II
INDUSTRY PROFILE

Page 5
Pvt.Ltd, Gadag
CHAPTER - II
INDUSTRY PROFILE
An industrial fastener comprises a very wide range of items like nuts and bolts,
washers, studs, nails etc. Nuts and bolts consist a major link in the family of industrial
fasteners and are used by every industry. Bolt is a piece of metal rod, whose one end is
unsettled and other end is threaded. Nut is the item, which rolls on these threads. Nut
and bolts are available in various shapes, designs and sizes.
Nuts and bolts are used for fastening purpose in industries where the replacement of
pieces and the parts is necessary. There are many industries producing these nuts and
bolts of various sizes, but the demand too is increasing as well as the raw material for
the product is easily and indigenously available. The main raw material is mild steel
wire coil/rod of required diameter. The composition of materials controls the quality of
the bolts and nuts.
The recommended composition for nuts and bolts raw material is given as under:
Carbon 0.22 to 0.23%
Phosphorus 0.40%
Manganese 0.39 to 0.60%
Sulphur 0.50%
Nuts and bolts are classified by two ways: i) Their uses, ii) Shape of head.
In terms of use, nuts and bolts are of several types:
Larger dia bolts, machine bolts, stand bolts, joint bolts, foundation bolts and nuts etc. in
terms of shape, bolt and nuts are classified by head shape like hexagonal head, square
head, round head, pan head, truss head etc.

Page 6
Pvt.Ltd, Gadag
Market Potential
The demand of nuts and bolts is influenced by the following factors:
a) Transportation industries, Railways, aircraft, wagon, bicycles, automobile, body
builders, etc.
b) Electrical industries like manufacturing of transformer, electric motors, fans etc.
c) Building activities such as construction of bridges, fabrication of various steel
structures etc.
d) Other heavy and light industries, steel and wooden furniture, machine tools,
e) Agricultural machines and agricultural implements etc.
As various types of MS and HT nuts and bolts are used in above sectors, the market
demand is directly proportionate to the development of these industrial segments.
BASIS AND PRESUMPTIONS

1. Capacity Utilization: 75% on single shift basis
2. Time period of 1 year: 300 days
3. Labour wages: Estimated on the minimum wages
4. Rate of interest: 16%
5. Margin Money: 25% varying from state to state
6. Operation period of project: 10 years
7. Rental charges for land and building: 20,000 per month
TECHNICAL ASPECTS
Process of Manufacture
The raw material used for manufacture of bolt is M.S. Rounds. As some of the rounds
available are rusty and not perfectly round and straight, it is necessary to make them
round. The rounds are pickled in the acid tanks, washed and drawn in a drawing
machine. The cleaned rod is fed into the cold heading machine. In the machine, one end
of the rod is cut into the desired length with cutting stroke and simultaneously the head
formation takes at another end. For the HT bolts, forging is done on hot forging press.
The pins are then trimmed in the trimming machine. In quality bolts, the lower side of
the head is also faced. Threading is done in the thread rolling machines.

Page 7
Pvt.Ltd, Gadag
While manufacturing nuts, the hexagonal rod of desired size is procured and the
nuts are cut on the automatic nut-cutting machine. Cutted nuts blanks are drilled and
tapped on the nut-tapping machine. Finally, these are deburred in the polishing barrel.
Quality Control and Standards

The Bureau of Indian Standards has laid down the following quality standards for M.S.
and High tensile fasteners such as Bolts and Nuts:
IS 1363 : 1992
IS 1367 : 1994
IS 4206 : 1987
Production Capacity:
Quantity Value (In Rs.)
Nuts and Bolts of various sizes - 360 MT 2,52,00,000/Motive Power: 85 HP
Pollution Control:
This industry involves pollution to some extent for which State Pollution Control Board
has to be approached.

Page 8
Pvt.Ltd, Gadag
Process Flow Chart (M.S. Bolts)

Mild steel rod
Bolt cutting
Head making
Head trimming
Thread rolling
Polishing
Store/dispatch
Process Flow Chart (H.T. Bolts)

Mild steel rod
Wire drawing
Bolt cutting
Forging
Trimming
Threading
Heat treatment (800oC 900oC)
Tempering (400oC 500oC)
Plating/Coating
Store/despatch 6

Page 9
Pvt.Ltd, Gadag
CHAPTER - III
COMPANY PROFILE

Page 10
Pvt.Ltd, Gadag
CHAPTER - III
COMPANY PROFILE
INTRODUCTION
M|s Karnataka OEM &Spares Pvt. Ltd was established in 2005 Gadag, as a small
Scale industry for manufacturing of Tensile and High Tensile Fasteners required by
Hiten Fasteres Private Ltd. This is the mother concern. And ISO 9001:2000 certified
company.
our Customers as per their specification.
Our manufacturing Unit at Plot no 64 has all the manufacturing facilities to
manufacture Nuts.
Our Manufacturing Unit at Plot no 119 & 120 has all the manufacturing facilities
to manufacture exter nally threaded fasteners. Company has established and maintaining
Quality Management system in lines with ISO 9001:2000 standard.
Every member of the organization is committed to follow the process approach
and improve upon the quality management system and enhance customer satisfaction.
Company employs more than 100 numbers of people who are qualified & trained in
their activities. Company has excellent track record with the financial institutions &
Banks for the implementation of any new projects & expansion. Supplier Suppliers of
materials, Components and Service to Karnataka OEM & Spares Pvt. Ltd. Customer:
Hiten Fasteners Private Ltd. Suppliers of tensile and high tensile fasteners. All
organizations requiring tensile and high tensile fasteners and offering labour orders.
THE COMPANY
KARNATAKA OEM SPEARES PRIVATE LIMITED is sister concern unit and
labour unite . Its main branch HITEN FASTENERS PRIVATE LIMITED Situated in
Maddur Taluk, Mandya Dist.

Page 11
Pvt.Ltd, Gadag
Suppliers to Karnataka OEM Spares private limited Raw material is supplied by main
branch Maddur unit HITEN FASTENERS PRIVATE LIMITED.
KARNATKA OEM SPARES PVT LTD Unit has qualified
Technical and
Managerial Staff to managerial staff to manage the day-to-day affairs of the company.
The company also employed and trained sincere dedicated employees who have carrying
on the manufacturing activities without interruption. Today ,in wake of its quality
consciousness the company has upgraded its quality system in line with ISO 9001-2001
also the company proposed to go for QS 9000 & ISO 14000, its manufacturers a wide
range of High Tensile Fasteners a per National & international Standards and also caters
to customized specification.
BACK GROUND
M|s. Karnataka OEM Spares Private Limited was incorporated in 2004 as small
scale industry for Manufacturing of High Tensile Fasteners. Its promoters were
Mr.B.Saikumar, Mr.V.R. Gourishankar.
The company catered to requirement of High tensile Fasteners of Non-standard
specification and small quantities, which was not being catered to; by the large
manufacturers it was mainly catering to Mining & Value Industry subsequently, with an
excellent customer response, the company Forehead into the Automobile Industry and
various other sectors.
The company has an excellent customer base and wants to expand its activities to
cater the requirements of new Foreign multinational companies in the Indian Market.
The company proposes to acquire asset up fulfil its objective. The company has started a
branch for its manufacturing plant at NARSAPUR Industrial Area, GADAG Dist
employing almost all 250 members and this unit mainly manufacture Anchor Bolt,Nuts,
and T-Bolts for prestigious Delhi Metro Project and the entire contract has been
successfully completed in Time.

Page 12
Pvt.Ltd, Gadag
NATURE OF THE BUSSINESS CARRIED

PROJECT
The project is for expansion of manufacturing activity for Anchor Bolts & TBolts for enhanced requirement of different Metro Rail. Setting up these facilities to
existing operation and additional employment to 150-250 people will be provided.
M/S Karnataka OEM & Spares Pvt. Ltd was established in 2005. Gadag as a
Small Scale Industry for manufacturing of Tensile and High Tensile Fasteners required
by Hiten Fasteners Private Ltd. Which is the mother concern and ISO 9001:2000
certified company.
our Customers as their specifications. Our manufacturing Unit at Plot 64 has all the
manufacturing facilities to manufacture Nuts.
Our manufacturing Unit at Plot 119 & 120 has all the manufacturing facilities to
manufacture externally threaded fasteners. Company has established and maintaining
Quality Management system in lines with ISO 9001:2000 standard.
Every member of the organization is committed to follow the process approach
and improve upon the quality management system and enhance customer satisfaction.
Company employs more than 100 numbers of people who are qualified & trained in
their activities. Company has excellent track record with the financial institutions &
Banks for the implementation of any new projects &expansion.

Page 13
Pvt.Ltd, Gadag
VISION, MISSION & QUALITY POLICY

VISION:
To achieve & dispatch of one lack Anchor Bolt with Nut & One lack T-head Bolt
with Nut & washer per Month.
MISSION:
Mission is to manufacture quality Nut Bolt products for the process industry
worldwide. We embrace the concept of total quality and people involvement to enhance
Total Customer Satisfaction and commit to maintain this standard of excellence
through continual improvements and use of quality management system.
QUALITY POLICY:
It is ensured that the quality policy is appropriate to the purpose of the
organization (business objectives) and includes a commitment to comply with
requirements and continually improve effectiveness of QMS. The continuing suitability
of quality policy and establishing quality objectives and its review are carried out in a
management review meeting of senior executives.
We are committed to manufacture and supply tensile and high tensile fasteners as
per customer requirements by utilizing the organizational and human resources
effectively and efficiently.

Page 14
Pvt.Ltd, Gadag
OWNERSHIP PATTERN:
PROMOTERS:
The unit was formed as Private Limited Company and its promoters are
technically qualified along with a good experience of being associated with various
other companies. The founder Director Mr. B. Saikumar was employed at M/s. Larsen &
Turbo and was handling purchase function and responsibility in Karnataka. He has also
been instrumental in establishing the customer network for the company with his rich
commercial background.
Board of Directors:
Mr.B. Saikumar
Mr. V.R. Gowrishanka
Name & Address of The Industry
Status of Organisation
Certificates
Date of Registration
Date of Commencement
Availability of communication facility
Cost of Project (Initial Investment)
Exporting Capacity
Turn Over Per Year
Applicable Act
Bank
Email
Factory Area
Manpower
Tel & Fax No.
KARNATAKA OEM AND SPARES PVT

LTD.
Private Limited
ISO 9001, ISO 2000 and PED 97/23/EC.
2003-04
2004-05
Telephone, Fax, Internet, Printer, Hard
Copy ,P.O.
50 lack
Nil
6 crore
1) Factory Act:
2) Provident fund:
3) ESI (Employee State Insurance)
4) Bonus Act
5) Payment of Gratuity:
6) Product Processing order:
State Bank of India.
1.com
Industrial Area, Narasapur
210
/Fax- 08372-277378

Page 15
Pvt.Ltd, Gadag
THE PRODUCT PROFILE

High Tensile fasteners are the major requirements in any engineering industry
and have a wide range of applications. With increasing stress on cost, reliability and
human safety, there is a transformation from use of mild steel fasteners to high tensile
fasteners. The permutation and combination in the product provide a very large market
for small industries that are equipped to produce large varieties in small quantities.
With increase in production of automobiles, the high fasteners industry is likely
to expand multi fold and the demand for quality fasteners is always on increase. The
company has established all the required manufacturing and testing facilities over a
period of time and it is in a position to manufacture high tensile fasteners from diameter
M8 up to M100 as per various national & International specifications.
The company also specializes in manufacturing special fasteners custom built to
the customer specification. The company proposes to expand its manufacturing activities
to produce fasteners for high Temperature applications, nuclear application, Metro
projects, and Wind Mill projects and also for Thermal power plants.

Page 16
Pvt.Ltd, Gadag
PRODUCT RANGE
EXTERNALLY
THREADED
FASTENERS
CARBON
&
ALLOY STEEL
STAINESS
STEEL
MINMUM
DIAMETER
MAXIMUM
DIAMETER
MINIMUM
LENGTH
MAXIMUM
LENGTH
SUPPLY
CONDITION
M6
INTERNALLY
THREADED
FASTENERS
CARBON &
ALLOY
STEEL
STAINLESS
STEEL
M16 5/8
M100 4
M64 2
M64 2
140MM
25 1
0.5D
--
--
3000 MM 12
2.0D
--
--
THREAD
PITCH MIN
THREAD
PITCH MAX
SURFACE
FINISH
1.0P 20 TPI
1.5P 16 TPI
QUENCHED QUENCHED
&
TEMPERED/
TEMPERED
/
INDUCTION
HARDENED
NOT
QUENCHED
&
TEMPERED
---
10P 4TPI
6.0P 5 TPI
--
TESTING
FACILITIES
HARDNESS TEST /TENSILE TEST/ IMPACT TEST/ PROOF LOAD

TEST DECARBURISATION TEST /HEAD SOUNDNESS TEST/SALI
SPRAY TEST/ WIDENING TEST/ MAGNETIC CRACK DETECTION /
EDDY CURRENT TESTING/MICROSTRUTURE ANALYSIS BY
IMAGE ANALYSER/ TORQUE TENSION TESTING/ TORQUE
TESTING/ COATING THICKNESS MEASUREMENT/ CONE PROOF
TEST/WEDGE LOAD TEST / BEND TEST/ COMPRESION TEST.
MATERIAL
QUENCHED & QUENCHED

TEMPERED/
&
TEMPERED/
NOT
QUENCHED & NOT
TEMPERED
QUENCHED
& TEMPERED
WASHERS
MACHINED
COMPONENTS
M6
16MM
CARBON & CARBON & ALLOY

ALLOY
STEEL
STEEL
&
--
AS PROCESSED (THREAD POLLED AFTER HEAT TREATMENT ) /

PHOSPHATE & OILED / BLACK OXIDE COATING / ZINC
ELECTROPLATING WITH DICHROMATE PASSIVATION / HOT DIP
GALVANISING.

Page 17
Pvt.Ltd, Gadag
REFERENCE ISO/ ANSI/SAE /BS/JIS/ASTM/BIS/AND CUSTOMER DRAWINGS
STANDARDS AND SPECIFICATIONS.
AREA OF OPERATION:
Karnataka OEM and Spares Pvt. ltd., Sells its products in Different states viz.
Delhi.
Maharashtra.
Karnataka.
Tamil nadu.
Andhra Pradesh.
Uttar Pradesh
INFRASRUCTURE FACILITY:
All infrastructures (buildings, workplace, utilities, and process, equipment and
supporting services) needed to achieve conformity to product requirements are
determined, reviewed in MRM, provided for and maintained. NARASAPUR Industrial
Area is adjacent to Gadag which is a district head quarters. The infrastructure which is
like transportation of goods, availability of man power, electricity and travelling
convenience for people will not be an obstacle. The industrial Area is hardly 60 km
away from Hubli city procuring Raw material and other Industrial inputs is much easier.
The company does not foresee any major infrastructure difficulty in the future, which is
likely to hamper its operation and expansions.
Manufacturing Facilities
Machine
18 Thread Rolling Machine
Centre less Grinding Machine with Hydraulic Attachment
150 T Hydraulic Press
Eland induction Heating
Forging Press- 150 T
Friction Screw Press-250 T
Grid Blasting Machine
Hot galvanizing
Plating
Drawing
Cutting

Page 18
Pvt.Ltd, Gadag
Extrusion
Heat Treatment
Inspection and Testing Facilities

Testing Machine
Universal Testing Machine (UTM) 60 T
Magnetic Meter
Rock hardness tester
Vickers Hardness Tester
Measuring and test equipment for all linear measurements
Torque Wrench for testing torque 68 Nm
Thread gauges
Digital Impact Testing Machine
The following are some of the important facilities available:

In addition to the conventional manufacturing facilities of turning Milling,
Grinding, Thread Rolling and facilities for Nut manufacturing, the organization has
established the following special equipment.
ACHIEVEMENT /AWARD
The company is an ISO 9000 2001 recognition.
It has also bagged the Best Garden award ensuring to get even the Best
Flower award.
FUTURE GROWTH AND PROSPECTS

Installing a Machine for Heating.
The company is also striving to achieve the recognition of ISO 14001 such as
waste water treatment, reducing the db (sound) levels in thefactory premises.
WORK FLOW MODEL:

Start
Raw Material
Drawing

Page 19
Pvt.Ltd, Gadag
Cutting
Champering
Forging
Grit blasting
Excursions
Grinding
Rolling
Heat treatment
Blasting
Surface finishing
DEPARTMENTAL STUDY
PRODUCTION AND ASSEMBLY DEPARTMENT
PRODUCTION
The production dept ensures that production process is identified, planned and carried
out under controlled conditions in accordance with monthly manufacturing plan. The

Page 20
Pvt.Ltd, Gadag
objective of this dept is to improve the productivity, to reduce the cost of production
without any compromise on quality and to manufacture non defective quality products
by training the people.
OBJECTIVES
Productivity improvement.
To reduce the cost without compromise on quality.
To manufacture non defective product by training the people.
PRODUCTION PROCESS
The production process is carried out in the following 3 steps,
Control of customers supplied product.

Process control.
Production planning and process

Scope: This procedure describes how the products manufactured.
Purpose: To ensure that Products are manufactured in controlled condition as per the
specification
Responsibility: Manufacturing In charge.
Input: Manufacturing Plan and Input material.
Output: Conformed product as per customer requirement.
Process: Manufacturing
1. Receive the Manufacturing Plan from the planning department.
2. Collect the Specification or Drawing from the QA department for vrious stages
of manufacturing.
3. Check the availability of work Instruction
4. Receive the availability of work Instruction.
5. Decide the pririty of product considering backlog.

Page 21
Pvt.Ltd, Gadag
6. Start the operations as per the Work Instructions.
7. Offer the first Piece for Inspection.
8. After Clearance from the inspection start the Production.
9. In between petrolling inspection is carried out by QA department.
10. Record the production details.
11. Issue the product for next operation through PIS.
12. Record the issue details in the receiving PIS.
13. Products are identified with appropriate tax during manufacturing.
14. Isolate rhe non conferming priducts identified with NC tag & keep in the NC bin.
15. Safety measure to be re-used in the shop during operation.
16. Non conferming products are handled as per procedure.
17. Machines are checked by the operator as per the daily machine check list.
18. Machine is maintained as per the preventive maintainance plan.
19. Records of break down maintainance are maintained.
20. Calibrated instruments are used for measurement of the product.
Identification & Traceability

Products are identified with identification Tag. Product grade and Raw material Batch
No is marked on each piece of the product by embossing or punching or by engraving
which will remain for full life. This provides Identification traceability.
For Heat Treatment shop

List of Machine
Work Instruction-WI.MFG<go>........
Heat treatment Register F.MFG.28.ROO
Hardening & tempering Log Book F.MFG.29.ROO
Hardening & tempering Log Book F.MFG.29.ROOfor Induction Method.
In Direct validation Register F.MFG.13.ROO
Process Capability Chart F.MFG.02.ROO

Page 22
Pvt.Ltd, Gadag
FUNCTIONS OF ADMINIDTRATION DEPARTMENT (H.R)
Training
Recruitment
Safety
House keeping
STYLE
The style of management in the organisation is very much similer to TOP
DOWN MANAGEMENT. The Director from BANGALORE who is at the top
most level takes strategic decisions and is passed on to the Managing Director of
NARSAPUR of the respective company.
Short term decisions are decentralized in HITEN FASTENERS and Karnataka
OEM Spares Pvt Ltd as the number of employees is more and it would be
impractical for the MD to take regular decisions.
Though the decision making is concerned only with the top management, the
company also emphasizes on PARTICIPATIVE FEEDBACK from the
employees and helpers on a regular basis to enhance thinking capacity of the
employees.
This is generally done by the Respective department in charge.
STRATEGY
To establish themselves as a global company with strong technology capabilities
KOEM, has laid increased emphasis on devising its business strategy on aggressive top
line growth, a de-risked business model, increased operational efficiencies and CPI
programme adopted to improve the productivity.
Companys growth strategy

Developing a global product strategy.
Creating an integrated organization with world class quality valve to produce and
full service supply capability
SYSTEM

Page 23
Pvt.Ltd, Gadag
Merit rating system:

Objectives:
To ensure the performance of the supplier with regards to Quality,Delivery, & Service.
Scope
These ratings are applicable to all the Suppliers, like sub-contractors, vendors, traders &
suppliers.
Responsibility
Planning & Purchase In charge/Planning Assistant is responsible rating to supplier.
Planning & Purchase In charge is responsible to carry out the supplier rating with
assistance of planning assistant.
Delivery rating
DR=No of orders completed in time *20
No. Of orders required to be
Completed
[Maximum marks allotted is 20]
Service rating [SER]

This includes prompt response to delivery of urgent requirements, prompt
Response to communication, prompt to corrective & preventive actions.
Supplier Rating [SR]:

SR=QR+DR+SER
Reference
Goods received inspection.

Purchase order.
Statistical welding reports.
Rejection notes.

Page 24
Pvt.Ltd, Gadag
QA department work instruction.
STAFF
Number and types of personnel within the organization.
Number of employees:Above 150.
The company considers the employees as one of the major resource.the skills of
the employees are constantly improved through various training programmes.
The company organizes regular Departmental meetings MR meeting with the
members wherein the suggestions and feedback of the members are discussed.
SHARED VALUE
Guiding concepts, fundamental ideas around which a business is built it is generally
simple, usually stated at abstract level,have great meaning inside the organization even
though outsiders may not see or understand them
SKILL
Skills refer to the fact that employees have the skills needed to carry out the companys
strategy. Training and Development ensuring people know how to do their jobs and
stay up to date with the latest techniques.
ACCOUNTS DEPARTMENT
All transactions related to Receipts &Payments of the whole Organization is done only
in the A/Cs dept. It deals with preparation of Balance Sheet ,P/L A/C & other necessary
A/Cs , Maintaining cash & bank transactions, Pay slips, Preparation of Payment,
Receipt& Journal Vouchers File, Dealing with Loans and other financial matters
,Dealing with T.D.S, Monthly Trial Balance, Framing Annual Report Etc.
Objectives of the A/Cs Department

a) Maintenance of books of accounts and finalization of A/Cs at management level.

Page 25
Pvt.Ltd, Gadag
b) Preparation of annual budgets f Fund flow Statements.or every month & submitting
the various analysis reports.
c) Preparation of Cash flow
Responsibilities
Finalization and audit of accounts
Compliance of tax laws
Plan and arrange funds for short-term and long term
Implementation and compliance of industrial and labour statutory and
regulatory laws concerned to the business.
Conducting board meetings
Prepare and submit reports to directors
To ensure no defaults occur under any laws
Call board and shareholders meetings.
SALES & PLANNING DEPARTMENT

Marketing is a social process by which individuals and groups obtain what they need
and want through creating, offering and freely exchanging products and services of
value with others.
Role of marketing manager
1. To collect information for sale forecasting.

2. Pricing the products as per the demand.
3. To appoint new dealers and distributors

Page 26
Pvt.Ltd, Gadag
Functions of sales department

1. Sales officer is responsible for selling the products.
2. To look after dispatch of the ordered products.
3. Secondary sales are taken properly.
social to keep one responsible person who handle the marketing of the products
named as marketing manager who follow the instructions of the management. As we
know the industry is producing products which are selling into the market so the
company.
The sales and planning department includes mainly two sub departments they are: Packing and Dispatch In charge
Stores In charge
PACKING AND DISPATCH DEPARTMENT

Page 27
Pvt.Ltd, Gadag
Objectives - The main objective of the packing is to carry the proper packing
before dispatch.
Scope - Scope of packing is packing of valves & valve spares seaworthy applicable.
Responsibility
Sales & planning officer will study the packing slip through with respect to work order.
Sales &planning officer decided the size of the box depending on quantity. Sales &
planning officer will collect the products numbers from quality assurance department
against packing slip. products will be segregating as per packing slip and sales &
planning officer will ensure that all products have undergone final inspection before
packing they are properly identify with respect to purchase order. While checking the
packing the following details are taken care.
1. Packing box markings.
2. Destination box markings.
3. Estimation of address.
4. Name of the transporter
5. Identification numbers (invoice number).
6. Supplier number.
7. Number of boxes.
STORES DEPARTMENT

Page 28
Pvt.Ltd, Gadag
Introduction:
Stores department holds the entire inventory required in the Organization.
Functions
Receipt of materials.
Inspect of order quantity, quality and any specifications.
Maintain minimum level of materials.
Objectives
To ensure all materials are stored properly
To ensure control over the stock
To verify the stock periodically
To ensure the materials are based on requisition

Page 29
Pvt.Ltd, Gadag
PRODUCTION DEPARTMENT
Production management refers to the application of management principles to the production
function in a factory. In other words production management involves application of planning,
organization, directing and controlling the production process.
A well-organized production functions can offer competitive advantage to a firm in the
following area.
Higher quality.
More inventory turns
Shorter new productions lead time.
Greater flexibility
Shorter manufacturing lead time
Better customer satisfaction
Reduced wastage
Purpose
To outline the procedure of preventive maintenance of machines and equipments to
ensure that the trend of breakdowns are maximum.
Scope
All machines and equipment mentioned in list of machines and equipments.
Process owner
In charge- Maintenance.
Input
List of machines and equipments.

Page 30
Pvt.Ltd, Gadag
PURCHASE DEPARTMENT
Introduction
Purchase departments heads purchasing are dividing into two. One for purchase of
capital assets and another is regular purchase.
This is also one of the important departments in this department they purchase the
materials, which require for production and also for the office work. Its main function is
purchasing the materials. It receives the requisition letter from the store department to
know what type of materials is required. After receiving this letter they make enquiry
and then place the order.
Purchasing refers to the act of buying an item by price. Purchasing means
procurement of goods and services from some outside agencies the object of purchasing
is to supply materials, semi finished goods etc. to the production department
Objective
To evaluate & select Sub-Contractors on the basis of their liability to meet specified,
requirement to maintain records of approved Sub Contractors and control to ensure
quality requirement are fulfilled consistently.
Procedure
Selection of Sub-Contractors or quotation.
Release of purchase order.
1. Selection of Sub-Contractions or quotation

The purchase department has to select ability to meet their requirements the purchase
department asks for the quotation which is having lowers cast but there never
compromise with the quality. The duality of material is inspected by managers and the
team members it is approved.

Page 31
Pvt.Ltd, Gadag
2. Release of Purchase order

For releasing order the purchase department gets the feedback from the
planning department. Usually the there months of stock is mentioned in the stores
department.
QUALITY ASSURANCE DEPARTMENT

The main function of the QA department is to check whether the raw materials
purchased and goods manufactured are better quality or not.
Here quality means the totality of the features and characteristics of a products or
services the quality policy of this department is to be world class leader in
designing and manufacturing quality value of products for the process industry
worldwide.
CONSULTANTS / INSPECTION AGENCIES
Burueau Veritas
Engineers India Limited
Nuclear Power Corporation of India Limited
Projects and Development India Limited
Tata Consulting Engineers
TUV India Private Limited.

Page 32
Pvt.Ltd, Gadag
SWOT ANALYSIS
STRENGTHS
The company has excellent network, which provide good quality product with
minimum time.
ISO standard helps to marketing in International level.
The good HR system is their like Motivation, Training to new employee etc.
Feed-back information is provided to all employees.
Benefits provided by government to 100% EOU Unit.
The company has unity of team work,good salary to workers.
Regular medical cheekups & help to employees.
They are exempted from tax for the 10 years.
WEAKNESSES
It is not having a separate markrting dept.
OPPORTUNITIES
Potential market for spare parts is growing high.
Export order received for greater then what they are able to produce, so
opportunity to increase production capacity for which ready market is available.
Whatever is produced is exported.
Opportunity to enter plug value market.
Company has an out bond logistic management and documentation.
THREATS
No threat in the sense, no competitors for it because it is not a dependent firm.

Page 33
Pvt.Ltd, Gadag
CHAPTER IV
THEORTICAL
FREAMEWORK

Page 34
Pvt.Ltd, Gadag
CHAPTER IV
THEORTICAL FREAMEWORK
INVENTORY MANAGEMENT
Physical Inventory Management
Meaning:
"Keeping of goods is also a type of management. Whenever requirements comes
from the production department, providing of those required materials in a proper
manner & providing those at the specified period, is the main motto of physical
inventory management."
Benefits for Holding Inventory

Benefits in Purchasing
Benefits in Production
Benefits in Work-in-process
Benefits in Sales
Objectives of Inventory Management
Usually, the company is faced with the following conflicting objectives in the
area of inventory management:
1. To carry maximum inventory in order to facilitate efficient and smooth
production and sales operations.
2. To minimize investment in inventory for maximize the profitability.
Both over-investment and under investment is undesirable as both involve the
consequences.
The over investment involves the consequences like

i.
ii.
iii.
Unnecessary blocking of funds in inventory and hence loss of profit.

Excessive storage and insurance cost.
Risk of liquidity. The inventories once purchased and stored are normally difficult
to dispose off at the same value.
The under investment involves the consequences like:

Page 35
Pvt.Ltd, Gadag
i.
If sufficient stock of raw materials and work in process is not available, it may
ii.
result into frequent interruptions in production.

If sufficient stock of finished goods is not available it may not be possible for the
company to serve the customers properly and they may shift to the competitors.
Thus, it can be said the objective of inventory management is to minimize
the investment in inventory without affecting production or sales operations.
Inventory, as a current asset, differs from the other current assets because
only financial managers are not involved. Rather, all the functional areas, finance,
marketing, product & purchasing are involved.
The job of the financial manager is to reconcile the conflicting viewpoints
of the various functional areas regarding the appropriate inventory levels in order
to fulfill the overall objective of maximizing of owner's wealth.
Two-Bin System
Under this system, the inventory items are grouped into two categories. In
one group or bin, sufficient quantity kept to meet the current requirements over a
designated period of item. In another group or bin, a safety stock is maintained to meet
the requirements of inventory at times when the stock in the first bin is exhausted and reordering occurs.
Financial Inventory Management

Meaning
"Recording, maintaining and evaluating of stocks in a value terms is known
as financial inventory management." In other words valuation of stocks and controlling
of ordering and holding costs and also maintaining of sufficient valued stocks in
inventory is known as financial inventory management."
Financial inventory management is again divided into three different categories.
1.
Based on valuation
2. Based on cost analysis

3.
Based on financial statement
1. Based on valuation
There are number of generally accepted methods of determining the cost of

Page 36
Pvt.Ltd, Gadag
inventories at the close of the accounting period. The selection of a suitable method
assumes significance in view of the fact that it has a direct bearing on the cost of goods
sold and consequently on profit. Therefore, the method should be selected in the light of
probable effects on profit over a period of years.
Note: It may not be out of place to mention that once a method is selected, it must be used
consistently and cannot be changed from year to year.
The discussion here of the methods to value inventory should, therefore be
viewed in this perspective.
First in First Out (FIFO) Method:

The FIFO method of valuation of inventory is based on the assumption that
the inventory is consumed in chronological order, that is, those received first are
issued /consumed first and value fixed accordingly. The merit of FIFO Method is
that the physical flow of materials the flow of cost.
Last In First Out (LIFO) Method:

Under the LIFO method, the cost of goods sold and the value of closing
inventory can be determined only after the final lot of the year has been received. This
is because of the assumption underlying the valuation of inventory, according to
this method. As name LIFO suggests, the use of inventory is valued on the basis of the
inverse sequence of receipts. Since the LIFO method assumes that the latest selling
price/current revenues. The matching of current cost with current revenues is essence of
the LIFO method.
Average Cost Method:

According to average cost method, each purchase is added to inventory and an
average cost determined. Materials are charged into cost of sales at this average
until another lot is received, when a new average unit inventory cost is calculated.
Note: There are so many other than these above methods but most wide usefully
methods are these three so here we discussed those three methods only.
1) Based on Cost Analysis:

Cost of Holding Inventory:
One operating objective of inventory management is to minimize cost.
Excluding the cost of merchandise, the costs associated with inventory fall into two
basic categories: (i) ordering or acquisition or set-up costs, and (ii) carrying costs, these

Page 37
Pvt.Ltd, Gadag
costs are important elements of the optimum level of inventory decisions.
1) Ordering cost:
It is the fixed cost of placing & receiving an inventory order. Like (a) preparing a
purchase order or requisition form & (b) receiving, inspecting & reordering goods
received to ensure both quantity & quality. It is also called as setup cost.
2) Carrying cost:
The second broad category of costs associated with inventory is the
carrying costs. They are involved in maintaining or carrying inventory. The cost of
holding inventory may be divided into two categories.
1. Those that arise due to the storing of inventory: The main
components of this category of carrying costs are (i) storage cost, that is,
depreciation, insurance, maintenance of the building and utilities, (ii) insurance
of inventory against fire and theft; (iii) deterioration in inventory because of
pilferage, fire, technical obsolescence, style obsolescence and price
decline; (iv) serving costs, such as labor for handling inventory, clerical and
accounting costs.
2. The opportunity cost of funds: This consists of expenses in raising funds
(interest on capital) to finance the acquisition of inventory. If funds were not
locked up in inventory, they would have earned a return. This is the opportunity
cost of funds or the financial cost component of the cost.
Linking of Costs based and Physical based Inventory Management

The carrying costs and the inventory size are positively related and move in the
same direction. If the level of inventory increases, the carrying costs also increase and
vice-versa.
Total Cost:
The sum of inventory increases, the carrying costs represent the total cost of
inventory. This compared with the benefits arising out of inventory to determine the
optimum level of inventory.

Page 38
Pvt.Ltd, Gadag
Economic Order Quantity (EOQ):

How much inventory should be bought in a lot? Should the quantity to be purchased
be large or small? Should the requirement of materials during a given period (say 6 months
or 1 year) be acquired in one lot or should it be required in installments or in several small
lots? Such inventory problems are called order quantity problems.
Therefore EOQ is that level of inventory at which total cost of inventory comprising
ordering cost & carrying costs in the minimum.
Formulae for calculating Economic Order Quantity:

2Ao
EOQ =
C
Where,
A=Annual quantity
O= Ordering cost
C= Carrying cost
Assumptions:
1. The firm knows with certainty the annul usage (consumption) of a
particular item of inventory.
2. The rate at which the firm uses inventory is steady over a time.
3. The order placed to replenish inventory stocks are received at exactly that point
in time when inventories reach zero.
Order Point
This is the point at which order has to be done.
Reorder Point:

Page 39
Pvt.Ltd, Gadag
This is the point at which to order inventory-expressed equation-ally as:
Lead Time in days * daily usage.
Lead Time:
It is the time normally taken in receiving delivery after placing order with
suppliers.
Safety Stock:
It implies extra inventories that can be drawn down when actual lead-time and/or
usage rates are greater than expected.
Logistics Inventory Management

Meaning of Logistics:
Logistics is the organization of services and supplies. In other words,
logistics is making and taking the permission for sell/exporting the company's products
in foreign countries.
In fully export-oriented business this is one of the main departments, where
this department gets an approval to sell their goods in foreign countries. And also their
main intention is to maintain
all
documents of those related to the exporting of their
products.
Logistics Inventory Management:

Yes, already we have observed about the meaning of inventory
management in the organization. But in fully export oriented business; inventory
management is a very important concept. Because every exporter or importer, they
do not know about each other who are staying in other countries.
Benefits of Holding Inventories:

The second element in the optimum inventory decisions deals with the benefits
associated with holding inventor'. The major benefits of holding inventory are
the basic functions of inventory. In other words, inventories perform certain basic
functions which are of crucial importance in the firm's production and marketing
strategies.
The basic function of inventories is to act as a buffer to decouple or

Page 40
Pvt.Ltd, Gadag
uncouple the
Various activities of a firm so that all do not have to be pursued at exactly the
same rate. The key activities are
(1) Purchasing
(2) Production
(3) Selling
Benefits in Purchasing:
If the purchasing of raw materials and other goods is not tied to
production/ sales, that is, a firm can purchase independently to ensure the most efficient
purchase, several advantages would become available. In the first place, a firm can
purchase larger quantities than is warranted by usages in production or sales level.
This will enable it to avail of discounts that are available on bulk purchases. Moreover, it
will lower the ordering cost as fewer acquisitions would be made. There will thus be a
significant saving in the costs. Second, firms can purchase goods before anticipated or
announced price increases. This will lead to decline in the costs of production.
Inventory thus serves as a hedged against price increases as well as shortage of raw
materials. This is a highly desirable inventory strategy.
Benefits in production:
Finished goods inventory serves to uncouple production and sales. This enables
production at a rate different from that of sales. That is, production can be carried on at a
rate higher or lower than the sales rate. This would be of special advantage to firms with
seasonal sales pattern. In their case, the sales rate will be higher than the production
rating during a part of a year and lower during the off-season. The choice before the
firm is either to produce at a level to meet the actual demand, that is higher
production during peak season and lower production during off season, or, to
produce continuously throughout the year and build up inventory which will be sold
during the period of seasonal demand.
The former involves discontinuity in the production schedule while the latter
ensures level production. The level production is more economical as it allows the
firm to reduce the cost of discontinuities in the production process. This is possible
because excess production is kept as inventory to meet future demands. Since inventory
permits least cost production scheduling, production can be carried on more efficiently.

Page 41
Pvt.Ltd, Gadag
Benefits in Work In Progress:

The inventory of work in progress two functions, In the first place, it is necessary
because production processes are not instantaneous. The amount of such inventory
depends upon technology and the efficiency of production. The larger the steps involved
in the production process, the larger work in progress inventory and vice versa.
By shortening the production time, efficiency of the production process can be
improved the size of this type of inventory reduced. In a multi stage production process,
the work in progress inventory serves a second purpose also. It uncouples the various
stages of production so that all of them do have to be performed at, the same rate. The
stages involving higher set up costs may be most efficiently performed in batches with a
work in process inventory accumulated during a production run.
Benefits in Sales:
The maintenance of inventory also helps a firm to enhance its sales efforts. For
one thing, if there are no inventories of finished goods, the level of sales will depend
upon the level of current production. A will be not able to meet demand instantaneously.
There will be a lag depending upon the production process. If the firm has
inventory, actual sales will not have to depend on lengthy manufacturing
processes. Thus, inventory serv es to bridge the gap between current production and
actual sales. A related aspect is that inventory serves as competitive marketing tool to
meet customers' demands.
IMPLIMENTATION OF INVENTORY MANAGEMENT

Efficient processing and operations management starts with an integrated
approach that links all facets of system management together. Inventory
management is just one of the disciplines. Each arguments the other, and
provides the ability to effectively manage a large systems environment.
Accurate inventory data is vital. A lack of such data affects the other
systems management disciplines ability to function. The automated elements of
inventory management monitor the enterprise-wide data network processing
environment for change, while the system environment relies on the change
process (which may or may not be fully automated) for accurate input.

Page 42
Pvt.Ltd, Gadag
VARIOUS STOCK LEVELS OF KARNATAKA OEM PVT.LTD

Maximum Level
In KARNATAKA OEM PVT.LTD industry there will be always maximum
level of stock. The maximum level is the level or quantity above which the stock in
maximum level is fixed so as to avoid over stocking of materials and the various
risks associated with overstocking.
Minimum Level
It is the level or quantity below which the stock in hand of a certain item of
material should not, normally be allowed to fall. The minimum level is fixed to ensure
that production is not stopped for want of materials.
Order Level
It is the level which a new order for the material to be placed. This level is fixed
somewhere between the maximum and the minimum level. Usually this level is
fixed a little above the minimum level to cover any emergency, such as excessive usage
of materials and unexpected delay in the delivery of fresh supply.
Danger Level
A danger level is the level which is generally fixed below the minimum
level. This level indicates emergency stock position and urgently of obtaining fresh
supply of material. When the stock goes down to this level, urgently action is taken up
by the purchasing department to obtain fresh supply of material at any cost to avoid
production hold up.
Average Stock Level

It is the level which represents the average of maximum stock and
minimum stock.
AVERAGE STOCK LEVEL= MAXIMUM LEVEL + MINIMUM LEVEL
Order quantity
It is generally determine after taking into account the costs of ordering and the
costs of carrying inventory. A large order brings in more trade discounts and results in

Page 43
Pvt.Ltd, Gadag
reduction in transportation costs and reduction in ordering costs that is the costs of inviting
tenders, section of quotation's placing of orders, receiving and inspection of materials
and accounting and payments for materials.
CHAPTER V
DATA ANALYSIS
AND
INTERPRETATION
CHAPTER V
DATA ANALYSIS AND INTERPRETATION
FINANCIAL RATIOS
The various ratios that are calculated for the purpose of to know the efficiency of
the company they are as interpreted as follows:
A) LIQUIDITY RATIO

Page 44
Pvt.Ltd, Gadag
These ratios are measures the short-term solvency or financial position of a firm.
The main liquidity ratios are:
CURRENT RATIO
Current assets
Current ratio = =================
Current liabilities
Current assets
2012-13 = 6, 05, 55, 100 + 23, 36, 27, 031 + 6, 55, 70, 878
= 35, 97, 53, 009
Current liabilities 2012-13
Current assets
2013-14
Current liabilities 2013-14
Current assets
= 25, 22, 98, 323

= 35, 97, 53,009 /25, 22, 98,323
CR = 1.43: 1
= 15, 57, 95,411 + 32, 95, 93, 565 + 3, 33, 19, 033
= 51, 87, 08, 009
32, 62, 58, 813
= 51, 87, 08, 009/32, 62, 58, 813

CR =1.59:1
2014-15 = 15, 43, 52, 904+35, 22, 77, 811 + 7, 33, 28, 893
= 57, 99, 59, 608
Current liabilities 2014-15 = 27, 20, 13, 474

= 57, 99, 59, 608/ 27, 20, 13, 474
CR = 2.13: 1
Table - 1
Year
Current
Current
Current Ratio
2012-13
2013-14
2014-15
Assets
35,97,53,009
51,87,08,009
57,99,59,608
Liabilities
25,22,98,323
32,62,58,813
27,20,13,474
1.43
1.59
2.13
Graph - 1

Page 45
Pvt.Ltd, Gadag
Current Ratio
2.5
2
Axis Title
1.5
1
0.5
0
2012-13
2013-14
2014-15
ANALYSIS AND INTERPRETATION:

Table No. 1 indicates that current ratio is increasing from year to year i.e. in
2012-13it is 1.43: 1, while in the year 2013-14 it is 1.58 : 1. In the year 2014-15current
ratio has increased as compared to previous two years i.e. 2.13: 1. It means firms current
assets in cash and bank balance are increased, the sundry debtors are increased and
inventories and decreased and improving year by year.
ACID TEST RATIO

Acid Test Ratio= Quick assets / Quick Liabilities
Quick assets= Current assets Inventories
2012-13 = 29, 91, 97,909 / 25, 22, 98,323
ATR = 1.19:1
2013-14 = 36,29,12,598 / 32,62,58,813
ATR= 1.11:1
2014-15 = 42,56,06,704 / 27,20,13,474
ATR = 1.56:1
Table - 2
Year
Quick
Assets
Quick
Acid Test Ratio
Liabilities

Page 46
Pvt.Ltd, Gadag
2012-13
2013-14
2014-15
29, 91, 97,909

6,29,12,598
42,56,06,704
25, 22, 98,323

32,62,58,813
27,20,13,474
1.19
1.11
1.56
Graph 2
Acid Test Ratio

1.6
1.4
1.2
1
Axis Title
0.8
0.6
0.4
0.2
0
2012-13
2013-14
2014-15

The above chart shows the generally Acid test ratio is 1:1 is considered to represent a
satisfactory current financial condition. In the year 2012-13 acid test ratio was 1.19 and
decreased in the year 2013-14 to 1.11 and then increased in the year 2014-15 to 1.56.
PROFITABILITY RATIO
GROSS PROFIT RATIO
Gross Profit Ratio = Gross Profit / Net sales * 100
2012-13
14,78,87,442 / 78,14,91,478*100
Gross Profit Ratio = 19%
2013-14
18,94,51,580 / 1,38,22,35,743*100
Gross Profit Ratio =13.71%
2014-15
25,14,28,289 / 1,67,21,20,503*100
Gross Profit Ratio = 15.04%
Table - 3
Year
Gross Profit Ratio
2012-13
2013-14
2014-15
19%
13.71%
15.04%
Graph - 3

Page 47
Pvt.Ltd, Gadag
Gross Profit Ratio
Axis Title
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2012-13
2013-14
2014-15

The above chart shows that Gross Profit Ratio has decreased in the year 2013-14 i.e
13.71% as compared to 2012-13 which is 19. In the year 2014-15 Gross profit ratio has
increased to 15.04%. It means firms Gross Profit Ratio is effective and is improving.
NET PROFIT RATIO

Net Profit Ratio = Net Profit / Net Sales *100
2012-13 9,15,55,265 / 78,14,91,478*100
Net Profit Ratio = 11.71%
2013-14 18,64,96,398 / 1,38,22,743*100
2014-15
32,09,31,715 / 1,67,21,503*100
Table - 4
Year
Net Profit Ratio
2012-13
2013-14
2014-15
11.71%
13.49%
19.19%
Graph - 4

Page 48
Pvt.Ltd, Gadag
Net Profit Ratio
Axis Title
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2012-13
2013-14
2014-15

The above table indicates that net profit ratio has increasing trend i.e 11.71% in 2012-13,
13.49% in 2013-14 and 19.19% in 2014-15. It means firms net profit ratio is increasing
year by year and net profit ratio if effective and improving year to year.
INVENTORY TURN OVER RATIO

Inventory Turn Over Ratio = Net Sales / Inventory
2012-13
78,14,91,748 / 6,05,55,100
Inventory Turn Over Ratio = 12.91 times
2013-14
1,38,22,743 / 15,57,95,411
2014-15
1,67,21,503 / 15,43,52,904
Table - 5
Year
Inventory Turn Over
2012-13
2013-14
2014-15
Ratio
12.91 times
8.87 times
10.83 times
Graph - 5

Page 49
Pvt.Ltd, Gadag
Inventory Turn Over Ratio

14
12
10
Axis Title
8
6
4
2
0
2012-13
2013-14
2014-15
ANALYSIS AND INTERPRETATION

The above chart indicates that in the year 2012-13 inventory turnover ratio is 12.91
times and then it is decreased to 8.87 times in 2013-14 and increased to 10.83 times in
2014-15. It means firms inventory management is not effective and it has to concentrate
more on inventory turnover.
INVENTORY CONVERSION PERIOD

Inventory Conversion Period = Number of Days / Inventory Turnover Ratio
2012-13 = 365 / 11.39
Inventory Conversion Period = 32 days
2013-14 = 365 / 11.03
2014-15 = 365 / 9.16
Table - 6
Year
Inventory conversion
2012-13
2013-14
2014-15
Period
32 days
33 days
40 days
Graph - 7

Page 50
Pvt.Ltd, Gadag
Inventory conversion Period

40
35
30
25
Axis Title
20
15
10
5
0
2012-13
2013-14
2014-15
ANALYSIS AND INTERPRETATION

The above table reveals that Inventory Conversion Period is increasing from 32 days in
2012-13 to 33 days in 2013-14 and in the year 2014-15 is increased to 40 days. The firm
has to take necessary steps to control the inventory conversion period for stock into
sales.
Balance Sheet as on 31st March of the three years

Particular
Sources of Funds:
Share Capital
Reserves and Surplus
2012-13
2013-14
2014-15
43881000
16175299
88873650
25662413
88873650
38808076
Loans:
Secured Loans
13371918
13343414
15425950
2
13860000
46975057
53976697
Unsecured Loans
Deferred Tax Liability
Total
2
13860000
46850525
40006370
4
23976743
22882480
22171932
7
2304607
7200
24207924
2
13946399
7200
24277840
6
42235408
7200
26396193
Application of Funds:
Fixed Assets
Capital Work in Progress
Investment
40889657
67210357

Page 51
Pvt.Ltd, Gadag
Current Assets, Loans& Advances
Inventories
60555100
155795411 15435290
4
352277811
Sundry Debtors
23362703
35959356
Cash& Bank Balances

Loans and Advances
1
65570878
83978676
5
33319033 73328893
180444113 26463197
44373168
69895212
9
84459158
5
and 25229832
2
32625881
7
57201347
3
33448902
3
76537709
4
165061211
3
28574722
40279652
43707468
5
15798446
2
29615560
5
40751690
0
832978
2
624734
40006370
53976697
67210357
Less:
Current
Liabilities
Provisions
Current Liabilities and Provisions
Net Current Assets

Miscellaneous Exp
Total
Profit and Loss A/c for year ending 31st March

2012-13
2013-14
2014-15
Income:
Sales
Particular
78149147
138223574
167212050
Profit on sale of Fixed Asset

Other Incomes
Total
8
2414335
3477075
78738288
7447965
138968370
3
3382860
12028615
168753201
63340403
1192784163 142069221
Expenditures
Manufacturing and other Expenses
6
Interest and Finance charges
Loss on sale of Fixed Assets
Depreciation
Total
16185710
64958974
21940243
1442
36871715
125159756
4
24095762
35613480
148040145

Page 52
Pvt.Ltd, Gadag
Profit before Tax
13759314
138086145
207130558
15949902
34742042
479000
51170944
86422199
24982
5158048
91555265
41978718
124532
1110089
43213339
94872806
1674
91555265
186426398
77483303
6085400
1227338
72625241
134505317
186526398
320931715
19.65
19.65
14.11
14.11
15.13
15.13
4388100
6723784
8887365
2
Provision for Income Tax
Current Tax
Deffered Tax
Fringe Benefit Tax
Total
Profit after Tax
Less: Income Tax relating earlier years
Balance brought from previous year
Bnalance trancefered to Balance Sheet
Earing per Share
Basic
Diluted
Weighted Average no of shares used in
Computing EPS
CHAPTER- VI
FINDINGS, RECOMMENDATIONS
AND CONCLUSION

Page 53
Pvt.Ltd, Gadag
CHAPTER- VI
FINDINGS, RECOMMENDATIONS AND CONCLUSION
FINDINGS:
The analysis of the financial records of the KARNATAK OEM PVT LTD.
Company revealed certain interesting aspects especially with respect to INVENTORY
MANAGEMENT of the company.
The following are the main findings of the study:
According to the ratios among the three years the company's position is good in
the last year because company had lot many orders in the hands.
This business is too risky & hard but company is trying to reduce its losses.
Present year profitability condition of the company has increased when it's
compared to other two years.
For net profit also the current year position is very good.
Company is having good sales turnover.
The company is maintaining proper books of accounts with the accounting
principles. Accounts like P & L, balance sheet, cash flow etc....
Company is having values & beliefs which are like seven pillars to the company.
RECOMMENDATIONS
The company can sell the products as per the order received.
An initial count is to be maintained on available stocks.

If it adopts inventory software it will be helpful to avoid recount of stocks.
It can also have highly trained personnel working on inventory

management.
Employees must be able to adjust to changes in demand and supply as
quickly as possible.
There are many inventory management seminars available; sending
inventory managers to these seminars is always a good idea.
CONCLUSION:

Page 54
Pvt.Ltd, Gadag
KARNATAKA OEM SPARES PVTB LTD., is one of the enlightened and

progressive companies in the Karnataka. The organization is taking keen interest in
providing customer needs. Customers are fully satisfied by its products. Not only in
Karnataka there is a demand for its products in other states also. All the employees
in this organization are highly skilled, qualified and experienced which is an integral
part of achieving excellence. By providing quality products, it is aiming at total
customer satisfaction and delight.
The primary objective of the study was to analyze the inventory
management by the study it is clear that financial position of the company right now in
good position. As per the objective of the study, findings and suggestions are sure to help
the company to manage the inventory.
The company can improve its financial strength by decreasing its
expenses. The company is making a steady progress in market and trying to have a
higher market share. The production and sales of the KARNATAKA OEM SPARES
PVT LTD. Have been increasing in last years. Thus with little more efforts in its
marketing area KARNATAKA OEM SPARES PVT LTD. Can achieve back its lost status.
Over the year is KARNATAKA OEM SPARES PVT LTD. Facing a lot of
internal turmoil in its administration. This area has to be the starting point for beginning
any improvement program, as only with an efficient management all other problems of
the company can be solved.
BIBILOGRAPHY
Primary Sources
Visiting companys production department
Secondary Sources
Company Annual Report
Internet

Page 55
Pvt.Ltd, Gadag
Financial Management by Khan and Jain

Page 56

Mahesh 5 Sem

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Mahesh 5 Sem

Загружено:

Авторское право:

Доступные форматы

Inventory Management

Karnataka OEM Spares

A.S.Ss College of Business Administration, Gadag.

NEED FOR THE STUDY

A.S.Ss College of Business Administration, Gadag.

OBJECTIVES OF THE STUDY

SCOPE OF THE STUDY

A.S.Ss College of Business Administration, Gadag.

An initial count is to be maintained on available stocks.

It can also have highly trained personnel working on inventory

LIMITATIONS OF THE STUDY

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

BASIS AND PRESUMPTIONS

A.S.Ss College of Business Administration, Gadag.

Quality Control and Standards

A.S.Ss College of Business Administration, Gadag.

Process Flow Chart (M.S. Bolts)

Process Flow Chart (H.T. Bolts)

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

NATURE OF THE BUSSINESS CARRIED

A.S.Ss College of Business Administration, Gadag.

VISION, MISSION & QUALITY POLICY

A.S.Ss College of Business Administration, Gadag.

KARNATAKA OEM AND SPARES PVT

A.S.Ss College of Business Administration, Gadag.

THE PRODUCT PROFILE

A.S.Ss College of Business Administration, Gadag.

HARDNESS TEST /TENSILE TEST/ IMPACT TEST/ PROOF LOAD

QUENCHED & QUENCHED

CARBON & CARBON & ALLOY

AS PROCESSED (THREAD POLLED AFTER HEAT TREATMENT ) /

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

Inspection and Testing Facilities

The following are some of the important facilities available:

FUTURE GROWTH AND PROSPECTS

WORK FLOW MODEL:

A.S.Ss College of Business Administration, Gadag.

A.S.Ss College of Business Administration, Gadag.

Control of customers supplied product.

Production planning and process

A.S.Ss College of Business Administration, Gadag.

Identification & Traceability

For Heat Treatment shop

A.S.Ss College of Business Administration, Gadag.

FUNCTIONS OF ADMINIDTRATION DEPARTMENT (H.R)

Companys growth strategy

A.S.Ss College of Business Administration, Gadag.

Merit rating system:

Service rating [SER]

Supplier Rating [SR]:

Goods received inspection.

A.S.Ss College of Business Administration, Gadag.

Objectives of the A/Cs Department

A.S.Ss College of Business Administration, Gadag.

SALES & PLANNING DEPARTMENT

Role of marketing manager