PART-A

GENERAL INTRODUCTION
There are four important components for running an industrial organization i.e.,
Men, machine, material and money. All these four components have to be employed in
an industry in order to make the manufacturing process to extract the finished products
and marketing it properly to get sales realization with profit.
Profit making is an important goal or an object of any industrial organization. To
attain the maximum profitability utilizing the above set our Ms to the optimum level.
!oney is used for procurement of the material which is re"uired for the production.
#uring the time of procurement the re"uirement of the proper material has to be
identified and re"uired "uality and "uality of material has to be decided in advance.
This is nothing but a process of material procurement planning. The very purpose
of planning of procurement of material is to purchase the good "uality material for a most
competitive lowest price. This will help the organization to undertake manufacturing
process most effectively with minimum or nil wastage.
!any times in an industry organization$s improper planning in material
procurement leads to filing up material stock in the form of raw%materials& semi%finished
goods ' (%)%P* unsold finished goods.
The aim of such stock is called inventory.
Any unwanted stock leads to debt capital which cannot be appreciated as good
financial management. +ence, material and money are playing a vital role in the efficient
financial management.
This project is select to have detailed study about the ,Financial Planning and
forecasting which is the one of the important activity in any industrial organization to
reach the organization goal with out much effort. -ecause, inventory management has to
be definitely considered for the increase of profitability and reduce the unwanted
working capital investment in the process of manufacturing.
INDUSTRIAL PROFILE
The invention of pper
(ritten communication has been the center of civilization for centuries. !ost of
our important records are on paper. Although written has been around for a long time,
paper hasn$t. infact, putting thoughts down in written form wasn$t easy or partical.
.arlier people discovered that they could make simple drawing on the walls of caves
which was a great place for recording thoughts, but wasn$t portable.
)magine spending hours scratching a massage into a heavy clay table and then
having to transport it, that$s exactly what the /umerians did around 0111 -2. Although
this form of written communication was not portable, is still wasn$t practical because of
its weight.
or centuries people tried to discover better surface on which to records their
thoughts. Almost everything imaginable was tried. (ood, stone, ceramics, cloth, bark,
mettle, silk, bamboo, and tree leaves were all used as a writing surface at one time or
another.
The word 3paper$ is derive from the word ,papyrus4 which is plant found in
.gypt along the lower 5ile 6iver. About 7111 years ago, .gyptians created ,sheets4 of
papyrus by harvesting, peeling and slicing the plant into strips. The strips were then
layered, pounded together and smoothened to make a flat, uniform sheet.
The person credited with inventing paper is 2hinese man named Ts$ai 8un. +e
took the inner bark of a mulberry tree and bamboo fibers, mixed them with water, and
pounded them with a wooden tool. +e then poured this mixer on to a flat piece of
coarsely woven cloth and the water drain though, leaving only the fibers on the cloth.
-y the tenth century Arabians were substituting lines fiber for wood and bamboo,
creating a finer sheet of paper. Although paper was of fairly high "uality now, the only
way to reproduce written work was by hand, painstaking process.
-y 9:
th
century paper making reached .urope. )n 900;, <ohannes =uttenberg, a
=ermen, was credited with inventing printing press. ' it is believed that movable type was
actually invented hundreds of years earlier in Asia *. -ook and other important
documents could now be reproduced "uickly. This method of printing in large "uantities
led to a rapid increase in the demand for paper.
Some of the important development in recent decades is as follows:
9. !ulti%stage bleaching of >raft%paper, lending to availability of fully bleached
>raft% pulp.
:. ?se of chloride%di%oxide for pulp for pulp bleaching permitting higher rightness
with the retention of strength.
@. 2oating of paper, while passing through the paper machine dryer section. =reatly
expanding use of coated paper for printing.
0. ?se of soluble bases for sulfite pulping permitting pulping of more species wood
by the sulfite process.
7. -leaching of high yield pulp, ground%wood and semi%chemicals.
A. (et strength paper use of synthetic resins for economic production of wide
variety of paper that are strong when wet.
B. !ulti%stage sulfites pulping permitting greater variety of pulp properties.
;. 2ontinues cooking of >raft and semi%chemicals pulp making is possible,
reduction in capital and operating cost.
C. +igh yields pulpingD combined chemical and mechanical action to produce pulp
from wood in high yield.
The !eo!rphi"# spre$ of the in$ustr% is !iven in the fo##o&in! t'#e(
Stte No of Mi##s
Andhra Pradesh @C
Assam :
-ihar B
2hathisghad C
=ujarat C9
+aryana 9B
+imachal Pradesh B
<ammu and >ashmir 9
<harkhand :
>arnataka 9C
>erala 9@
!adhya Pradesh :B
!aharashtra C1
5agaland 9
Erissa A
Pond 2heri B
Punjab B@
6ajasthan B1
Tamil 5adu @0
?ttar Pradesh C0
?ttaranchal 9A
(est -engal :A
Tot# )*+
In$in pper in$ustri# s"enrio(
The paper industry is cyclical in natureD its demand is linked to the level of
economic activity and the supply is influenced by domestic production and as well as
international trade in pulp and paper.
?/A ' over @1F *, (estern .urope 'around :1F*, and <apan '9:%97F* account
for a major portion of the demand. =lobal demands add stagnated in 9CC1%C@ at around
:71!5 TPA with showing down of economic growth. Per capital consumption actually
dropped @%7F and with dropping demand capacities closed down. The recovery started
in 9CC@%C0 with improvement economic outlook. )n 9CC0%C7 international pulp and paper
prices kept rising on the back of growing demand.
)ndia$s per capital consumption is very low at @ kg against a world average of
over 07 kgs, domestic industry has nearly A11 mills with an aggregate capacity of @.;
!5 tons per annum. Eut of A11 mills, @1 are large woodGbamboo based mills, ;1 are
agro based and rest are waste paper based. The effective capacity is about :.A million
tones as a lot of mills are sick. )n the new s print segment total capacity is
around1.0million TPA '!TPA*, of this B@F is dominated by four major players in the
public sector while the rest of the capacity is shared by 90 players.
Stru"ture of pper in$ustr%,
The industry can be classified on the basis of size, the type of raw materials
consumed and the end product manufactured.
The )ndian paper industry comprises of nearly A11 mills with a total capacity of
around @.; ! TPA. !ore than :11 mills have capacities of less then :1111 TPA. There
are 9: companies with a capacity of 71,111 TPA and only : with 9,11,111 TPA and
above.
-ased on the raw material used, the mills can be classified as wood%based ' hard
wood or bamboo *, agro residue based ' baggase and rice G wheat straw * and news paper
based ' imported waste paper and pulp *.
Stru"ture of pper in$ustr% 'se$ on en$ pro$u"t pro$u"e$-
Paper and paper board 5ews
print
Stru"ture of pper in$ustr% 'se$ on R& .teri#s re/uire$ for .0in! pper-
(ood Agro based /econdary (aste
Paper
'+ard (ood H 6aw%materials H )mported
pulp
-amboo* '-aggase, /traive =lasses,
<ute waste, 2otton 8iners
H )ndustrial waste*
Future prospe"tus of pper in$ustr%(
/trong demand from packaging segment will drive demand growth for industrial
paper. .stablishment of new business area such as telecom and power will lead to
increasing literacy levels, thus improving low per capital consumption of paper '@.: kgs
p.a*. -esides rapid growth in population, enhanced literacy levels, growing "uality
consciousness and changing consumer preferences will drive paper demand.
)n view high capital costs, expansion of existing units and revivals of sick units
remain the practical option for capacity addition. Also, paper mills in )ndia have to look
for ways to cut down costs to compete with imports.
)nternational paper prices are not expected to prices are not expected to price
substantially over the short medium term. #omestic paper companies will thus continue
to reel under the pressure of reduced margins. +owever, a depreciating rupee will
marginally protect domestic companies from imports. #ue to increased supply, some of
the companies have put their expansion plans on hold or have reduced their investment
opting for lesser capacity expansions.
1ISTORICAL PAPER INDUSTR2 DE3ELOPMENT IN INDIA
)ndian paper industry is classified broadly into two categories into two categories
paper and paper bonds then newsprint. The paper and paperboard segment constitutes of
cultural paper, industrial paper and special paper.
Paper industry in )ndia has a long history with the first mill being commissioned
in 9;@:. The initial development and growth of paper industry till the early nineteenth
century was affected by the shortage of wood 'soft wood* in the country. -ut in 9C90, in
development of a process based on bamboo lead rapid growth of domestic industry. -y
the end of sixties, the capacity for paper production lagged, demand and imports
increased to approximately 91F of the domestic demand. !ost of the domestic
production was concentrated in the hands of a few large mills. -y the late sixties, bamboo
as an input to paper industry came under short supply. Taking this into account, the
government of )ndia started encouraging small units based on an agro residue and waste
paper in the seventies. iscal incentives were also offered. This lead to spurt in the
number of mills with small capacities.
-ut from the late eighties industry started facing an oversupply situation lower
price realization and plant closures. The downtrend continued till 9CC:, when demand
supply situation improved.
rom 9CC@, step with the easing of the worldwide recession in the industry,
investments stated increasing. A booming capital market also helped in raising money for
new capacities. The industry was in a jolly mood up to 9CCA.
The increase in supply coupled with a worldwide recession has pushed the )ndian
paper industry back into down trend. The global cycle was further affected by the Asian
crises, which has reduced demand considerably.
/ince 9CC1 the paper industry in )ndia, is following global cycle with periods of
over capacity leading to drop in paper prices, lower capacity utilization and slow down
in investmentsGcapacity addition, followed by closure of mill, decreased in demand
supply gap and then back full circle to an increase in paper prices.
4ASIC PRO4LEMS FACED 42 T1E NE5SPRINT IN INDIA
The economic liberalization policies initiated by the Nrsi.h Ro committee
government in 9CC9 have been carried through vigor in successive years. As a result
industry is on the road to globalization and its getting even more inter wined with the
overseas market
The sharp rise is pricing during 9CB@%B0 created a paper crisis in the county.
1IG1 COST OF PRODUCTION
9. The international price of capital e"uipment needed by the news print industry has
been souring. Ever cost too have been rising "uite fast.
:. Power and coal both supplied by the public sector units have risen by 011F in the
last decade.
@. /imilarly chemical materials have also risen by similar percentage& royalties on
bamboo and hard wood have been increased by 911F to B11F in the last A years
in some states.
0. The acute shortage of local timber and heavy excise duties has burdened the
newsprint industry, which has been struggling all along out and above all these
problems there is services power cut, especially in south )ndia.
Future Prospe"ts of pper in$ustr%(
.stablishment of new business area such as telecom and power will lead to
increasing literacy levels, thus improving the low per capita consumption of paper
'@.: >=/ per annum*. -esides rapid growth in population, enhanced literacy
levels, growing "uality consciousness and changing consumer preferences will
drive paper demand.
)n view of the high capital costs, expansion of existing units and revival of sick
units remain the practical option for capacity additions. Also, paper mills in )ndia
have to look for ways to cut down costs to compete with imports.
)nternational paper prices are not expected to rise substantially over the short%
medium term. #omestic paper companies will thus continue to reel under the
pressure of reduced margins. +owever, a depreciating rupee will marginally
protect domestic companies from imports. #ue to increased supply, some of the
companies have put their expansion plans on hold or have reduced their
investment opting for lesser capacity expansions.
COMPAN2 PROFILE
4"0!roun$ n$ in"eption of the "o.pn%
The !P! situated on the bank of river -hadra at -jadravathi, /himoga #ist.,
>arnataka state, was incorporated in the year 9C@A as a joint sector company. The
foundation stone was laid by the then !aharaja of !ysore /ri. >rishanarajendra
(oueyar. )t was started with a small capacity of 6s.:.7 million. /ince inception, the
!P! never looked back. )t went from one threshold of progress to another expanding its
annual capacity to ;111 !T in 9C7:, then to 9;111 !T in 9CA0 and to :0111 !T in
9CB:.
)n 9CBA the company ventured a major expansion project by installing new
machinery to produce B7111 !T of news print per annum and increasing the capacity
from :0111 !T to @1111 !T per annum of writing and printing varieties of paper. The
project was completed during 9C;9. )n 9C;@, a sugar mill of :711 T2# was com
vmissioned and thus !P! become the first largest, single location integrated plant in the
country manufacturing news, writing and printing paper and sugar at a single location.
The integration of sugar mill with paper mill is with the idea of utilizing the by%products
of sugar mill i.e., sugar cane baggase for paper production and avoid dependence of
forest based raw materials and avoid deforestation. (ith the commissioning of newsprint
project, the company was able to help the country to reduce imports substantially.
Gro&th6 histor% of MPM in "hrono#o!i"# or$er(
2er A"tivit%
9C@A )ncorporated as a public sector company
9C@B 2ommercial production started with 0111T per annum
9C7: irst expansionD production increased to ;111T per annum
9CA0 /econd .xpansionD production increased to 9;111T per annum
9CB: !odernizationD production increased to :0111T per annum
9CBA !ajor expansion to manufacture B7111T per annum news print and to
increase writing H printing paper production from :0111T per annum to
@1111T per annum.
9C;9 commercial production of newsprint started with self power generation of
:7!(
9C;@ commissioning of :711 tons sugar mill
9CC@ conversion of stoker fired boilers into /6 boilers
9CC0 refitting of chemical recovery boilers
9CC; commencing of C1TG+r /6 boiler along with @
rd
extraction cum back
pressure turbo generator 'T=* of 9A!( capacity, thus increasing the self
power generation capacity to 09!(
:11: expansion of effluent treatment plant with increased aeration capacity and
introduction of post Aeration treatment
:110 6etrofitting of /6 evaporators. )/E90119 certificate 'for pollution
control* and also )/EC119 for "uality of product.
3ISION MISSION AND ORGANI7ATION STRUCTURE OF MPM(
VISION
,Mysore papers mill committed to deliver prodcts and service
to satisfy the needs of cstomer-8
To make continuous effort to improve "uality by continuous training
To actively involve people to contribute toward high productivity through
teamwork and innovation.
To consciously work toward conversion of resources and minimization of
wastes of all forms.
MISION
2reating a vibrant work culture
2ustomer /atisfaction
2onsistent "uality
2ompetitive price.
.nhancing productivity
A GLANCE OF T1E ORGANI7ATION(
5A!. E T+. 2E!PA5I D !I/E6. PAP.6 !)88 8T#
TIP. E T+. 2E!PA5I D P?-8)2 /.2TE6 2E!PA5I
8E2AT)E5 D -+A#6AJAT+)'T*,
/+)!E=A'#*, >A65ATA>A
./TA-8)/+!.5T D :1
T+
!AI 9C@A
2E!PA5I 6eg., 5o. D 9B@
P6E#?2T/ D PAP.6 A5# /?=A6'subsidiary*
6A( !AT.6)A8/ D -A!-EE, .?2A, A2A2)A, P)5.
nh A5# -A=A//.
2APA2)TI D @1111T (6)T)5= P6)5T)5= H
/P.2)A8)T PAP.6 B7111T
5.(/P6)5T :711T
/?=A62A5. 26?/+)5=
2E6PE6AT. E)2. D -A5=8E6.
6.=)E5A8 E)2. D #.8+), !A#6A/, >E8>ATTA H
!?!-A)
9UALIT2 POLIC2
!P! shall be reputed, profitable and growth oriented company
employing skills that take pride in satisfying customer needs with superior
products and services.
AREA OF OPERATION
The regional office is situated at 16/5, Ali Asker Road, Bangalore. The
branches offices are situated at New Delhi, u!bai, "olkata and #hennai.
#$%&T'T$R(
-allarpur )ndustries 8td., !aharashtra.
a* Iear of starting 9CCB
b* Annual 2apacity K 9.91.11 tones per year
c* =rades of paper
(riting, printing, packing and industrial paper
6ama 5ewsprint and papers 8td., =ujarat
a* Iear of starting K 9CCA
b* Annual 2apacity K 9@:%11 Tones per year
c* =rade of paper%% 5ewsprint
Tamil 5adu 5ewsprint and paper 8td., Tamil 5adu
a* Iear of starting K 9C;0
b* Annual 2apacity K 9;1%11 Tonnes per year
c* =rades of paper %% 5ewsprint, printing and writing
Andrapradesh paper mills 8td., Andra Pradesh
a* Iear of starting 9CAA
b* Annual capacity C;.7%11 tones per year
c* =rades of Paper%%-ase paper, wedding and greeting cards
The (est coast paper mills 8td., #andeli
a* Iear of starting K 9C7;
b* Annual capacity K 97B.B71.11 metric tones per year
c* =rades of paper%%(riting and printing board including !)26 and 2opier
d* )t is a private company.
CUSTOMER OF T1E MPM
!.P.!. 5ews print is used for printing 5ewspaper in all languages in )ndia. A
few of important customer are as follows,
.nglish 5ews Paper
Times of )ndia
5ew )ndian .xpress
#eccan herald
The +indu
The /tate man
The Tribhuvan
>annada 5ews Paper
Prajawani
/amyuktha >arnataka
?dayavani
>annada Prabha
Tamil Paper
#ina malar
#inakaran
Telugu 5ews Paper
.nadu
Jartha
Andra -humi
!arathi 5ews Paper
/akal
!aharastra times
/amachar
APPLICATION OF MC:ENS2S ;S MODEL
The B%/ framework was developed by the consultant at the !ckinsey 2ompany, a
very well known management consistency firm in ?/A, towards the end of 9CB1$s to
diagnose the cause of organization problem and to formulate programs for improvement
the B%/ framework.
S:ILLS(
)n !ysore paper mills 8td employees are to be recruited on the basis of their
Lualifications. Training facilities be provided to be both employees both internal and external.
There are @ types of labours based on their skills they are
9* skilled labours
:* semi%skilled labours
@* un%skilled labours
ST2LE(
The management believes in an open organization. )n !ysore paper mills 8td. They do
not involve employees for taking any decision. The management will be taking the decision itself
Structure
Shared
values
Strategy Systems
Skills Style
Staff
may be in any area like production decision, marketing decision. !anagement itself takes all
finance decisions.
STRATEG2(
The !ysore paper mill limited started on 9
st
April 9C@B in the remote village of
-hadravathi. There is no perfect mission statement in the !P! but the main aim of the company
will be producing good "uality of paper and sugar to the public as well as providing more number
of employment and increase the standard of living of the people.
The !ysore paper mill company$s business philosophy is based of three core values& they
are operational excellence, 2ustomer$s focus and product leadership.
The business strategy emphasizes the following
9. )ncrease their market shares.
:. 6educed cost of production.
@. )ncrease company performance-
0. Produce always "uality product.
7. To meet social responsibilities.
A. Provide employment opportunity to the people of the area.
B. !eet the national and regional demand of paper and paperboard.
;. 6educe the import of news print from the foreign market.
C. 6educe the import of news print from the foreign market.
91. To manufacture and deal in all kinds of sugar and sugar products
99. To manufacture and deal in all kinds of sugar and sugar products
9:. To cultivate and raise grass, timber, wood eucalypt-
9@. To grow niligiri plant within the premises of the company. (hich Provide raw
materials for the company at low cost.
90. 6ecycle all the wastage products.
S2STEMS(
The management believes in the utilization of cutting edge technology of deliver
world class products and services. The company has made huge investments in
technological resources to ensure that products are superior and the service delivery in
terms of these products offering standard.
The system of the !ysore paper mills limited company clearly shows the formal
processes and procedures used to manage the organization, including the control system,
performance management measurement and reward systems, planning budgeting and
information system they follow the bottom to top approach in decision making. That
means first they collect the opinion of trade unions based on that the top management
take the decision which is better for company.
STAFF(
/taff re"uirement is designed to ensure that those on board have the primary focus
as customer service with a high level of product and process knowledge and operation
excellence. )nduction and training program are designed to conduct for all employees at
regular basis to ensure that these levels are continually enhanced feed back for
continuous improvement in solicited from all understood. -eing a dynamic organization
susceptible and the changes are well understood.
-eing a dynamic organization to fre"uent change in policy so as to suit business
needs that re"uire to be a learning organization fulfilled by the systems and processes
which document all changes and feedback received. #evelopment programmes are
conducted by !P! every year only for the persons who are in the management cadder.
(hich helps them to improve their skills and knowledgesM

5OR: FLO5 MODEL(
<- Pur"hse Or$ers(
At the first stage the company receives purchase order from its agents. They are
mentioning the product grade, "uality, "uantity etc.
=- Re#ese R& Mteri# to Pu#p Mi##(
The purchase department releases the raw materials to the pulp mill
>- Pu#pin! Pro"ess(
)n this pulping process the raw material pulping made in pulper with water. )t will
undergo cleaning of pulp, refining and addition of re"uired chemicals.
+- Pro$u"tion Pro"ess(
The pulps are passes to the paper machine and it passes through solid press water
removal. Then it passes through #ryer machine and it passed change calendar
machine next it passes to the online coating machine
)- Si?e Cuttin!(
Then passes to the size cutting machine in this machine they cutting the paper bands
according to the customer re"uirement
@- Finishin! 2r$(
The finished yard paper boards are passes to the stores or finishing yard.
;- P"0!in!(
The next step is packing. The workers pack the paperboards in bundles as orders.
A- Do"u.enttion(
-efore delivering the paperboard to the customers it should be documented in the
stores ledger.
*- Dispt"hin!(
After documentation in proper ledger, the next process is dispatching the goods to
customers.
!"I#F #$P%&N&'ION &!O(' ')# O"*&NI+&'ION&% S'"(,'("# OF
MPM:
The organizational structure of enterprises would depend upon its size, product
manufactured and its fictional divisions. The organizational structure may be flexible.
The company may change its structure according to the needs and suitability.
)n !P! 8td., the -oard of directors is having the major position in the company.
The chairman is the chairman cum managing #irector '2!#* of the company. +e is held
responsible for formulating and implementing the policies, Procedures and rules with the
assistance of -oard of #irectors appointed by the =overnment and various financial
institutions. #ifferent functional department heads like production, marketing finance,
and +6# H A etc., also assists him.
The =overnment appoints the =eneral !anager of +6# H A. +e always keeps
contact with all other functional departments for routine administration. +e also keeps
direct contact with 2.!.#. .ach functional department heads are assisted by the
Assistant !anagers. The #irector of Production is in charge of some divisions$ viz.,
!aterial, Paper, Pulp, /ugar, 2hemical etc., there is always co%ordination between all
functional departments through horizontal communication.
FUNCTIONAL AREAS BDEPARTMENTSC OF MPM(
MI,-IN#./S 0 S MO1#%S
O"*&N I+& 'ION S'"(,'("# OF ')# MPM %'1
)*AR&
*$+D&R)
B$ARD $, D'R&#T$R)
#*A'RAN/ANA-'N- D'R&#T$R
D'R&#T$R ,$R&)T D'R&#T$R ,'NAN#&
-...arketing/ -...%roduction/ -.. .*.R. D. 0 %/
#$%AN1
)&#R&TA
R1
A-.
.A'NT/
A-
.%R$2/
A- .%B/
.'n #hange/
A-
.*RD0%/
A-
.,'N/
)r. ANA-&R
.ktg/
)r. ANA-&R
.#D/
)r. ANA-&R
.N%/
)r. ANA-&R
.'A/
ANA-&R)
D&%3T1 ANA-&R)
A))T.
ANA-&R)
FINANCE DEPARTMENT
PRODUCTION PROCESS(
Chipper 1ouse(-
2hipper house is a place where the different types of wood are cut in to homogeneous
product to heterogeneous and uniform chips.
A"tivities of Chipper 1ouse(-
Re"eipt of R& .teri#(-
6aw !aterial is received in accordance with the production re"uirement H silo stock of
chips.
#*'&, $, D'R&#T$R
$, ,'NAN#&
A))T. -&N&RA+ ANA-&R
)&N'$R ,'NAN#& ANA-&R
ANA-&R $,
#$NTR$+ 0
B3D-&T
ANA-&R $,
,'NAN#& 'N )A+&)
ANA-&R $,
&)TAB+')*&NT
ANA-&R
#$R%$RAT&
,'NAN#&
ANA-&R B/% ANA-&R A'N
A/# #$)T'N-
Chippin! pro"ess(-
#ifferent chippers are run for different raw materials. There are two types of chippers
namely disc chippers H drum chipper. There are two drum chippers used for bamboo H
four disc chippers used for hard wood.
S"reenin! D Conve%in!(-
+ere the accepted chips are sent to the digestion and unaccepted chips are screened and
sent for re%processing.
Stor!e of "hips D issue(-
The accepted chips are stored in silo and issued to digestion process whenever re"uired.
A""ountin!(-
A record of all the above activities is kept in a systematic manner. 2hipper house issues
chips to two streams of pulp mills$
MI,-IN#./S 0 S MO1#%S% : IN PROCESS OF RA5 MATERIAL
DEPARTMENT(
9. Re"eipt (
!aterial loaded vehicle must complete the mill security formalities ,Enly valid
materials will be accepted4
=- Inspe"tion(
!aterial type
!aterial Luality and Luantity.
>- Trnsit $o"u.ents verifi"tion(
/uppliers particulars
!aterial /tatus
Jalidity of supply
+- 5ei!ht.ent(
Lualification of both received and issued material.
Prioritize the chipper re"uirement
/tore as per need, availability in separate stacks and storage potentiality.
)ssue on the basis of re"uirement of production material mix "uality and priority
of period of storage.
)- 2r$ "#enin!(
2leaning to prepare the area for further storage
2leaning to ensure better utilization of the materials and minimize storage loss.
A. 2r$ Sfet%(
/afety against unfairG illegal activities like theft.
Prevent material from other damages.
/afety against hazards like stacks collapse, fire etc.
;- A""ountin!(
2onsolidate all the above activities and to generate production report
-udgeting
/tock assessment
2ontrolling yards loss.
6eports for finance purpose.
S5OT ANAL2SIS OF T1E COMPAN2
/(ET analysis is a tool for auditing an organization and its environment. )t is the
first stage of planning and helps marketers to focus and key issue. /(ET analysis it is an
effective way of analyzing the organization potential by identifying strength, weakness to
examine the opportunities and Threats which may affect the organization carrying out an
analysis using /(ET tool will be enough to reveal the changes which can be
implemented easily and gain results.
T1E S5OT ANAL2SIS OF T1E MPM IS A FOLLO5S
S'"#N*')
!arket leader in paper manufacturing.
Technical and experience manpower.
L/C111. )/EC119, )/E90119 'for pollution control* certified company.
)mproved infrastructure.
.fficient communication network.
(ell planned layout.
Automated and highly sophisticated machines.
2apacity to meet higher demand.
Additional land of B7111 acres for replanting eucalyptus trees.
=ood marketing network over all )ndia
irm is getting raw material "uickly for in time production.
irm is getting raw material cheaply for the production.
2#&-N#SS
The cost involved in completion of the product is high.
As the company is in process of decreasing the existing manpower., it may lose
opportunity of obtaining.
2reative and enthusiastic people in future development of the company.
As the customer expectations is increasing day by day it has become difficult to
satisfy them completely.
There is a fre"uent change in the top management due to political interference as
it is a public sector firm.
OPPO"'(NI'I#S
2apacity of meeting higher demand and attain optimum utilization of existing
resources.
#ue to advance in technology there is a scope for recruiting and retaining right
people on right job.
As the company has obtaining six sigma and Ls company has the capability of
achieving global standards$
orfeiture of paper industry can be directly linked increase level of literacy.
')"#&'S
Price of raw material is comparatively high.
Adopting auto motive machines may cause fear among the existing employees of
the job loss, which may morale and the productivity of employees.
A new entrant is market may dilute the market share of company.
&N&%.SIS OF FIN&N,I&% S'&'#M#N'
S(MM&". OF %&'#S' &NN(&% "#PO"':3
)t is very essential to keep written record of all the transaction in appropriate
books, which help in calculating the profit and clarifying the financial position of the
company with paper control system one can detect the leakage extravagant and misuse of
fixed assets. The function of the accounts department is to record the various transaction
of the company in financial terms apart from the "uantitative records necessary to be
maintained.
As per the balance sheet and profit and loss account of the company there is
decreasing in sales of 6s 0:0C1.B: lakhs in :11C and 6/.@@,B0:.B: lakhs in :191 and the
company is present academic year it has the loss of 6s. %B,B::.7A. -ut the -alance of '%*
loss brought forward from previous year shows that the company is going under loss.
.ven if we compare it to the previous year loss was 6s %@:1:.:;'9A@:.C0%
0;@7.::* in :11C, now it shows %91,C:0.;A N'6s %BB::.7A*% '%@:1:.:;*O in :191. )t shows
that the loss has been increased instead of the decreasing loss G gaining the profit for the
company.
The following statement will show the comparison between the previous years,
:11C and :191. That will base on the balance sheet and the profit H loss account for the
previous year and current year.
T1E M2SORE PAPER MILL LIMITED
PPROFIT AND LOSS ACCOUNT FOR T1E 2EAR ENDED ><ST
MARC1 =E<E
B RS in L0hsC
PARTICULARS
For the %er en$e$
><-E>-=EE*
For the %er en$e$
><-E>-=EEA
A INCOME

/ales
@@,B0:.B: 0:,0C1.B:
8essD .xcise #uty H cess
BA9.0
: >=F*A<->E 9,90:.B0 +<F>+;-*A
Ether )ncome
91@B.@B @9@:.7C
Jariation in stocks
%:C;C.99 :7C.1;

><FE=*-)@ ++F;>*-@)
4- EGPENDITURE

6aw !aterial 2onsumed
;,9@C.
1B
C,:91.
AB
2hemical 2onsumed
@,097.
:B
0,A09.
17
/tores 2onsumed
BA7.
01
C1@
.0B
6epair H !aintenance
B9:.
0A
9,10B.
9;
Power and uel
91,971.
07
9@,A;1.
AB
8abor charges
9,A07.
B;
9,::1.
01
.mployee -enefits
;,0B1.
:;
B,10:.
@@
Administration and Ether .xpenses
9,:::.
77
9,9@:.
;@
/elling .xpenses
9,00@.
A7
B;;
.9B
Prior Period Adjustment 'net*
A;.
0;
>@FE>>-
>*
7AC
.11

+EF=>)-;;
C-
Profit for the %er 'efore InterestF
Depre"ition D THtion
-)EE>-A>

+F)E>-AA

D-
)nterest
<;EA-A@

9,;A0.9C
E-
#epreciation
<EE*-A;

CC0.;A
F-
Taxation%ringe -enefit Tax


-

99.;C

5et Profit for the year
-;;==-)@

<F@>=-*+

A$$( 4#n"e of Loss B-C 'rou!ht
for&r$ fro. previous %er
->=E=-=A -+A>)-==

4#n"e of Loss B-C "rrie$ to 4#n"e
Sheet
-<E*=+-A@ ->=E=-=A
T1E M2SORE PAPER MILL LIMITED
4ALANCE S1EETAS AT ><ST MARC1 =E<E
B RS in L0hsC
PARTICULARS
For the %er en$e$
><-E>-=EE*
For the %er en$e$
><-E>-=EEA
SOURCE OF FUNDS
A- S1ARE 1OLDERS FUNDS
2apital
99,;;C.
@0
99,;;C.
@0
6eserve and /urplus
770.
BA
<=F+++-
<E
7C1.
99
9:,0BC.
07
4- LOAN FUNDS
/ecured 8oans
0,@@9.
7B
99,@:@.
7;
?nsecured 8oans
9A,C9B.
:B
=<F=+A-
A+
99,B9B.
:B
:@,101.
;7
Total AP-
>>F@*=-
*+
@7,7:1.
@1
APPLICATION OF FUNDS
C- FIGED ASSETS
=ross -lock
71,;0B.0
:
71,7B0.@
A
8ess D #epreciation
@;,A9:.C
A
@B,AA1.1
:
NET 4LOC: <=F=>+-+@ <=F*<+->+
2apital (ork%in Process
7C1.@
7 <=FA=+-A<
:1C.0
:
9@,9:@.B
A

D- CAPTI3E PO5ER PLANT ATIONS )FE;+-+A
0,@0@.:
C
E- IN3ESTMENTS @=->> A:.00

F-
CURRENT ASSETSF LOANS AND
AD3ANCES


)nventories
91,A9C.0
C
97,;C@.C
9
/undry #ebtors
@,@C7.:
1
7,1:B.0
C
2ash and -ank -alance
9,1C1.:
;
;0.9
:
8oans and Advances
:,A00.@
B
:,A:7.;
A
<;F;+*->+
:@,A@9.@
;

Less( Current Li'#ities n$
provisions
2urrent 8iabalities
C,1@9.:
A
7,CA9.B
9
Provisions
@,C99.A
:
@,@B;.7
@
<=F*+=-AA +FAE@-+@ *F>+E-=+ <+F=*<-<+
==F;@A-EA
@9,;:1.A
@
G-
MISCELLANEOUS EGPENDITURE
B to the eHtent not &ritten off or
$Iuste$ C
J6/ Payments %
0CB.@
B
1- Profit n$ #oss A""ount -<E*=+-A@ ->=E=-=A
TOTAL B C to 1 C >>F@*=-*+
@7,1::.C
9
The above statements are shows the company current situation in the market as
well as the financial position that are all discussing belowD%
Analysis of financial statement shows that the danger of imputing companies
economics significance to accounting numbers. The financial information can be
extracted from by using various methods they are as followsD
9* financial ratio
:* #u point analysis
@* /tandardized financial statements
0* applications of financial analysis
7* =oing beyond the numbers
/ome of the few methods we taking for interpretation of financial position of the
company.
Current rtio Q current assets R current liabilities
:11C it was :.7@D9 but in the year :191 it shows that 9.@BD9 it shows that current assets is
more than current liabilities .
Gross profit .r!in rtio Qgross profit R net sales
)n :11C it was @.;0D9 but in the year :191 it shows that :.:;D9 it shows that gross profit
margin may reduced to nearly @times.
Net profit .r!in rtio J net profit R net sales
)n :11C it was B.7@D9 but in the year :191 it shows that @.:@D9 it shows that company is not in a
financial sound position.
LEARNING EGPERIENCE
)n my Ten weeks of project work in !ysore Paper !ill 8td., ) studied and learnt
many things carried in the organization. This project work helped me in gaining more
knowledge about the work and production carried out in the organization.
There is a strict rules followed in +6 department and attendance was taken daily
to check the regularity we were used to stay from morning C.11 A! to evening 7.1 P!
daily and visit different departments daily accordingly to there schedule.
There was a good reaction and co%operation by the superiors and sub%ordinates in
the !ysore Paper !ill 8td., . They helped me in collection the information regarding the
different departments and production process.
) got the clear picture about the organizational work carried on and how the work
in allotted and how it is carried out and duties and responsibilities of the employees in the
organization. ) observed the work techni"ues that are studied in subject are implemented
in the organization like welfare facility, training techni"ues etc,.
inally this project work gave me the clear idea about the working condition in
the organization which will help me in future days
PART-B
1. INTRODUCTION:
In recent decades businessman have shown an increasing awareness of
the need for recision in the fie!d of inventor" contro!.
In the ast# inventors were considered as indication of wea!th# even
inventories great!" in e$cess of the amount needed to carr" on the rocess of
roduction and distribution were considered beneficia!.
%ince the advent of modern industries# wea!th has become more identified
with mone". &n increased emhasis on the !i'uidit" has !ed businessman to ho!d
cash and securities in reference to inventories a!though the !ater have an
inherent convertibi!it" not ossessed b" he other categories. These have been
made a strong tendenc" towards ho!ding the means for urchase of goods rather
than the goods themse!ves. (arge inventories are now viewed with a!arm# where
as in times no one wou!d ever have doubted that such were beneficia!.
)ver" enterrise needs inventor" for smooth running its activities. It serves
as a !in* between roduction and distribution rocesses. These are genera!!"# a
time !ag between the reorgani+ations of a need and its fu!fi!!ment. The grater the
time,!eg# the higher the re'uirements for inventor". The unforeseen f!uctuations
in demand and su!" of goods a!so necessitate for inventories. It a!so rovides
a cushion for future rice f!uctuations.
The investments in inventories constitute the most significant art of
current assets-wor*ing caita! in most of the underta*ings. Thus# it is ver"
essentia! to have roer contro! and management of inventories. The urose of
inventories contro! and management is to ensure avai!abi!it" of materia!s in
significant 'uantit" as and when re'uired and a!so to minimi+e investment in
inventories.
1.. /&C01ROUND O2 T3) %TUD)4:
Inventor" in genera! meaning 5stoc* of goods# or a !ist of goods# the word
5Inventor" is understood difficu!t!" b" various authors. In according !anguage it
ma" mean finished goods on!". In a manufacturing concern# it ma" inc!ude raw
materia!s# wor* in rocess and stories#etc.to understand the e$act meaning of the
word 5inventor" we ma" stud" it from the usage side or from the 5side oint of
entr" in the oerations. Inventor" inc!udes the fo!!owing things.
1. raw materia!s
.. wor* in rogress
6. finished goods
7. Consumab!e stores and sares.
&. R&8 9&T)RI&(%:
The are the in4uts of the final 4roducts. The5 are 4urchase b5the fir!
fro! others and are used in the 4roduction for con6erting into finished
co!4onents. The 7uantit5 of raw !aterials re7uired will be deter!ined b5 the
rate of consu!4tion and the ti!e re7uired for re4lenishing the su44lies. The
factors like the a6ailabilit5 of raw !aterials and go6ern!ent regulations, etc. too
affect the stock of raw !aterials.
/. 8OR0 IN :RO1R)%%:
This refers to the goods !"ing in the manufacturing rocess. the"
are norma!!" ractica!!" finished or semi,finished that are at various stages of
roduction in a mu!ti,stage roduction rocess. The raw materia!s enter the
rocess of manufacture but the" are "et to attain a fina! shae of finished
goods. The 'uantum of wor*,in,rocess deends uon the time ta*en in the
manufacturing rocess. The grater the time in manufacturing# the more wi!! be
the amount of wor*,in,rocess.
C. 2INI%3)D 1OOD%:
These are the fina! or com!eted roducts which are read" for sa!e.
The stoc*s of finished goods rovide a buffer between roduction and
mar*et. The urose of maintaining inventor" is to ensure roer su!" of
goods to customer. In some concerns the roduction is underta*en on
order basis# in these concerns there wi!! not be a need for finished goods.
The need of finished goods inventor" wi!! be more when roduction is
underta*ing in genera! without waiting for secific order. 8or* in
roduction# whi!e stoc* of finished goods is re'uired for smooth mar*eting
oeration. Thus inventor" serve as a !in* between roduction and
consumtion.
D. CONU9&/() %TOR)% &ND %:&R)%:
These are the goods he!d for consumtion b" machines in a
manufacturing concern. The" inc!ude sare arts# !ubricants# c!eaning
materia!s# oi!# cotton waste etc. the" dont enter into the fina! roduct but
the" are re'uired for maintaining and running the machines for roduction
urose.
The !eve!s of the above four *inds of inventories differ deending uon
The nature of the business. 2or e$am!e,& manufacturing firm wi!! have a!!
the four *inds of inventories. /ut a retai!er or who!esa!er wi!! have a high
!eve! of inventories of finished goods but the" wi!! have no inventories of
raw materia!s# sares# maintenance su!ies and stores and goods in
rogress. 2urther deending uon the nature of the business# inventories
ma" be durab!e or non,durab!e# va!uab!e or ine$ensive# erishab!e or
non,erishab!e etc.
Inventor" contro! has been attracting the attention of managers in
India for a !ong time. /ut with the credit s'uee+e measures announced b"
the government of India and the consideration of the recommendations of
the committee for inventories to management is dee!" a concern with
deve!oing suitab!e norms for inventor" contro!. In this inventor" than the
other categories.
1.69)&NIN1 &ND D)2INITION O2 IN;)NTOR4:,
The term 5Inventor" refers to the stoc* of raw,materia!s# sare arts and
finished roducts he!d b" a business firm. It is the aggregate 'uantit" of materia!
resources and goods that are id!e at a given oint of time. The resources ma" be
of an" t"e< for e$am!e men# materia!s# machiner"# mone"# when resources
invo!ved in materia!s or goods in an" stage of com!etion# inventor" referred to as
stoc*. 3ence inventor" refers to the 5stoc* that a business firm *ees to meet its
future re'uirements of roduction and sa!es.
%evera! authors have defined the term Inventor". The most ou!ar of
them are# =The term Inventor" inc!udes# Raw materia!s# 8or* In :rogress#
finished ac*aging sares and other stoc* in order to meet an une$ected
demand or distribution in the future.>
1.7 &N&(4%I%:
Date and information co!!ected are ana!"+ed using statistica! too!s# grahs
and charts.
.. INTRODUCTION TO CO9:&N4:
9"sore aer mi!!s (td.# was estab!ished in the "ear 1?6@ as a
government coman" !ater on in 1?7@. This coman" has been converted in to
ub!ic !imited coman".
The *ing *rishnaraAa 8ode"ar estab!ished this factor" to so!ve
unem!o"ment rob!em for the /adhravathians and for effective uti!i+ation of
natura! resources.
9"sore :aer mi!!s (td.# is ub!ic based manufacturing coman" which
is estab!ished at /adhravathi. The coman" roduces and su!"ing of aers
such as news rints. &t resent the coman" is meeting the re'uirement of
government deartments# rivate news rint industries and various dea!ers.
..1 IN;)NTOR4 CONTRO( %4%T)9:
Inventories are stoc* of the roduct a coman" is manufacturing for sa!e
and comonents that ma*e u the roduct. The various forms in which
inventories e$ist in a manufacturing coman" are raw materia!s# wor* in
rogress# and finished goods. &n inventor" contro! s"stem is to be engineered to
achieve the basic urose for which the inventories are created. The
fundamenta! obAective of a good inventor" contro! s"stem is to be ab!e to
determine# what# when# how much to order# how much to carr" in stoc*s so as to
gain econom" in urchasing. &n inventor" s"stem rovides the organi+ationa!
rovides the organi+ationa! structure and the oerating o!icies for maintaining
and contro!!ing goods to be stoc*ed.
Objectives of Scientific Inventory Control System:
The main obAective of inventor" contro! management that to be considered
b" the ana!"st whi!e designing
1. Continuit" of roductive oerations.
.. )ffective use of caita!.
6. Reduction of administrative wor* !oad.
7. %ervice to customers.
B. )conom" in urchasing.
C. Reduction of ris* of !oss.
@. :ractica! s"stem.
D. &dministrative sim!icit".
?. To maintain a minimum investment in inventories to ma$imi+e
rofitabi!it".
... %T&T)9)NT O2 :RO/()9:
E (ac* of new techno!ogica! information s"stem
E Inefficient hand!ing of inventor" materia!s
E )$cessive investment in inventories
E Inade'uate inventories
..6 %CO:) O2 %TUD4
This stud" was main!" concentrated on inventor" management being
adoted b" the coman". The urchase rocedure fo!!owed b" the coman" and
further actions for satisf"ing the re'uirement are ana!"+ed.
The coman"s rocedure for stores wi!! inf!uence more on the !eve! of
inventor" of the coman". %o the stud" of urchase has vita! ro!e to understand
the efficient s"stem of the coman".
..7 O/F)CTI;)% O2 T3) %TUD4
E To assess the efficienc" of inventor" management in 9"sore aer mi!!s
(imited.
E To eva!uate the inventor" contro! techni'ues of 9"sore aer mi!!s
!imited.
E To ana!"+e the urchase and stores rocedures fo!!owed b" the
coman".
..B 9)T3ODO(O14
..B.1 (OC&TION O2 T3) %TUD4:
The stud" had been conducted at 9"sore aer mi!!s !imited /adhravathi.
..B.. %OURC)% O2 D&T&
The methodo!og" fo!!owed for co!!ecting information is based on
aG :rimar" data
bG %econdar" data
:RI9&R4 D&T&:
The method which was adoted to co!!ect the rimar" data was
ersona! interview.
To co!!ect the information regarding the inventor" contro! s"stems
of the coman" direct ersona! interview and discussions was
made with the materia! manager# mar*eting manager and sa!es
officer and other staff members.
%)COND&R4 D&T&:
2or gathering secondar" data various other source were used. The" are:
Different accounting records and annua! reorts and research reort of
the coman".
%ublished books, !aga8ines, news 4a4ers, 9ournals, websites and 4ublished
annual re4orts of the co!4an5.
Different records re!ated to inventor" were co!!ected b" stores
deartment i.e. materia! management stoc* maintenance.
..C (I9IT&TION% O2 T3) %TUD4
1. The time constraint which the stud" has been conducted on!" for si$
wee*s.
.. The e$ected de!iver" schedu!es ma" not be ossib!e in some
monoo!" items. The average !eve! can be fi$ed after an in deth
stud".
6. (eve! of accurac" of resu!ts of research restricted to the accurac" !eve!.
7. The &/C c!assifications were done for materia!s and some materia!s
were se!ected and studied. The stud" can be e$tended to other materia!s
a!so on the same !ines.
6. R);I)8 O2 (IT)R&TUR)
%!.
No
Title Findings Source
1. Inventor" contro!
:ractice in
HI22COG
Inventories constitute second
!argest item after fi$ed assets in
the financia! statement
articu!ar!" in manufacturing
organi+ations. :roer
management of the comonents
is imortant to maintain and
imrove the hea!th of the
organi+ation.
Dr. %u*hdev
%ingh# ;o!,71#
Fu!" .IIC
. /ad goods contro!
in food rocessing
Inventor" contro! mechanism
have to be bui!t to a!! oints of
:rof.
9ousumi
units the su!" chain after a thorough
s"stem stud"# the contro! aim at
maintaining.
1hosh ;o!,
67# No..
2ebruar"
1???
6 Inventor"
9anagement of
Indian Commercia!
;ehic!es Industr".
The stud" concentrates on Indian
commercia! vehic!es industr" !i*e#
/T(#)9( and %9( using and
maintained b" more ercentage
of raw materia! where as T9(
and )9( using !ess ercentage
of raw materia! and more
ercentage of sa!es. It indicates
the T9( and )9( is a more
strength comare to /T(# )9(
and %9(.
:. Fana*i
Ramudu et a!#
Oct .IIC
7 Imroving foundr"
erformance
through activit"
based costing
&ctivit" based costing is the
current cost management.
&ctivities are a owerfu! and a
usefu! base for managing and
enterrise.
&.N.Romans>
;o!,7I 4ear
.IIB
B. The Reorting
%"stem of 2oreign
Direct Investment
in India
2DI is an imortant driving force
for the growth and deve!oment
of nation there is a big
cometition among the nations
in attracting 2DI. 2DI and issues
re!ating to its comutation
rovides the much needed
foreign e$change to he! bridge
the ba!ance of trade deficit and
techno!og"
0.
Ramamoorth"
et a!# &ri! J,
.II6
C &ctivit" /ased
Cost and
9anagement
%uccess of &/9 deends on the
outut of an &/C s"stem. &/9
can he! the business
organi+ation in stoing an
interna! war of numbers. /etter
understanding of the business
ta*ing right strategic decision in
T
%at"nar"ana
Fu!",Dec.IIB
the area of roduct ricing#
roduct sourcing# roduct ricing#
roduct sourcing# roduct mi$
and mar*et segmentation
continuous imrovement can be
achieved through &/C K &/9 to
succeed in the conte$t of g!oba!
cometitiveness
@ 1!oba!i+ation cost
management and
su!" chain
management
1!oba!i+ation has shifted cost
management aradigm form
management of cost from
roducers view oint to
managing costs for greater
customer satisfaction in the
g!oba! mar*et where va!ue
addition refers to va!ue creation
er unit cost as the customer
sees it and costs refer to cost of
customer retention or cost of
conversion of a customer in to
c!ient
:rof %h"mma!
/anerAee#
Cost
9anagement
&ccountant#
Fanuar" .II6
! A"A#$SIS A"% I"T&RPR&TATIO"
In t'is c'()ter t'e *'ole (n(lysis is divided in to t'ree )(rts! T'ey (re
To assess the efficienc" of inventor" management in 9"sore aer
mi!!s (imited.
To eva!uate the inventor" contro! techni'ues of 9"sore aer mi!!s
!imited.
To ana!"+e the urchase and stores rocedures fo!!owed b" the
coman".
OB+&CTI,& -
TO ASS&SS T.& &FFICI&"C$ OF I",&"TOR$ /A"A0&/&"T I" /$SOR&
PAP&R /I##S #T%!
Inventory /(n(gement (nd Control Tec'ni1ues
The !iterar" meaning of the word =inventor"> is stoc* of goods. )ver" enterrise
needs inventor" for smooth running of its activities. It serves as a !in* between
roduction and distribution rocess. The unforeseen f!uctuation in demand and
su!" of goods a!so necessitates the need for inventor". It a!so rovides a
cushion for future rice f!uctuations.
The urose of inventor" management is to ensure avai!abi!it" of materia!s
in sufficient 'ua!it" and 'uantities as and when re'uired and a!!ow minimi+ing
investment in inventories. Thus it is ver" essentia! to have roer contro! and
management of inventor".
Activity R(tios or Turnover R(tios (t /ysore )()er mills ltd!!2
&ctivit" ratios are ca!cu!ated to measure the efficienc" with which the
resources of a firm have been em!o"ed. These ratios are a!so ca!!ed turnover
ratios because the" indicate the seed with which assets are being turned over
into sa!es.
%ome of the turnover ratios that are used to *now the efficienc" of
inventor" management in 9"sore aer mi!!s !itL# are as fo!!ows:
Inventor" turnover ratio
Inventor" conversion eriod
Raw materia! turnover ratio
%tores and sares turnover ratio
8or*,in,rocess turnover ratio
2inished goods turnover ratio
Inventor" to wor*ing caita! ratio
2i$ed asset turnover ratio
Inventory Turnover R(tio (t /ysore P()er /ills #td
Inventor" turnover ratio measures the ve!ocit" of conversion of stoc* into
sa!es. Usua!!"# a high inventor" turnover ve!ocit" indicates efficient management
of inventor" because more fre'uent!" the stoc*s are so!d< the !esser amount of
mone" is re'uired to finance the inventor". & !ow inventor" turnover ration
indicates an inefficient management of inventor". & ver" high turnover of
inventor" does not necessari!" im!ies higher rofits. The rofits ma" be !ow due
to e$cessive cost incurred in re!acing stoc* in sma!! !ots# stoc*,out situations#
se!!ing inventories at ver" !ow rices etc.#
T'e different com)onents of inventory (re
Raw materia!s.
8or*,in,rocess.
%tore and sares.
2inished goods.
T(ble !- Inventory Turnover R(tio 3Rs in #(4's5
$e(rs Cost of goods
sold
Avg! inventory R(tio
.IIB 6@@?1.1C 11II7.D6 6.76
.IIC 7I661.D1 11.@7.CD 6.B@@
.II@ 7CDCI.BC 1.?I7.1.B 6.C61
.IID 77.7I.CD 17DI..1BB ..?D?
.II? 7BC?...D 1BC1@..1 ..?.C
.I1I 77CC@.DC 16.BC.CC 6.6C?
Fig !- inventory Turnover R(tio
The inventor" turnover ratio was 6.76 in .IIB and it is decreased to
..?.C in .II? because inventor" consumed and roduction high but in the .I1I
it is increase to 6.6C? it is not good comared to revious "ear and a!so cost
Hcost of goods so!dG is high.
Inventory conversion )eriod
T(ble !6 inventory conversion )eriod
3Rs in #(4's5
$e(rs %(ys in ye(r Inventory turn
over r(tio
%(ys
.IIB 6CB 6.76 1IC.71
.IIC 6CB 6.B@@ 1I..I7
.II@ 6CB 6.C61 1II.B.
.IID 6CB ..?D? 1...11
.II? 6CB ..?.C 1.7.@7
.I1I 6CB 6.6C? 1ID.67
Fig !6 inventory conversion )eriod
It ma" a!so be of interest to see average time ta*en for c!earing
the stoc*s. This can be ossib!e b" ca!cu!ating the inventor" conversion eriod.
The conversion of stoc*s was 1IC.71 da"s in .IIB but it is 1.7.@7da"s in .II?
and it is short eriod ta*en to conversion of stoc*s comared to revious "ears
that is 1ID.67da"s in .I1I and it is good to organi+ation.
R(* m(teri(l turn over r(tio:
It is the ratio with which we can measure the efficienc" with which the firm
converts raw materia!s in to wor* in rogress. 9ateria!s consumed can be found
out as oening ba!ance of raw materia!s !us urchase minus c!osing ba!ance of
raw materia!s.
T(ble !7 R(* m(teri(l turn over r(tio: 3Rs in #(4's5
$e(rs S(les R(* m(teri(l R(tio
.IIB 6.1.D.II @B6I.C. 7..CC
.IIC 67?.@.61 ?11C.B6 6.D6
.II@ 71B1?.II CCI?.B. C..D.
.IID 6?7IB.II C77?.@? C.1I?
.II? 7.7?I.II ?.1I.C@ 7.C16
.I1I 66@76.II D16?.I@ 7.17C
Fig !7 R(* m(teri(l turn over r(tio
This ratio indicates the re!ationshi between the sa!es and raw
materia!s. In the "ear .IIB it was 7..CC and it is increase to C..D. in .II@ there
is strong re!ationshi between sa!es and raw materia!s but in .I1I it is decrease
to 7.17C it shows decrease the efficienc" of the firm.
Stores (nd s)(res turnover r(tio:
T(ble ! Stores (nd s)(res turnover r(tio:3Rs in #(4's5
$e(rs S(les Stores (nd
s)(res
R(tio
.IIB 6.1.D.II 6.BB.1D ?.DC?
.IIC 67?.@.61 6BD..C1 ?.@B
.II@ 71B1?.II 67@..6@ 11.?B@
.IID 6?7IB.II 6BD?.6. 1I.?@D
.II? 7.7?I.II 6DDI.@D 1I.?7D
.I1I 66@76.II 6@?@.CI D.DD
Fig ! Stores (nd s)(res turnover r(tio
This ratio indicates the re!ationshi between the sa!es and stores
and sares. In the "ear .IIB it was ?.DC? and it is increased to 1I.?7D in the
"ear .II? and it is decrease to D.DD in .I1I. so this origination is not using
stores and sares roer!" so it is effect to roduction decreases.
Stoc4 in )rocess turn over r(tio:
T(ble !8 Stoc4 in )rocess turn over r(tio: 3Rs in #(4's5
ye(rs S(les Stoc4 in
)rogress
R(tio
.IIB 6.1.D.II DC.I. 6@6.7?
.IIC 67?.@.61 DC.D. 7I...?B
.II@ 71B1?.II 1I1..B 71I.IC
.IID 6?7IB.II 167.7B .?6.ID
.II? 7.7?I.II 17..BC .?D.IB
.I1I 66@76.II ?7.61 6B@.@D
Fig !8 Stoc4 in )rocess turn over r(tio
This ratio shows the re!ationshi between the sa!es and stoc* in
rocess. It was 6@6.7? in the .IIB but it is decreased to .?D.IB in the "ear .II?.
/ut in the .I1I it is increased to 6B@.@D it is not good to organi+ation because
stoc* in rocess turn over ratio is shou!d be decrease and stoc* in rocess cou!d
be increase so it is better to origination.
Inventory to *or4ing c()it(l r(tio:
T(ble !9 Inventory to *or4ing c()it(l r(tio: 3Rs in #(4's5
$e(rs Inventory :or4ing c()it(l R(tio
.IIB 11I7.D6 CDC1.BB 1.CI7
.IIC 11B77.7B C771.@. 1.@?.
.II@ 17.C6.DI 11CD..D6 1...1
.IID 1B67I.B1 1I7I?.6B 1.7@7
.II? 1BD?6.?1 17.?1.17 1.11.
.I1I 1IC1?.7? 7DIC.BI ...I
Fig !9 Inventory to *or4ing c()it(l r(tio

This ratio determines the connection between inventories to wor*ing caita!. It
was 1.CI7 times in .IIB but it is decreased to1.11. times in .II?.but in .I1I it
is increased to ...I so it is good to organi+ation because the wor*ing caita!
consumtion is decreases. Hi.e da" to da" transaction cost is decreaseG so that
indicates the organi+ation is good at cost reduction.
Fi;ed (sset turnover r(tio:
T(ble !< fi;ed (sset turnover r(tio:3Rs in #(4's5
$e(rs S(les Fi;ed (ssets R(tio
.IIB 6.1.D.II 1C.CD.C6 1.?@
.IIC 67?.@.61 1B7I?.D6 ...@
.II@ 71B1?.II 17CCI.C7 ..D6
.IID 6?7IB.II 16@7B.@6 ..D@
.II? 7.7?I.II 1.?17.67 6..?
.I1I 66@76.II 1..67.7C ..@C
Fig !< fi;ed (sset turnover r(tio
This ratio indicates the e$tent# which the investment in fi$ed
assets contribution was 1.?@ times in the "ear .IIB. &nd it has increased to 6..?
in .II?. /ut in .I1I it is sudden changes Hi.e. decreasedG In fi$ed assets turn
over ratio that is ..@C because of huge changes in sa!es so the fi$ed assets turn
over ratio decreased.
OB+&CTI,&6
TO &,A#=AT& T.& I",&"TOR$ CO"TRO# T&C."I>=&S OF /$SOR&
PAP&R /I##S #I/IT&%!
ABC A"A#$SIS
(arge number of firms has to maintain severa! t"es of inventories.
It is not desirab!e to *ee the same degree of contro! on a!! the items. The firm
shou!d a" ma$imum attention to those items whose va!ue is the highest. The
firm shou!d therefore c!assif" inventories to identif" which items shou!d receive
the most effort in contro!!ing. The firm shou!d be se!ective in its aroach to
contro! investment in various t"es of inventories.
The high va!ue items are c!assified as
&,items and wou!d be under the tightest contro!.
5/ items fa!! into between these . categories and re'uire reasonab!e
attention of management.
5C items reresent re!ative!" !east va!ue and wou!d be under sim!e
contro!.
&/C ana!"sis enab!es to e$ercise se!ective contro! when the materia!s manager
is confirmed with a !arge number of items. The significance of this ana!"sis is
that it sot !ights attention to be given in resect of the areas !i*e.
(oss
8astage
%cra
Mua!it"
:rice variance
Usage variance
Inventor" turnover etc.
It a!so he!s to determine safet" stoc*s fre'uent!" of ordering
rearing of contro! statements sources from which materia! is to be
rocured etc. hence &/C ana!"sis is one of the best techni'ue of
inventor" contro!.
Adv(nt(ges of ABC (n(lysis:
To minimi+e urchasing cost and carr"ing cost
Cost minimi+ation and rofit ma$imi+ation.
C!oser and strict contro! on these items# which reresent a high ortion
of tota! stoc* va!ue.
)nsuring avai!abi!it" of su!iers at a!! times
C!erica! cost can be reduced
Inventor" is maintained at otimum !eve! and there b" investment in
inventor" can be regu!ated and wi!! be minimum
)'ua! attention to & / and C items are not desirab!e as it is e$ensive
9aintaining enough safet" stoc* for C item
Inter)ret(tion
2rom the &/C ana!"sis 9"sore aer mi!!s !imited Hhere too* maAor
grou of row materia!s for the ana!"sisG it is c!ear that & c!ass items that is
high va!ue item# constitute for @1..@N of annua! inventor" consumtion
and / c!ass items constitute .6.B7N of tota! annua! va!ue and 7BN of tota!
item this c!ass is ca!!ed as midd!e c!assed va!ue item. 8hen comared to
a c!ass this inventor" re'uired !ess contro! and C c!ass item constitute
B.1DN of tota! annua! va!ue and 6BN of tota! item# this is ca!!ed !ow va!ue
tems. %o the contro! on this inventor" does not re'uire when comare to
the & and / c!ass items.
&/C ana!"sis is showing tab!e 7.D# 7.? K 7.1I
T(ble !? Consum)tion )rice %(t( of 6@ Items of /ysore P()er /ills
limited!
"o! Item descri)tion Price Annu(l Annu(l R(n4
Of
Item
s
3)er
unit5
us(ge
3in /T5
Consum)tion
1 Caustic soda !"e .6116 @III 1C1@?1III 1
. (i'uid ch!orine DIBC 7.II 66D6B.II C
6 /urnt !ime B6DB .6III 1.6DBBIII .
7 3"drogen ero$ide 66.17 6.II 1IC.D7DII 6
B %oa stone owder CIII ?III B7IIIIII 7
C 2erric &!um C1@B CII 6@IBIII 1.
@ Non 2erric &!um DIDC 1BII 1.1.?III ?
D %odium %i!icate D7?I 16II 11I6@III 1I
? 3"droch!oric acid 711. 7.I 1@.@I7I 1B
1I %u!hur 111B1 1CI 1@D71CI 17
11 Rosine .IIII BII 1IIIIIII 11
1. :!astic :!ug HnosG C..B 76.III .@IIIII 16
16 Co!ors 1.D @BI ?CIII 1D
17 1um tae HnosG B1 1IDII BBIDII 1C
1B 9other !i'uor 11B. ..77I .BDBIDDI D
1C 9 : steam 1.II 6?I 7CDIII 1@
1@ Ree! Core HnosG 7II 16.III B.DIIIII B
1D & T wi!! 1unn"
/ags HnosG
C. 7.BIII .C6BIIII @
T(ble !A Revised t(ble *it' items (rr(nged (ccording to t'eir res)ective
r(n4s
"o
Of
Item
s
Item
descri)tion
Annu(l
consum)tio
n v(lue
Cumul(tive
(nnu(l
consum)tio
n v(lue
Cumul(tive
Annu(l
consum)tio
n
Percent(ge
C(tegory
1 Caustic
soda !"e
1C1@?1III 1C1@?1III .B.@.N &
. /urnt !ime 1.6DBBIII .DBC7CIII 1?.C?N &
6 3"drogen
ero$ide
1IC.D7DII 6?1?6IDII 1C.D?N &
7 %oa stone
owder
B7IIIIII 77B?6IDII D.BDN &
B Ree! Core
HnosG
B.DIIIII 7?D@6IDII D.6?N /
C (i'uid
ch!orine
66D6B.II B6.BCCIII B.6@N /
@ & T wi!!
1unn" /ags
HnosG
.C6BIIII BBD?1CIII 7.1DN /
D 9other
!i'uor
.BDBIDDI BD7@CCDDI 7.11N /
? Non 2erric
&!um
1.1.?III B?CD?BDDI 1.?.N C
1I %odium
%i!icate
11I6@III CI@?6.DDI 1.@BN C
11 Rosine 1IIIIIII C1@?6.DDI 1.BDN C
1. 2erric &!um 6@IBIII C.1C6@DDI I.BDN C
16 :!astic :!ug
HnosG
.@IIIII C.766@DDI I.7.N C
17 %u!hur

1@D71CI C.C1..I7I I..DN C
1B 3"droch!oric
acid
1@.@I7I C.@D7?IDI I..@N C
1C 1um tae
HnosG
BBIDII C.D6??DDI I.ID@N C
1@ 9 : steam 7CDIII C.DDC@DDI I.I@7N C
1D Co!ors ?CIII C.D?C6DDI I.I1BN C
T(ble !-@ Summ(ry of ABC An(lysis of -? Items
"o of
items
B of
items
R(nge of
(nnu(l
us(ge
Tot(l
(nnu(l
us(ge
Percent(g
e (nnu(l
us(ge
C(tegory
7 ..... &bove Rs
11IIIIIII
77B?6IDII @I.DDN &
7 ..... /etween
1B7IIIII
DC7IIII
16DD6CIDI ...IBN /
1I BB.BB /e!ow Rs
DIIIIII
771?@III C.?@CN C
)CONO9IC ORD)RIN1 MU&NTIT4:
One of the maAor inventor" management rob!ems to be reso!ved is how
much inventor" shou!d be added when inventor" is re!enished. The )OM
shou!d be a!ied to 9"sore aer mi!!s !td for the urose of man" units shou!d
be issued for roduction deartment as er roduction schedu!e. The wi!!
invo!ves the ordering cost and carr"ing cost. 2or ana!"+ing the )OM techni'ues
coman"s . "ears raw materia!s data shou!d be ta*en it shou!d be resented
and ca!cu!ated.
The )OM a!ied to 9"sore aer mi!!s !td raw materia!s for . "ears. The
coman"s )O8 units wi!! be varied in . "ear because of 'uantities issued to the
roduction deartment wi!! be change the "ear after "ear. If the consumtion
rates wi!! increase the 'uantities of raw materia!s shou!d a!so be increased for the
roduction. The ever" item in )OM techni'ues resented in tab!e wi!! be used for
aer roduction.
In .IID the 'uantit" shou!d be minimum units ?BI6# when comare to
"ear .II? is units 1II6.. If the coman" is ordering as we!! as carr"ing cost wi!!
a!so increase ever" "ear and these cost are different for different items in the
coman".
The ordering and carr"ing cost wi!! be the main e!ements for the
aer manufacturing units. If the comanies carr"ing cost wi!! occurred b" wa" of
!oss due to i!ferages# wastages and brea*ages in the sores and the ordering
cost wi!! occur b" wa" of transortation of items from one !ace to another !ace.
)conomic Ordering and Muantit" is shown in tab!e 7.11.
T(ble !-- c(lcul(tion of &conomic Ordering >u(ntity for t*o ye(rs:
"o of
Items
Items 6@-@:
&O>CD6AOEC
=nits 6@@A:
&O>CD6AOEC
=nits
1 Caustic
soda !"e
O.E@IIIE1.I-I.D 177? O.E@DIIE1II-I.@I 17?6
. (i'uid
ch!orine
O.E7.IIE11I-I.D 1I@B O.E77IIE11I-I.DI 11II
6 /urnt !ime O.E.6IIIEDI-1 1?1D O.E.@IIIEDI-1 .I@?
7 3"drogen
ero$ide
O.E6.IIE1II-I.CB ??. O.E6IIIE1II-I.CB ?C1
B %oa stone
owder
O.E?IIIE1.I-I.@B 1C?@ O.EDBIIE11I-I.@B 1B@?
C 2erric &!um O.ECIIE11I-I.CB 7B1 O.E1BIIE1II-I.@B C6.
@ Non 2erric
&!um
O.E1BIIE1II-I.CI @ID O.E1CIIE1II-1 BCC
D %odium
%i!icate
O.E16IIE1.I-I.@B C7B O.E.IIIE1II-I.D@ C@D
? %u!hur O.E1CIE7I-1 117 O.E.BIE7B-I.?I 1BD
1I 3"droch!oric
acid
O.E7.IEBI-I.@B .6@ O.EBIIEBI-I.@B .BD
Tot(l -@@76 A8@7
,&% A"A#$SIS:
This c!assification is usua!!" a!ied for sare arts to be stoc*ed for
maintenance of machines and e'uiment based on the critica!it" of the sare
arts. The stoc*ing o!ic" is based on critica!it" of the items. The vita! sare
arts are those which can cause stoage of the !ant if not avai!ab!e usua!!"
such sare arts are *nown as caita! or insurance sares.
The inventor" o!ic" is to *ee at !east one number of vita! sares irresective of
its va!ue. &!so sare arts be su!ied b" manufacturer are treated as
;ita! sare# the stoc* of which even for as short time wi!! sto
roduction for 'uite same time and where the cost of stoc* out is ver"
high are *nown as vita! sares.
)ssentia! sares# the absence for which cannot be to!erated for more
than a few hours a da" and cost of !ow roduction is high and which
are essentia! for the roduction to continue are *nown as essentia!
sares.
Desirab!e sares# those which are needed but their absence for even a
wi!! not !ead to sto sare of roduction.
Inter)ret(tion
2rom ;)D ana!"sis 9"sore aer mi!!s !imited H3ere too* maAor grou of raw
materia!s for the ana!"sisG It is c!ear the 5; c!ass item for vita! usage of items. It
constitute for D1..N annua! inventor" consumtion of tota! items of 7IN and )
c!ass items that is essentia! of usage of materia!s the tota! annua! usage is 1..?N
of tota! consumtion 6IN and this c!ass is ca!!ed as medium c!ass usage item
and D c!ass of usage items this constitute B.?N of tota! usage of item. This
shown in Tab!e 7.1..
T(ble !-6 ,&% =s(ge %(t( on -@ Items
"o! Items Annu(l R(n4 Cumul(tiv CA=B R(n4
of
Items
%escri)tion =s(ge e of
Annu(l
=s(ge
c(tegory
1 Caustic soda !"e @III 6 @III 16.D?N ;
. (i'uid ch!orine 7.II 7 11.II D.66 ;
6 /urnt !ime .6III 1 67.II 7B.CB ;
7 3"drogen
ero$ide
6.II B 6@7II C.6B )
B %oa stone
owder
?III . 7C7II 1@.DC ;
C 2erric &!um CII D 7@III 1.1? D
@ Non 2erric &!um 1BII C 7DBII ..?@ )
D %odium %i!icate 16II @ 7?DII ..BD )
? 3"droch!oric acid 7.I ? BI..I I.D6 D
1I %u!hur 1CI 1I BI6DI I.61 D
T(ble !-7 Summ(ry of ,&% An(lysis for Ten Items
No of
items
N of
items
Tota! annua! usage N of annua!
usage
Categor"
7 7I 76.II DB.@ ;
6 6I CIII 11.? )
6 6I 11DI ..6 D
./# A"A#$SIS:
The high# medium and !ow c!assification fo!!ows the same rocedure as if
adoted in &/C c!assification on!" difference is that in 39(# the c!assification unit
va!ue is a criteria and not the annua! consumtion va!ue.
The items are inventor" shou!d be !isted in the descending order of unit va!ue
and it is u to the management to fi$ !imits for three categories.
39( ana!"sis is usefu! for *eeing contro! or consumtion at deartmenta! !eve!s
for deciding the fre'uenc" of the h"sica! verification and for contro!!ing
urchase.
Inter)ret(tion:
It is c!ear that 3 c!ass items that is high va!ue rice items# constitute for CI.I6N
of annua! inventor" consumtion rice# and 9 c!ass item that is medium !eve!
va!ue rice that constitute 61.1?N of tota! annua! rice and ( c!ass items that is
!ow rice items constitute D.@DN T this shows in Tab!e 7.17# Tab!e 7.1B
resective!".
T(ble !- C(lcul(tion of ./# (n(lysis
"o
of
item
s
Items
consum
)tion
Price
)er
unit
Annu(
l
us(ge
Annu(l
consum
)tion
R
(
n
4
Cumul(tiv
e (nnu(l
)rice
B
unit
)rice
R(n4
c(teg
ory
1 Caustic
soda !"e
.611
6
@III 1C1@?1I
II
. .6116 .I.6
1
3
. (i'uid
ch!orine
DIBC 7.II 66D6B.I
I
C 611C? @.ID 9
6 /urnt
!ime
B6DB .6III 1.6DBBI
II
? 6CBB7 7.@6 (
7 3"droge
n
ero$ide
66.1
7
6.II 1IC.D7D
II
1 C?@CD .?.1
?
3
B %oa
stone
owder
CIII ?III B7IIIII
I
D @B@CD B..@ (
C 2erric
&!um
C1@B CII 6@IBIII @ D1?76 B.7. (
@ Non
2erric
&!um
DIDC 1BII 1.1.?II
I
B ?II.? @.1I 9
D %odium
%i!icate
D7?I 16II 11I6@II
I
7 ?DB1? @.7C 9
? 3"droch!
oric acid
711. 7.I 1@.@I7I 1
I
1I.C61 6.C1 (
1I %u!hur 111B
1
1CI 1@D71CI 6 116@D. ?.D 9
T(ble !-8 Summ(ry of ./# (n(lysis for ten items
No. of items N of items Tota! annua! N of annua! Categor"
rice rice
. .I BC6.@ 7?.BI 3
7 7I 6B@D6 61.77 9
7 7I .1C@. 1?.I7 (
OB+&CTI,& 7
TO A"A#$S& T.& P=RC.AS& A"% STOR&S PROC&%=R&S FO##O:&%
B$ T.& CO/PA"$
The urchasing function occuies a vita! and uni'ue oison in the
organi+ation of manufacturing industr". /ecause urchasing is one of the main
functions in success of a modern manufacturing concerns.
9ass roduction industries !i*e 9"sore aer mi!!s !td..# since the" re!a"
uon a continuous f!ow of right materia!s# demand for an efficient urchasing
division.
Under urchase rocedure ana!"sis this stud" considered on!"#
urchasing rocedure for stores# sares# comonents and raw materia!s which
constitute inventor" in the coman". These items constitute a maAor ortion of the
tota! inventories in a coman" the" inc!ude the items needed for roer
oeration# reair and maintenance during manufacturing c"c!e.
Objectives of t'e )urc'(se %e)(rtment
The coman" urchase deartment stands for fo!!owing obAectives# in order to
achieve cometitive advantage in materia! rocurement
iG To rocure right materia!
iiG To rocure materia! in right 'uantities
iiiG To rocure materia! in right 'uantities
ivG To rocure from right and re!iab!e sources
vG To rocure materia! economica!!"# i.e. right or reasonab!e rice.
viG To receive and de!iver materia!s at
Right !ace# and at
Right time.
T'e )urc'(se )rocedure
%tes invo!ved in the com!ete urchasing c"c!e of materia!s.
i! Recognition of need2 recei)t (nd (n(lysis of )urc'(se
re1uisition!
8henever a deartment needs an item# it is officia!!" brought the
notice of the urchasing deartment. :urchase re'uisition forms
the basis for action b" the urchasing deartment.
ii! Sending )urc'(se re1uisition to .e(d Office
In second stage the coman" stores deartment sends a!! orders
to head office# for urchase of re'uired materia!s.
iii! Selection of )ossible sources of su))ly
This rocess consists of se!ecting a fair number of vendors in
accordance with estab!ished guide!ines# from whom 'uotations
wi!! be re'uested.
iv! /(4ing re1uest for >uot(tions
In this stage# re'uest for 'uotations is made on rescribed
'uotation forth to a!! se!ected Hossib!eG sources of su!".
v! Recei)t (nd (n(lysis of >uot(tions
&fter receiving a number of 'uotations from different su!iers#
the" are studied and a comarative statement of rates and other
terms and conditions mentioned in the 'uotations is reared.
vi! Selection of rig't source of su))ly
The comarative statement as reared in ste HviGabove serves
as good guide in se!ecting the right source of su!".
vii! Issuing )urc'(se order
&fter se!ecting the right su!ier# a urchase order is disatched
to them# to su!" resective materia!s.
& urchase order once acceted b" the vendor constitutes a
contract for the de!iver" of the artic!es in accordance with terms of
urchase agreement.
viii! Follo*-=) (nd e;)editing t'e order
&fter !acing the order# the urchase service se!ection maintains
contact with the vendor# in order to ta*e corrective actions such
as transferring some of the orders to some other su!iers.
i;! An(lyFing receiving re)orts (nd )rocessing discre)(ncies
(nd rejections
Receiving reorts are comared with urchase order in order to
find discreancies. Discreancies found if an" during insection
as regards the 'uantit" or 'uantit" of the received materia! shou!d
be romt!" bought to the notice of the su!ier.
;! C'ec4ing (nd ())roving vendors invoices for )(yment
Invoices shou!d be chec*ed to ensure that# the correct materia!
has been su!ied# according to agreed terms and conditions.
&fter confirming the above# the a"ment is made to the vender for
the va!ue of materia!s received.
Functions of store de)(rtment!
I. To receive materia!s and e'uiments and to chec* item for
identification.
''. To record the recei4t of !aterials
'''. To correct 4ositioning of all !aterials and su44lies in the store.
':. To !aintain stocks safel5 and in good condition b5 taking all
4recautions to ensure that the5 do not suffer fro! da!age,
4ilfering or deterioration.
:. To issue ite!s to the users onl5 on the recei4t of authori8e store
re7uisitions.
:'. To record and u4date recei4ts and issues of !aterials.
;II. To !an store for otimum uti!i+ation of the cubic sace i.e.
!ength# breadth and height.
:'''. To ensure that the re7uired !aterials are located easil5
IP. To initiate urchase c"c!e at the aroriate time so that
the materia!s re'uire are never out of stoc*.

To co,ordinate and co,oerate to the fu!! e$tent with the urchasing#
manufacturing# insection and roduction !anning and contro!
deartments.
FI"%I"0S:
Inventory control system: &s er the stud"# raw materia! has
increase the efficienc" of the inventor" and drastica!!" has reduced
the transortation cost.
The coman" shou!d ta*e in to account of e$isting stoc* !eve!
when it changes the design or when it introduces new mode!
otherwise abso!ute and non moving stoc*s wi!! increase due to
fre'uent changes.
The em!o"ees are ver" rude behavior and the" do not have
courtes" to sea* with subordinates and visitors.
The em!o"ees are inefficienc" and ineffectiveness towards
wor*.
The" do not have roer *now!edge to reare boo*s of
accounts.
Im!ementation of !atest techno!ogica! s"stems entrereneur
resource !anning software ac*ages as discussed wi!! cater to
the additiona! information re'uirements of the coman" which in
turn wi!! imrove the efficienc" of management of inventor"
contro! s"stems.
2or ma*ing &/C ana!"sis usua!!" comanies consider va!ue and
consumtion. In 9"sore :aer 9i!! (td.# the" a!so consider the
va!ue and consumtion of raw materia!s. This is one of the best
eva!uations of &/C ana!"sis in which the coman" has
deve!oed.
The em!o"ees are not interest to give an" information to
trainees.
The co!4an5 is !aking o4en order for the whole 5ear to the su44lier
and the 4lants according to !onthl5 schedule 4roduce the in6entories.
The stores should be according to the needs of the co!4an5 this will
4ro6ide effecti6e safe and good storage s5ste!.
The coman" shou!d adot !atest techno!og" to rovide a
cometitive roduct which can contro! inventor" and increase
rofitabi!it" of the coman".
S=00&STIO"S:
&s er the stud" inventor" management and its im!ementation in
9"sore aints K varnish !td..# it was revea!ed that management of the inventories
!a" strong ro!e in the success of the organi+ation.
Im!ementation of better and new information s"stem entrereneur
resource !anning# software ac*ages# as discussed wi!! cater to
the additiona! information re'uirements of the coman" which in
turn wi!! imrove the efficienc" of management of inventor" contro!
s"stem.
2or ma*ing &/C ana!"sis usua!!" comanies consider va!ue and
consumtion. In 9"sore :aer 9i!! (td..# the" a!so consider the
va!ue and consumtion of the raw materia!s. This is one of the
best eva!uation of &/C ana!"sis in which the coman" has
deve!oed.
The store should be !oderate according to the needs of the co!4an5.
This will 4ro6ide effecti6e, safe and good storage s5ste!.
The co!4an5 is !aking o4en order for the whole 5ear to the su44lier and
the 4lants according to !onthl5 schedule 4roduce the in6entories.
The co!4an5 should follow the first in first in first out !ethod in issuing
the !aterials to the 4roduction de4art!ent.
These materia!s issuing ractices are doing we!! and have more
contribution towards effective materia! management. It he!s a !ot
in achieving effective inventor" contro! over the materia!s in the
coman".
The Coman" which is give more concentrate on em!o"ees
benefit for the current "ear Hi.e. the em!o"ees benefit which
increased comared to revious "earG that has to be reduce.
The coman" which gives more cash discount on sa!es so this is
not good for organi+ation.
CO"C#=SIO":
The contro! of inventories is com!e$ of man" f!uctuation and forms.
Inventor" are the resu!ts of a!! f!uctuation areas Hi.e. roduction# mar*eting#
urchasing.G with in the organi+ation. The contro! of inventories reresents a
shared resonsibi!it" and viewed as such. &n" set of ro!es used for inventor"
contro!s in reva!ued regu!ar!" in 9"sore aer mi!!s !td..#
In 9"sore aer mi!!s !td..# the urchase and stores deartment are
hand!ing inventor" inefficient!" in the organi+ation due to the rob!em of
inade'uate techno!og" and ine$erienced em!o"ees. The" are maintaining
ancient method of boo*s of accounts and it carried high cost and there is no
roer uti!i+ation of funds. The maAor factor which is effect the who!e organi+ation
that is conf!ict Hagenc" costG which is high.
The 9:9 !tdL# which is run good at roduction# aart from that the
other over heads Hi.e. factor"# office and administration# and se!!ing and
distribution e$enses.G are high. %o the coman" shou!d reduce the cost which
he!s to imrove the organi+ation.
It is government underta*ing. It is running in !oss. Due to the above
condition. I wish this coman" a grand success in the "ears to come.
8! A""&G=R&
Profit (nd loss (ccount (nd B(l(nce S'eet (re s'o*n belo*:
7-
st
t'e )rofit (nd loss (ccount for t'e ye(r ended m(rc' 6@-@
3Rs! In l(4's5
)(rticul(rs 2or the "ear
ended 61,6,
.I1I
2or the "ear
ended 61,6,
.II?
Income 7.7?I.@.
sa!es 66@7..@. 117..@7
(ess: e$cise dut" @C1.7.
6.?D1.6I 7167@.?D
Other income 1I6@.6@ 616..B?
;ariation in stoc* ,.?D?.11 .B?.ID
tot(l 7-@6A!89 <7A!98
&;)enditure
Raw materia!s
consumed
D16?.I@ ?.1I.C@
Chemica!s
consumed
671B..@ 7C71.IB
%tores consumed @CB.7I ?I6.7@
Reairs K
maintenance
@1..7C 1I7@.1D
:ower and fue! 1I1BI.7B 16CDI.C@
(abour charges 1C7B.@D 1..I.7I
)m!o"ee benefits D7@I..? @I7..66
&dministration and 1....BB 116..D6
other e$enses
%e!!ing e$enses 1776.CB @DD.1@
:rior eriod
adAustment
CD.7D BC?.II
tot(l 79@77!7A @678!<<
:rofit-!oss for the
"ear before interest#
dereciation K
ta$ation
-8@@7!?7 8@7!??
Interest -<@?!?9 -?9!-A
dereciation -@@A!?< AA!?9
T(;(tion-fringe
benefit t(;
@!@@ --!?A
Net :rofit-!oss for
the "ear
-<<66!89 -976!A
&dd: ba!ance of
!ossH,G brought
forward from
revious "ear
-76@6!6? -?78!67
/a!ance of !ossH,G
carried to ba!ance
sheet
-
-@A6!?9
-76@6!6?
T.& /$SOR& PAP&R /I##S #I/IT&%
BA#A"C& S.&&T AS AT 7- /ARC. 6@-@
3Rs! In #(4's5
)(rticul(rs As (t 7--@7-
6@-@
As (t 7--@7-
6@@A
SO=RC& OF F="%S
&. %3&R) 3O(D)R%
2UND%
Caita! 11DD?.6
7
11DD?.6
7
Reserves and sur!us BB7.@C B?I.11
-6!-
@
-6<A!
8
/. (O&N 2UND%
%ecured !oans 7661.B@ 116.6.B
D
Unsecured !oans 1C?1@..
@
11@1@..
@
6-6?!?

67@@!?
8
Tot(l 3AHB5 779A6!A

7886@!7
@
APP#ICATIO" OF
F="%S:
C. 2IP)D &%%)T%
1ross b!oc* BID7@.7
.
BIB@7.6
C
(ess: dereciation 6DC1..?
C
6@CCI.I
.
"&T B#OCI 1..67.7
C
1.?17.6
7
Caita! wor*,in rogress B?I.6B .I?.7.
-6?6!?
-
-7-67!<
9
%! CAPTI,& FOR&ST
P#A"TATIO"S
8@<!? 77!6A
&! I",&ST/&"TS 96!77 96!
F! C=RR&"T
ASS&TS2 #OA"S
A"% A%,A"C&S:
Inventories 1IC1?.7
?
1BD?6.?
1
%undr" debtors 66?B..I BI.@.7?
Cash and ban* ba!ances 1I?I..D D7.1.
(oans and advances .C77.6@ .C.B.DC
1@@7?.6
7
.6C61.6
D
#ess: current li(bilities
(nd )rovisions:
Current !iabi!ities ?I61..C B?C1.@1
rovisions 6?11.C. 66@D.B6
1.?7..D
D
?67I..7
"et current (ssets ?@9!9 -6A-!-

Tot(l 66<9?!@
?
7-?6@!9
7
0! /ISC&##A"&O=S
&GP&"%IT=R&
;R% a"ment,note:
7.16
I.II 7?@.6@
.! Profit (nd loss
(ccount
-@A6!?
9
76@6!6?
TOTA# 3C to .5 779A6!A

7886@!7
@
8! BIB#IO0RAP.$
:&BSIT&S:

www.mm.co.in
www.m"soreaermi!!.co.in
P()er mill mont'ly m(g(Fines!
/P/ 1u(rterly m(g(Fines!
<7
rd
2 <
t'
(nd <8
t'
(nnu(l re)orts! 3till 6@-@5


Cost (ccounting- +(*('(rl(l- T/.2 7Ee2 6@@7

Production Jo)er(tion mgt K 4! Srid'(r B'(t!
Production Jo)er(tion mgt K
prof. I! As*(t'())(2