A STUDY OF INVENTORY MANAGEMENT

AT SHIV GRIT COMPANY (POWERED BY METSO)

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE

AWARD OF DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

TO

SCHOOL OF MANAGEMENT

SUPERVISOR NAME: DR. DEERGHA SHARMA SUBMITTED BY: - ANUJ BANSAL

16BBA020

The Northcap University, Gurugram

 DECLARATION FROM STUDENT

I, Mr. ANUJ BANSALROLL NO. 16BBA020 declare that the Summer Internship Project
entitled“INVENTORY MANAGEMENT” is done by me and it is an authentic work carried
out by me. The matter contained in it has not been submitted earlier as a part of any
assignment or the award of any degree or diploma to the best of my knowledge and belief.

(Signature)
Name of Student: - ANUJ BANSAL
Enrolment No.:- 16BBA020
Date:

___________________________________________________________________________

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 CERTIFICTATE FORM GUIDE
Certified that the summer internship report entitled “Inventory management” done by Mr.
ANUJ BANSAL, Roll no. 16BBA020, student of BBA 2016-2019 of SCHOOL OF
MANAGEMENT has been completed under my guidance.

(Signature of Guide)

Name of Guide: DR. DEERGHA SHARMA

Designation :

Signature

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 ACKNOWLEDGMENT

This Internship has been a very good experience for me in the way that it has given to me the
chance to understand the real world outside the classroom. I have learnt a lot about the office
Environment and my Interpersonal skills &self-confidence have improved significantly.

Firstly, I express my deep sense of gratitude to my honourable advisor MR. MOHIT

SHARMA for his endeavour approach and outstanding supervision by which it has been
possible for me to make a good combination of theoretical and practical knowledge in
preparing this report.

I forfeit my respect to MR. MOHIT SHARMA whomI have learnt a lot of practical
knowledge about basic accounting. I am also grateful to my colleague for cooperation and
direction in getting necessary information.

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 TABLE OF CONTENTS

Contents
1. INTRODUCTION .................................................................................................................................. 7
2010 ................................................................................................................................................ 8
2013 company demerge ................................................................................................................ 9
1.2 Services Rendered ...................................................................................................................... 10
1.3 Firm’s Mission & Vision .............................................................................................................. 10
1.5 S.W.O.T. Analysis:- ...................................................................................................................... 11
1.6 P.E.S.T Analysis ........................................................................................................................... 12
OBJECTIVES ........................................................................................................................................... 13
JOB PROFILE.......................................................................................................................................... 20
PURCHASES OF THE RAW MATERIAL WERE AS FOLLOWS:-................................................ 21
ISSUE OF THE FINISH GOODS WERE AS FOLLOW:- ........................................................................... 22

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 Executive Summary
The project was undertaken at''SHIV GRIT COMPANY POWERED BY METSO''. In this
study I have done basic accounting including making of purchase & sales entries in Tally.I
went through the Inventory of the company and learned how a company maintains the
inventory.

I also learn about the inventory management and it’s techniques. And learn about how to
maintain the stock and evaluate the stock in the company. Sometimes I work on the Ms-excel
to record the sale purchase entry and record the daily expenses in tally.

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 1. INTRODUCTION
1.1 Profile of Firm

Metso is a Finnish industrial machinery company focusing on providing technology and

services for mining, aggregates, and oil and gas, recycling, pulp and paper and other process
industries. Metso’s shares are listed on the NASDAQ OMX Helsinki, Finland.
Metso was created on July 1, 1999 through the merger of Valmet, a paper and board machine
supplier, and Rauma, which focused on fiber technology, rock crushing and flow control
solutions.In 1998 Rauma’s businesses included:
• Timberjack forest machines
• Sands Defibrator fiber technology equipment
• Nordberg rock crushers
• Neles Controls valve-control systems
The new company had overlapping operations and to some extent the same customer base
too. The purpose of the merger was the will to grow particularly in process technology. For a
bigger company it seemed to be easier to survive better in international markets. The
company’s scope of business became more diversified than before and there were critics of
the merger saying that easier growth would have been achieved if the two companies would
have each acquired a competitor in their own core business sector.
The new company had offices in 50 countries and 32,000 employees after a personnel
reduction of 2,000 people, and it operated in four sectors:
1. Paper machines
2. Forest machines (divested in 2001)
3. Fiber technology
4. Rock crushing plants
In 2002, Metso announced that it would not achieve its profit targets for two years, and a loss
in excess of EUR 300 million was recorded for July–September. The reason for difficulties
was Svedala. In 2003, a loss of over EUR 200 million was recorded and in September 2003,
President and CEO Bergman were forced to resign because of the company’s poor results.
Jorma Eloranta was selected as Bergman's successor. He started in March 2004.

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Between 2004 and 2007, Metso’s net sales increased from EUR 3.6 billion to EUR 6.3
billion, and the profit margin rose from 5.5 percent to 9.3 percent. During Eloranta’s tenure,
Metso increased its net sales and improved its financial performance for 19 consecutive
quarters (2004-2008).
Metso’s business functions had divided into three sectors (Metso Paper, Metso Minerals and
Metso Automation) with over 28,000 employees and net sales of EUR 6.4 billion. In fact, at
that point, it was Metso’s best year ever in terms of operating profit and net sales, but the
rapidly weakened market situation in the second half of the year forced Metso to initiate
sizable measures to adjust its operations.
By 2008, Metso had become Finland’s ninth largest company and the number of Metso
shareholders had increased from 25,000 to 42,000. Metso strengthened its market position
and service capacity in growing markets, particularly in India and China. During 2008, the
expansions to the Ahmedabad foundry and the Bawal factory in India were completed.
Metso also purchased the paper machine technology of Japanese Mitsubishi Heavy
Industries’ (MHI), making Metso the sole owner of Beloit’s paper machinery intellectual
property globally.
In September 2008, Metso sold 83% of its foundry in Sweden to an investment group
assembled by the Primaca investment company. The Metso Foundries Karlstad unit
specialized in casts of wind power components, diesel engine blocks and Yankee cylinders
for paper machines.
By 2009, half of Metso’s orders received in 2009 came from emerging markets, compared to
less than one fifth in 1999. In the same year, Metso entered into a combination agreement
with Tam felt, one of the world’s leading suppliers of technical textile. Subsequently, Metso
made a public exchange offer for all of Tam felt’s shares.
In the first half of 2009, Metso laid off over 700 employees and shut down several small
units in e.g. Tampere, Turku, Oulu and Hollola. The operations of the shut-down units were
integrated with the Järvenpää and Jyväskylä units. Metso’s strategy for the 2000s was to
manufacture wide, high-speed paper machines and discontinue its traditional paper machine
concepts.
2010
Matti Kekkonen was appointed the new President and CEO of Metso Corporation on March
1, 2011. Previously, Kekkonen had headed Metso’s Mining and Construction segment.
Despite the global economic uncertainty, Metso’s profitability grew steadily in 2011. The
services business, with a value of over three billion euros, accounted for about 40 percent of
orders received in 2011.
In September 2012, Metso announced the need for a personnel reduction of more than 600
Finnish employees in several of its business units serving the paper industry and paper
production. The reason for the reductions is structural change in the industry and due to that
the weakening of paper business unit’s competitiveness and profitability: competition has
increased, demand for paper machine and foundry products has weakened. Customers want
cheaper solutions than before. Metso had planned to give extra dividend for its shareholders
but after the decision of paying dividends while cutting staff was criticized e.g. by personnel
and the Finnish politics the decision was cancelled.
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In 2012, Metso agreed to form a joint venture with China’s LiuGong Group to develop the
track-mounted crushing business in China, consolidated its valve operations in the United
States into new premises in Massachusetts and opened a new valve supply and service center
in Vadodara, India. In the same year, Metso acquired the Korean valve manufacturer
Valstone Control Inc., U.S. software company ExperTune Inc. and 75 percent of the Chinese
crushing and screening equipment producer Shaorui Heavy Industries.
Metso Recycling business offers metal and waste recycling equipment and services globally.
On September 1, 2011, Metso announced that the Recycling business would be managed as a
separate entity while Metso reviews other strategic alternatives for it. As part of this process,
Metso evaluated both external and internal options. On October 25, 2012, Metso announced
that Metso Recycling will be integrated into Mining and Construction as of December 1,
2012.
In August 2013, Metso closed the acquisition of Chinese manganese steel foundry JX.

2013 company demerge

On October 1, 2013, the Extraordinary General Meeting approved the demerger of Metso
into two companies. At the start of 2014, Metso Corporation’s Mining and Construction
business and Automation business formed the new Metso Corporation and Metso’s Pulp,
Paper and Power business formed a new independent company under the name Valmet
Corporation.
In December 2013 Metso reduced its holding in Valmet Automotive to approximately 41%.
As a result of this arrangement, Valmet Automotive ceased to be a Metso subsidiary.
In 2015, Metso divested its Process Automation Systems (PAS) business to Valmet and
focusing on the mining and aggregates industries and on the flow control business
In 2018, Metso interim president and CEO as well as chairman of executive team are Eeva
Sipila as of February, 3 2018.
I have done my internship in shiv grit company powered by Metso was established Oct, 2011
in nagal, bharatpur rajisthan.There are three partner of the company.
1. RAJPAL BANSAL is the owner of 40% share in the company.
2. SUNIL YADAV is the owner of 40% share in the company.
3. NAVEEN JAIN is the owner of 20% share in the company.
Shiv Grit Company is finish industrial machinery focusing on providing services for mining
aggregate. More than 150 worker work in the company. And the machinery acquires the
1,10,000sqfeet land. Basically the machinery convert the big stone into the small stone and
dust for making the road, house and any civil project. The machinery is majorly making the
material for use infrastructure like road, house, building and civil projects.

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1.2 Services Rendered

1.2.1Purchase & Sale of the items for making the road, house and any civil project.

1.3 Firm’s Mission & Vision

Mission: -We contribute to a more sustainable world by helping our customers to process
natural resources and recycle materials into valuable products. And working as to be number
one.

Vision: - Metso, the best choice for sustainable processing and flow of natural
resources.

describes the impact we want to make to the world. It’s a long term direction that defines
Metso business purpose and reason to exist. Ambition is – and the company puts endless
efforts into it – to be the best choice to our customers and a preferred partner in all that we
do.

Sustainable – sustainability for us means reducing energy consumption and emissions,

using less raw ingredients and water and producing less and less waste while delivering
the same or increased production output. Sustainability also means that we follow the
highest health, safety and environmental standards and practices.

Processing and flow of natural resources – Metso’s solutions to the customers are
converting raw natural resources into materials that are used to build the modern world.

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1.5 S.W.O.T. Analysis:-

STRENGTHS
 Total is one of the leading oil & gas companies
 Strong brand name
 Excellent global reach
 Crude oil and product training.
WEAKNESS
 Legal issues.
 Employee management.
 Oil spill controversies.
OPPORTUNITY
 Scope of reduction in energy consumption by the way of implementing revamp
scheme.
 Use of electricity replace of generator. As government making the powerhouse for
these plants.
THREATS
 High competition.
 Government regulation.

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1.6 P.E.S.T Analysis: -PEST Analysis is a measurement tool which is used to assess
markets for a particular product or a business at a given time frame. PEST stands for
Political, Economic, Social, and Technological factors. Once these factors are analysed
organisations can take better business decisions.

POLITICAL ECONOMICAL
1 electricity, stone and diesel plays a very 1 Impact of globalisation.
important factor in the price determination 2 Impact of demonetisation by government
2 GST implementation by government. changes in taxation policies number of times.
3 Demonetisation effects the firm as there are 3 inflation effect the business as profit
many changes regarding taxation. increases but purchasing power decreases.
4 Government is one of the biggest
consumers of stone.

Social Technological
1 Providing a reliable report to the 1 There is regular need of up gradation of
government about the profits of the software so that work goes on efficiency.
company. 2 Being able to access tax and accounting
2 Fulfilling the requirements of clients at data remotely is also useful.
better cost. 3 telly updates on regular basis.
3. 4 Accountants need IT skills in addition to
other business skills.

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 OBJECTIVES
 To learn how a company doesmaintains its accounts.
 To practically experiencing the actual working cultures and conditions in office.
 To learn the ability to work in conditions with immense pressure.
 To improve command on tally.
 To know how to co-ordinate with other employees.

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FIFO METHOD
FIFO is the acronym for First-In, First-Out. FIFO is a cost flow assumption often used to
remove costs from the Inventory account when an item in inventory had been purchased at
varying costs. Under FIFO, the oldest cost of an item in inventory will be removed first when
one of those items is sold.

ADVANTAGES 
 It is simple to understand and easy to operate.
 This method is suitable when the item are bulky, slow moving and costly.
 Material is issued at the purchase price, so the cost of material is recovered.
 It is a logical method as the materials purchased earlier are used in earlier jobs.

DISADVANTAGES
 In case of fluctuation in price of materials, calculation becomes complicated.
 When price fluctuate, there is possibility of clerical errors.
 When price decline, jobs or production are charged at earlier higher prices with the
quotations are less competitive, stocks are understand and profit margin is reduced.

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Inventory control
Inventory is considered the most important factor of production. The team material includes
raw material, consumable stores, tools and maintenance materials. According to INDIAN
ASSOCIATION MATERIALS MANAGEMENT, 64% of the total cost of a product is
represented by the cost of material. Therefore, to have control over the cost of product, it is
necessary to exercise proper control over material.

Techniques of material control

 Inventory turnover ratio
 ABC analysis
 Perpetual inventory system
 Economic order quantity
 VED analysis of material control

INVENTORY TURNOVER RATIO

Inventory turnover ratio is also one method of existing material control. Material turnover
refers to movement of material into and out of an organisation.

Material turnover ratio= cost of material consumed during the period

Cost of average stock held during the period

Average stock can be calculated as follows:

Average stock=opening stock+ closing stock

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2. ABC ANALYSIS
ABC technique of inventory control is also known as Always Better Control method.

This technique divides materials into three categories:

 High priced materials, items falling in his category are treated as ‘A’ items.
 Medium priced materials, items falling in this category are treated as ‘B’ items.
 Low priced materials, items falling in this category are treated as ‘C’ itmes.
In the first category, those items are included on which major portion of total cost of
materials is spent. In the second category, those items are included which have moderate
consumption value. In third category, those items are included which have low consumption
value.

ADVANTAGES
 Storage cost is reduced.
 Working capital can be used in a better way.
 A strict control can be exercised on valuable materials.
 Management can apply the principle of ‘Management by exception’ as only A
category needs better control.

DISADVANTAGES
 Proper standardization & codification of inventory items needed.
 Considers only money value of items & neglects the importance of items for the
production process or assembly or functioning.
 Periodic review becomes difficult if only ABC analysis is recalled.
 When other important factor makes it obligatory to concentrate on ‘C’ items more,
the purpose of ABC analysis is defeated.

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3. Perpetual inventory system
It is a system of maintained by the controlling department, which reflects the physical
movement of stock and their current balance.

In perpetual inventory system, the perpetual inventory records i.e., bin cards and stores
ledger are maintained which show goods received, issued and stock on hand at any time and
physical verification of the stores is made by a programme of continues stock taking.

ADVANTAGES
 Bin cards and store ledger give ready figures.
 Discrepancies can be detected easily.
 It ensures a moral influence on employees.
 A system of internal check remains in operations all the time.
 Information regarding stock is more reliable because of continuous stock taking.

DISADVANTAGES
 Higher Cost Investment. One disadvantage of a perpetual inventory
system involves the setup cost. …
 Training on Equipment. Another disadvantage to implementing a perpetual
inventory system involves the increased level of training required. …
 False Reliability. …
 Increased Monitoring.

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4. ECONOMIC ORDER QUANTITY
It is the quality of material to be ordered at one time and purchased most economically.
Economic order quantity (EOQ) should be fixed in such a manner as to minimize the
carrying costs and ordering costs. The concept of carrying and ordering cost is given as
below:

CARRYING COSTthis is the cost of holding inventory in the store and it includes: storage
cost, interest payable o invested funds, cost of handling, cost of obsolescence, clerical cost,
insurance cost, cost of maintaining the materials etc.

ORDERING COSTit is the cost of placing an order for the purchase of materials. It
includes the cost of comparative evaluation of quotations, cost of paper work, cost of
inception, cost of accounting , cost of postage and telephone charges, transportation costs
etc.

Formula of EOQ=square root of 2AB/S

WHERE A=Annual consumption

B=Buying cost per order

S=Storage and carrying cost per unit per annum.

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5. VED ANALYSIS
VED stands for vital, essential and desirable. VED analysis is used primarily to have control
of spare parts. In ABC analysis only prices of materials are considered and not their
requirement. In ABC analysis such spare part may not be given attention because their value
of consumption is small. Such spare parts, though being less valuable, can be of great
importance for production and need special attention. In the first category such valuable
spare parts are included, the non-availability of which even for a short time can cause
stoppage of production for long time.

In second category, those spares are included, the absence of which can’t be tolerated for
more than some hours or a day and it can cause big loss to production. These spare parts are
known as Essential parts.

DISADVANTAGES
 There is chance of occurring clerical method.
 Stocks are valued at old price and hence they do not reflect current price. As a result,
stock becomes either undervalued or overvalued.
 Under this method materials purchased at last are issued first. Hence, materials
purchased earlier become obsolete.

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 JOB PROFILE
Inventory valuation an important part of every organisation. Company needs to inventory
evaluate time to time. To maintain certain level of inventory according to the demand.
Inventory valuation helps company to reduce the wastes of the stock.

The job profile which the company offered me was the designation of inventory valuation
intern under the superior MR.MOHIT SHARMA head of the finance department.

 The job done by the help of tally software and Ms excel.

 How to manage the inventory valuation and inventory management.
 I was learning about the GST how to put the GST in stock.
 The purchase and sale of inventory was recorded on daily basis.
 Sometime work on the Ms-excel for record the challan number of the truck.
 I help to the senior manager for distributing salaries to the employee and help to
record the all entry in tally software.
 And create the debit and credit note for the practice in educational mode.
 Basically, I was calculated the inventory valuation like in month which type of stock
produce and quantity. And I was calculated to purchase and sale of stock on daily
basis. And in the internship I have done a lot of small things.
 In the programme learn about the all techniques of inventory control.

The company use LIFO method for inventory valuation. The last in, first out (LIFO)
method is used to place an accounting value on inventory. The LIFO method operates
under the assumption that the last item of inventory purchased is the first one sold. The
trouble with the LIFO scenario is that it is rarely encountered in practice. And I was
calculated the inventory valuation by using LIFO method. LIFO is the type of cost price
method.

ADVANTAGES:-
• Like FIFO method, it is simple and easy to operate.
• In this method, cost of material is recovered from production because cost of
material is charged to production.
• In this method production is charged at the recent prices because materials are
issued from latest consignment.

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PURCHASES OF THE RAW MATERIAL WERE AS
FOLLOWS:-

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ISSUE OF THE FINISH GOODS WERE AS FOLLOW:-

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 4. Issues and challenges faced during internship period
 At first I faced difficulty in understanding how to work in tally,
 Regular monitoring for managing the accounting vouchers of purchase and sales
register.
 Collecting the bill and information from client.

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 5.Key learning
 Learnt various software used for accounting like tally, Ms-excel.
 Learnt how inventory is valued.
 Learnt how to working in stress.
 Learnt how an organization function.

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 6. Recommendation to the Firm

There should be proper structure of accountability that will be accountable to whom and
interns should be given a proper place and system to work so that they can work properly and
are motivated. And it’s a mining firm and it emits lots of pollution and lots of plants and trees
should be planted nearby.

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 CONCLUSION
I did my internship under the SHIV GRIT COMPANY(POWERED BY METSO). I
learned that how company maintain their accounts I got a practical experience to
work and see the working environment of the firm. And I learn the how the company
manage the inventory by various method. This company use the LIFO method for
valuation the stock.
I learned each and every step of accounting in tally as guided by my senior how to
arrange data in a specified, simplified and usable manner.

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