Dinesh Synopsis

A STUDY ON INVENTORY MANAGEMENT TIRUPATI COTTON MILLS LTD
1.
1 INTRODUCTION
1.1.1 FINANCE
Financial management is that managerial activity which is concerned with the planning
and controlling of the firm’s financial resources. It was a branch of economics till 1890, and as
separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own,
and draws heavily on economics for its theoretical concepts even today.
Finance is the lifeblood of the business. The financial management study deals with the
process of procuring necessary financial resources and their judicious with view to maximizing
the value of the firm and there by the value of the owner that is equity shareholders in a
company.
The financial of business undertake implies provision of fund required to be invested in

fixed capital and working capital is of great important to a financial manager, securing the capital
from a sound sources is his prime concern. So financial manager is of vital important in any
industry.
1.1.2 FINANCIAL MANAGEMENT
Financial management emerged as a distinct field of study at the turn of this Century.
Many eminent persons defined it in the following ways.
1.1.3 DEFINITIONS
“Business Finance can broadly be defined as the activity concerned with planning, rising,
controlling and administering of funds used in the business”.
 GUTHMANN AND DOUGHAL
“Financing consists in the rising, providing and managing of all the money, capital of funds
of any kind to be used in connection with the business”.
 BONNEVILE AND DEWEY
“Financial Management is concerned with the efficient use of any important economic
resource, namely capital funds”.
VEMU INSTITUTE OF TECHNOLOGY Page 1

 Prof. EZRASOLOMAN
1.1.4 FINANCIAL FUNCTIONS
The finance functions of raising funds, investing them in assets and distributing returns
earned from assets to shareholders are respectively known as financing, investment and divided
decisions. While performing these functions, a firm attempts to balance cash inflows and
outflows. This is called as liquidity decision.
The finance functions can be divided into three broad categories.
1. Investment or long-term asset mix decision.

2. Financing or capital mix decision.
3. Dividend or profit allocation decision.
4. Liquidity or short – term asset mix decision.
1.1.5 INTRODUCTION TO INVENTORY
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a

physical stock of goods kept deportment for the purpose of future affairs. The term is
generally used to indicate raw materials in process, finished products, packing, spares and
others stocked in order to meet expected demand or distribution in the future. Though
inventory of materials is an idle resource it is not meant for immediate use it is almost
essential to maintain some inventories for the smooth functioning of an enterprise.
1.1.6 INVENTORY MANAGEMENT
Inventory is a list for goods and materials, or those goods and materials themselves,
held available in stock by a business. It is also used for a list of the contents of a household
and for a list for testamentary purposes of the possessions of someone who has died.
Investment in inventory normally accounts for about 1/3 value of the total assets and for
an average manufacturing concern, cost of inventory represents about one half of the product
cost. Because inventory constitutes such a significant part of product cost since the cost is
controllable, proper planning, purchasing, handling, accounting and control of inventories is of
great significance.

1.1.7 DEFENITION
“Inventory management is the supervision of non-capitalized assets (Inventory) and

stock items. A component of supply chain management, Inventory management supervises
the flow of goods from manufacturers to warehouses and from these facilities to point of
sale.”
 JOHN HAMPTON

1.2 INDUSTRY PROFILE

1.2.1 INDIAN TEXTILE INDUSTRY
Indian textile is one of the leading textile industries in the world. Though was
Predominately unorganized industry even few years back, but these scenario started changing
after the of liberalization of Indian economy in 1991. The opening up of economic the
economy gave the much needed thrust to the Indian textile industry, which has now
successfully become one of the largest in the world.
India textile industry depends upon the textile manufacturing and export. It also plays a
major role in the economy of the country. India earns about 27% of its total foreign exchange
through textile exports. Further, the textile industry of India also contributes nearly 14% of
the total industrial production of the country. It also contributes around 3% to the GDP of the
country. India textile is also the largest in the country in terms of employment generation. It
only generates jobs in its own industry, but also opens up scopes for the other ancillary
sectors. India textile currently generates employment more than 35 million people. It is also
estimated that, the industry will generate 12 million new jobs by the year 2011.
Various categories:
Indian textile industry can be divided into several segments, some of which can be listed
as below:
 Cotton Textiles
 Silk Textiles
 Woolen Textiles
 Readymade Textiles
 Hand-crafted Textiles
 Jute and Coir
The Textiles Sector in India ranks next to Agriculture. Textile is one of India’s oldest
industries and has a formidable presence in the national economy in as much as it contributes to
about 14 percent of manufacturing value – addition, accounts for around one third of our gross
export earnings and provides gainful employment to millions of people. The textile industry

occupies a unique place in our country. One of the earliest to come into existence in India, it
accounts for 14% of the total industrial production, contributes it nearly 30% of the total exports
and is the second largest employment generator after agriculture.
Textile industry is providing one of the most basic needs of people and the holds
importance; maintaining sustained growth for improving quality of life. It has a unique position
as a self reliant industry. From the production of raw material to the delivery of finished
products, with substantial value addition at each stage of processing; it is a major contribution to
the country’s economy. This paper deals with structure, growth and size of the Indian textile
industry export and global scenario and strength, weakness, opportunities and treats of the Indian
textile industry.
1.2.2 INTRODUCTION:
The Indian textile industry is one of the largest in the world a massive raw material and
textiles manufacturing base. Our economy us largely dependent on the textile manufacturing and
trade inaddition to other major industries. About 27% of the foreign exchange earnings are on
account of export textiles and clothing alone. The textiles and clothing sector contributes about
14% to the industrial production and 3% to the gross domestic product of the country. Around
8% of the total excise revenue collection is contributed by the textile industry. So much so, the
textile industry accounts for as large as 21% of the total employment generated in the economy.
Around 35 million people are directly employed in the textile manufacturing activities. Indirect
employment including the manpower engaged in agriculture based raw – material production
like cotton and related trade and handling could be stated to be around another 60 million.
A textile is the largest single industry in the India (and amongst the biggest in the world,)
accounting for about 20% of the total industrial production. It provides direct employment to
around 20 million people. Textile and clothing exports account for one – third of the total value
of exports from the country. There are 1,227 textile mills with a spinning capacity of about 29
million spindles. While yarn is mostly produced in the mills, fabrics are produced in the power
loom and handloom sectors as well. The Indian textile industry continues to be predominantly

based on cotton, with about65% of raw materials consumed being cotton. The yearly output of
cotton cloth was about 12. 8billion. the manufacture of jute products (1.1 million metric tons)
ranks next in importance to cotton weaving. Textile is one of India’s oldest industries and has a
formidable presences in the national economy is as much as. It contributes to about 14 per cent
of manufacturing value addition, accounts for around one – third of our gross exports earnings
and provides gainful employment to millions of people.
1.2.3 INDIAN TEXTILE INDUSTRY- STRUCTURE AND GROWTH
India’s textile industry is one of the economies largest. In 2000/01, the textile and
garment industries accounted for about 4 percent of GDP,14 percent of industrial output,18
percent of industrial employment, and 27 percent of export earnings (Has him). India’s textile
industry is also significant in global context, ranking second to china in the production of both
cotton yarn and fabric and fifth in the production of synthetic fibers and yarns.
In contrast to other major textile- producing countries, mostly small scale, non-integrated
spinning, weaving, cloth finishing, and apparel enterprises, many of which use outdated
technology, characterize India’s textile sector. Some, mostly larger, firms operate in the
“organized” sector where firms must comply with numerous government labor and tax
regulations. Most firms, however, operate in the small scale “unorganized” sector where
regulations are less stringent and more easily evaded.
The unique structure of the Indian textile industry is due to the legacy of tax, labor, and
other regulatory policies that have favored small – scale, labor – intensive enterprises, while
discriminating against larger scale, more capital – intensive operations. The structure is also due
to the historical orientation towards meeting the needs of India’s predominately low income
domestic consumers into the 1990s have led to significant gains in technical efficiency and
international competitiveness, particularly in the spinning sector. However, broad scope remains
for additional reforms that could enhance the efficiency and competitiveness of India’s weaving,
fabric finishing, and apparel sectors.

1.2.4 STRUCTURE OF INDIA’S TEXTILE INDUSTRY:
Unlike other major textile – producing countries, India’s textile industry is comprised
mostly of small- scale, non-integrated spinning, weaving, finishing, and apparel – making
enterprises.
The unique industry structure is primarily a legacy of government policies that have
promoted labor- intensive, small- scale operations and discriminated against larger scale firms:
 Composite Mills: Relatively large – scale mills that integrate spinning, weaving,
sometimes, fabric finishing are common in other major textile- producing countries. In
India, however, these types of mills now account for about only 3% of output in the
textile sector. About 276 composite mills now operating in India most owned by the
public sector and many deemed financially “sick”.
 Spinning: spinning is the process of converting cotton or manmade fiber into yarn to be
used for weaving and knitting. Largely due to deregulation beginning in the mid – 190s,
spinning is the most consolidated and technically efficient sector in India’s textile
industry. Average plant size remains small, however, and technology outdated, relative
other major producers. In 2002/03, India’s spinning sector consisted of about 1,146 small
– scale independent firms and 1,599 larger scale independent units.
 Weaving and knitting: weaving and knitting converts cotton, manmade, or blended
yarns into woven or knitted fabrics. India’s weaving and knitting sector remains highly
fragmented, small –scale, and labor- intensive. This sector consists of about 3.9 million
handlooms, 3,80,000 “power loom” enterprises that operate about 1.7 million looms, and
just 1,37,000 looms in the various composite mills. “power looms” are small firms, with
an modern shuttle less looms account for less than I percent of loom capacity.
 Fabric Finishing: Fabric finishing (also referred to as processing), which includes
dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also
dominated by a large number of independent, small scale enterprises. Overall, about

2,300 processors are operating in India, including about 2,100 independent units and 200
units that are integrated with spinning, weaving, or knitting units.
 Clothing:Apparel is produced by about 77,000 small – scale units classified as domestic
manufactures, manufacturer exporters, and fabricators (subcontractors).
Growth of Textile Industry:
India has already completed more than 60 years of its independence. The analysis if the
growth pattern of different segment of the industry during the last five decades of post-
independence era reveals that the growth of the industry during the first two decades after the
independence had been gradual through lower and growth had been considerably slower during
the third decade. The growth there after picked up significantly during the fourth decade in each
and every segment of the industry. The peak level of its growth has however been reached during
the fifth decade i.e., the last 10 years and more particularly in the 90’s.
The government of India has also included new schemes in the Annual Plan for 2007-08
to provide a boost to the textile sector. They include schemes for Foreign Investment Promotion
to attract foreign direct investment in textiles, clothing and machinery; Brand Promotion on
public – Private partnership (PPP) approach to develop global acceptability of Indian apparel
brands; Trade Facilitation Centers for Indian image branding; Fashion Hubs for creation of
permanent market place for the benefit of Indian fashion industry; Common Compliance Code
To encourage acceptability among apparel buyers and Training Centers for Human Resource
Development on Public Private Partnership (PPP) mode.
Current scenario:
India is now a fast emerging market inching to reach half a billion middle income
population by 2030. All these factors are good for the Indian textile industry in a long run. Even
though the global economic crisis seems to be worsening day – by – day, as long as economics
are emerging and growing as those in South and South East Asia, textile industry is here to grow
provided it takes competition and innovation seriously. Read below to have an insight of the
stand of the Indian Industry in the economy.

A general impression I get talking to the Indian textile industry in the past few days make me
understand that the industry is in a pinch. Why so? These are the reasons:
1. Global recession
2. Less export orders due to reductions in inventories by global retail giants like Wall- Mart
3. Price of raw materials like cotton and
4. Infrastructure bottlenecks such as power, particularly in Tamil Nadu.
It has been recently reported that textile exports in 2015-2016 period will be equal or
could be even lower than the one achieved in 2011-2012. In this global meltdown situation, what
should the Indian textile industry do? In the times of adversity, it is an immediate task for all
stake holders to pause for a moment and take stock of the difficulties and chart plans for
sustainability and growth of the Indian textile industry.
1.2.5 The Industry:
India textile industry is one of the leading in the world. Currently it is estimated to be
around US$52 billion and is also projected to be around US$ 115 billion by the year 2016. The
current domestic market of textile In India is expected to be increased to US$60 billion by 2012
from the current US$ 34.6 billion. The textile export of the country was around US$ 19.14
billion in 2015-16, which saw a stiff rise to reach US$ 22.13 in 2007-08. The share of exports is
also expected to increase from 4% to 7% within 2016.

Year Area in lakh Production in Yield kgs per

lakh bales of 170 hectare
Hectares kgs
2002-2003 56.48 30.62 92
2003-2004 76.78 56.41 124
2004-2005 76.05 47.63 106
2005-2006 78.24 78.60 170
2006-2007 74.39 117.00 267
2007-2008 85.76 140.00 278
2008-2009 87.30 158.00 308
2009-2010 76.67 136.00 302
2010-2011 76.30 179.00 399
2011-2012 87.86 243.00 470
2012-2013 86.77 244.00 478
2013-2014 91.44 280.00 521
2014-2015 94.39 315.00 567
2015-2016 93.73 290.00 526

1.2.6 Cotton Exports from India:
Year Quantity (in lakh bales of Value (in Rs./crores)

170 kgs)
2002-2003 16.82 1655.00
2003-2004 3.50 313.62
2004-2005 1.01 86.72
2005-2006 0.65 52.14
2006-2007 0.60 51.43
2007-2008 0.50 44.40
2008-2009 0.83 66.31
2009-2010 12.11 1089.15
2010-2011 9.14 657.34
2011-2012 47.00 3951.35
2012-2013 58.00 5267.08
2013-2014 85.00 8365.98
2014-2015 50.00 9267.12
2015-2016 54.00 9997.13

Current factors on India Textile Industry:
 India retained its position as worlds second highest cotton producer.

 Acreage under cotton reduced about 1% during 2013-014.
 The productivity of cotton which was growing up over the years has decreased in
2015-16
 Substantial increase of Minimum Support Prices (MSPs).

 Cotton exports couldn’t pick up owing to disparity in domestic and international

cotton prices.
In textile Scenario:
In exports Cotton yarns, fabric, made ups etc. made largest chunk with US$ 3.33 Billion
or 26.5% in textiles category, and Ready Made garments (RMG) cotton including accessories
made largest chunk with 4.67 Billion US$ or 37.1% of total exports. Whereas, manmade yarn
fabrics in textiles group and RMG- Man-made fibers constituted second position in the two
categories, respectively. Carpets and woolen garments are other items exported from India.
In global scenario:
Developed countries exports declined from 52.2% share in 2011 to 37.8% in 2013. And
that of developing countries increased from 47.8% to 62.2% in the same period. In 2004 the
exports figures in percentage of the world trade in Textiles Group (for select countries) were:
1.2.7 EXPORT SCENARIO:
Textile contributed 20% of India’s exports to about US $ Billion. The Quota Countries
mainly USA, EU (15) and Canada constituted 70% of total garment exports and 40% of India’s
Textiles exports. In non – Quota countries UAE is the largest market with 7% of textile exports
and 10% of garment exports from India.
India’s Exports: In US $ Billions Year 2015-16
Countries/Region Export of Textiles Export of garments

World 6.47 6.10
Quota Countries 2.86 4.19
EU 1.64 2.35
USA 1.12 1.60
Canada .098 .239
Export data for the year 2015-16 Value in US $ Million

Country 2014-15 2015-16

USA/Canada 2180.00 2941.00
EU 2590.00 3619.00
Total OBA Countries 419.54 370.86
Grand total 6381.22 8200.00
The exports of readymade garments as per AEPC certification data for the last five years
are as follows:-
YEAR VALUE
2011-12 395.23
2012-13 5704.42
2013-14 6247.96
2014-15 6038.69
2015-16 8200.00
The above table clearly depicts the export of readymade garments for the last 5 years. In
the year of 2011-12 the value of export of readymade garment is 395.23 and in the year 2012-13
the value is 8200.00. From 2008-09is started increasing and in the year 2013-14 it declines and
again in the year 2015-16 it increases.
1.2.8 INDIAN TEXTILE INDSUTRY – SWOT ANALYSIS:
Strength:

 India has rich resources of raw materials of textile Industry. It is one of the largest
producers of cotton in the world and is also rich in resources of fibers like polyester, silk,
viscose etc.
 India is rich in highly trained manpower. The country has a huge advantage due to lower
wage rates. Because of lower labor rates the manufacturing cost In the textile
automatically comes down to very reasonable rates.
 India is highly competitive in spinning sector and has presence in almost all processes of
the value chain.
 Indian garment industry is very diverse in size, manufacturing facility, type of apparel
produced, quantity and quality of output, cost, and requirement for fabrics etc. It
comprises suppliers of ready – made garments for both, domestic or exports markets.
Weakness:
 Knitted garments manufacturing has remained as an extremely fragmented industry.

Global players would prefer to source their entire requirement from two or three vendors
and the Indian garment units find it difficult tomeet the capacity requirements.
 Industry still plagued with some historical regulations such as knitted garments still
remaining as SSI domain.
 Labor force giving low productivity as compared to other competing countries.
 Technology obsolescence despite measures such as TUFS.
 Low bargaining power in a customer – ruled market.
 India seriously lacks in trade pact memberships, which leads to restricted access to the
other major markets.
 Indian labor laws are relatively unfavorable to the trades and there is an urgent need for
reforms in India.
1.2.9 OPPORTUNITIES:

There are lots of assets for deployment.
There are still better opportunities available to expand our network system.
There is a scope for expansion of our branches with in the country.
S.S. mills man power can really help to improve its position in its category and also with the
achieved frame the company can think of more yarn producing centers.
Threats:
 Competition in past 2005 is not just in exports, but is also likely within the country due to
cheaper imports of goods of higher quality at lower costs.
 Standards such as SA-8000 or WARP have resulted in increased pressure on companies
for improvement of their working practices.
 Alternative competitive advantages would continue to be a barrier.
1.3COMPANY PROFILE

In modern fashion technology, the demand for perfection begins right at the birth of the
raw material, permeates through every single process, till the highly discerning customer dons
the finished garment. It is this demand for perfection that has spurred the growth of an
organization and its corporate philosophy.
Those who can furnish clients with the best quality, competitive price, and excellent
customer services and prompt delivery can only survive in the market. NTCs Ltd immense pride
In perceiving its role as the comprehensive architect of every single yarn and garment that its
produces.
SARA ELGI is a multi – unit, multi – interest business group with a wide range of
industrial activity; an organization that has founded its evaluation on value- based commercial
practice. NTC ltd was established in 1962 with an initial capacity 12,000 spindles over its four
decades of chequred growth it has expanded to 1,30,000 spindles spread over 6 operational
units. The company commenced operations with the manufactured of grey, gassed, mercerized
and dyed cotton yarn. Today, the company has carved a niche for itself on the textile map of the
country.

1.3.1 GROUP OF COMPANIES

 ELGI ELECTRIC & INDUSTRIES LTD.
 ELGI EQUIPMENTS LTD.
 ELGI SOFTWARE & TECHNOLOGIES LTD.
 ELGI BUILDING PRODUCTS LTD.
 L.G. BALAKRISHNAN & BROS,LTD.
 ELGI ULTRA INDUSTRIES LTD.
 ELGI TYRE AND TRADES LTD.
 ELGI FINANCE LTD.
 ELGI STEEL ROLLING MILLS LTD.
 ELGI RUBBER PRODUCTS LTD.
 SARA TRADING AND INDUSTRIAL SERVICES LTD.
 SARA ENVIROTECH LTD.
 SARA ELGIINDUSTRIAL RESEARCH AND DEVELOPMENT LTD.
 SARA ELGI INSURANCE ADVISORY SERVICES PVT.LTD.
 SARA ELGI ARATERIORS LTD.
 PRECOT MILLS LTD.
 MERIDIAN INDUSTRIES LTD.
Each company in the group specializes in a specific area, thus enabling us to betterment
the diverse needs of the industry. Our companies are focused on the meeting our customers
individual needs. We exist to provide superior customer satisfaction – developing solid long –
term relationships with our customers.
1.3.2 VISION STATEMENT OF T.C MILLS
The cotton yarn industries fortunes are closely linked to fluctuations in the cotton market
any upward movement of the cotton prizes puts pressure on profit margins of mills operating in
the intensely competitive yarn market. At the same time new entrance with modern mills have
the advantage better productivity and quality after lower prices and the credit facilities to

achieving market entity. This as increased expectation in terms of quality, price & delivery hence
they have been.
Strengthen the business systems for cotton purchase.

Reduce operational costs by improving the productivity of machinery & employer.
Retain our relationship by improving consistency.
Maintain the tempo continuous modernization of plant and machinery they have to improve the
performance by re – engineering business process.
All employees shall be educated.
They call re- engineering program SUPER stands for:
S—Super
U—Upgrade Quality
P—Profitability
E—Efficiency & employee satisfaction
R— Reduction in costs.
1.3.3 CORPORATE MISSION & OBJECTIVES
MISSION: customer’s satisfaction is the primary mission of S.S. mills.
PRIMARY OBJECTIVES:
 Market leadership.
 Low cost and energy efficiency operations.
 Consistent quality.

GOALS:
1. Zero defective products.
2. Cost effectiveness productivity.
3. Safety, high efficiency.
4. The most competitive & reasonable price.
5. Products quality guarantee.
6. Prompt & superior service.
7. Punctual delivery.
FOUNDERS OF SUPER GROUP
1. Sri V.N. Ramachandran

2. Sri N. Damodaran
3. Sri L.G. Bala Krishna
4. Sri L.G. Varadaraj
5. Sri L.G. Rammurty
S.S. Mills Ltd, has its registered office at
ELGI towers
P. Box No: 7113, 737-d, Green Fields PULIAKULAM road, Coimbatore 641045,TamilNadu.
Was in Corporate as a public Ltd Company in 1962 under the Indian Companies act 1956.
1.3.4 UNITS OF T.C.MILLS
The company which began with an initial capacity of 12,000 spindles ,has grown to 6 units with
capacity of 1,33,476 spindles .These units are
1. SUPER A :
This is the first unit of NTCs. Super A unit was established in the year 1964. It is situated
at kirekera, near Hindupur , Andhra Pradesh. It was established with an initial capacity of 12,096
spindles and expanded to 59,172 spindles. This unit produces the finest quality yarn, and the
production is 12 Tons per day.

DOMESTIC MARKET:
50’s, 60’s, 80’s combed yarn.
EXPORT MARKET:
60’s /1, 62’s/1 combed yarn, 80’s/2 combed yarn.
2. SUPER-B :
Super-B unit was established on 1983. It was situated at Kotnur, Hindupur,

AndhraPradesh, with an initial capacity of 28880, spindles and expanded to 58176 spindles.
Production is 13 Tones per day.
DOMESTIC MARKET:
40’s, 60’s, 2’s/60, 74’s Combed yarns.
EXPORT
36’s/2, 40’s/2 yarn.
MARKET:
1. 38’s,40’s,SUPER-C :
Super-C unit was establish on 1992.It was situated at D.Gudalur, near Karur,Tamilnadu,
with an initial capacity of 10,080 spindles. Production in super –c is 10 tones per day.
2. SUPER- SARA:
Super – Sara unit was established on 2006. It was situated at Beerepalli,
Hindupur, AndhraPradesh.

1.3.5 AN OVERVIEW OF NTCS LTD. UNIT-B
This NTCs ltd b-units was established on 26th march ,1923.it was situates at kotnur ,near
HindupuramAndhraPradesh.The founder of super-b was L.G.Balakrishanan.It’s managing
director is R.Sumanth and chairman is D.Vidhyaprajash. Super-B unit in charge is
S.Selvarajan.This unit occupying on area of 13 acres. The initially installed capacity do the
mill was 28,880 spindles .This was expanded to 51,840 spindles by 1991 and again to 57,888
spindles by 2011 and as on 2012 total capacity is 58,176 spindles and modernization effort
were initiated. How ever the plant age is 30 years.
FAVOURABLE CONDITIONS TO T.C. MILLS LTD, B-UNIT:
 During the 15 year cotton cultivation has consistently increased on Andhra Pradesh
and it assured them of a constant supply of good quality cotton.
 is a draught area.
 The climatic condition of this area very suitable for a Cotton mill.
 Intact, Hindupur has a sub-station of 132k.v.
 There are plenty of consumer centers with in the 200 kms. From Hindupur, mainly in
handloom sector.
 Hindupur is only 100kms from Bangalore and good infrastructure facilities are
available.
 There is obedience supply of labor from surrounding villages since it
1.3.6 QUALITY ASSURANCE:
The mill is having fully equipped quality assurance laboratory manned by well trained
techniques to ensure Quality Continues modernization and timely expansion has given
competitive advantage and on other companies. As a result of this, the company has established
itself as a leader m most products.
According to survey conducted by SIMA (South Indian Mills association) the

performance of this company has been maintained in production and quality over the post.
Productivity performances rating for the year 2013-14 is 5. This rank would be maintained in the
year 2013-14 also.

PILLARS AT T.C. MILLS:
TPM
5s- Work place Management
JishuHozen
Planned Maintenance
Kobestsu kaizen
Education and Training
Quality Maintenance
Office Tpm
Development Management
Safety, Health & Environment
Prevention of pollution of environment at our measures
Controlling significant environment impacts by suitable measures
Promoting environmental awareness among all the employees.

QE POLICY:
We are NTCs limited, involved in manufacturing of textile products are
Committed for continual improvement of QMS& enhancing the customer satisfaction
Committed to continual improvement, pollution prevention, resource conservation and

environmental management within the defined frame work of our activities, products and
services.
The above shall be achieved by:
Setting and reviewing objectives & targets, internal monitoring and review system.
Empowering employees through learning and development motivation and communication to
enhance the quality of their. Work, compete and skills with good work practices and
environmental practices. Complying with applicable statutory, regulatory, legal and other
requirements. Involving all stake holders in implementing environmental practices through
communication and awareness
5S- IMPLEMENTATION:
I. SERI:
 Segregate required, usable, rework able and obsolete items

 Dispose of the unwanted items
 Clear off walk ways
II. SEITON:
 Use labels, color codes for easy identification

 Use index for files, records, drawing etc to facilitate retrieve ability
 Plan storage with accessibility

1.3.7 AWARDS:
NCQC PAR EXCELLENT AWARD 2007 KOLKATA.

CCQC EXCELLENT AWARD 2007 (QCFI) HYDERBAD.
CCQC DISTINGUISHED AWARD 2006 (QCFI) HYDERBAD.
NCQC DISTNGUISHED AWARD 2006 (QCFI) KANPUR.
TOP AWARD IN TPM BY ABK- AOTS DOSOKAI CHENNAI.

1.3.8 CERTIFICATION & AWARDS
BVQI ISO 9001-2000 SKAL INTERNATIONALISO14001 Certification
AWARD FOR EXCELLENCE BEST MANAGEMENT AWARD
OKEO- TEX CertificationQUALITY CIRCLE AWARD

MANUFACTURING UNITS:
Unit Super – A
Kirikera – 515 211 Hindupur, Ananthapur District, Andhra Pradesh
Tel : (08556) 220522 / 220194 Fax : (08556) 220997 Email : supera@ssa.saraelgi.com
Unit Super – B
Kotnur – 515 213 Hindupur, Ananthapur District, Andhra Pradesh
Tel : (08556) 220182 / 220187 Fax : (08556) 220585 Email : superb@ssb.saraelgi.com
Unit Super Sara

M.Beerapalli – 515 212, HindupurAnanthapur District, Andhra Pradesh
Tel : (08556) 249687 / 249786 Fax : (08556) 249744 Email : supersara@sss.saraelgi.com
Unit Super – C
D-Gudalur 624 620, Dindigul District, Tamil Nadu
Tel : (04551) 225310 / 22530 Fax : (04551) 225229 Email : superc@ssc.saraelgi.com

1.4 PRODUCT PROFILE
The mill is enquired with reasonably new textile machinery from blow room to winding
including reeling, besides well equipped with latest testing equipment in its R&D division. The
mills is engaged in spinning of 100% cotton yarn of various counts ranging from 40s to 80s both
carded and canoed on conversion basis.
The company manufactures:
100% combed cotton yarn for knitting and weaving.
Shift timings:
Generalshift:8-00 AM to 5-00 PM
I shift: -00 am to 4-30 PM
II shift: 4:30 PM to 1-30 PM
III shift: 1-30 PM to 8-00 AM

Department in Super-B:
The following various department of super-B
Personal department
Finance department
Production department
Purchase department.

REVIEW OF LITERATURE
2.1 INTRODUCTION
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a

physical stock of goods kept dept. for the purpose of future affairs. The term is generally
used to indicate raw materials in process, finished products, packing, spares and others –
stocked in order to meet expected demand or distribution in the future. Though inventory of
materials is an idle resource –it is not meant for immediate use – it is almost essential to
maintain some inventories for the smooth functioning of an enterprise.
For example, let us consider an enterprise that has no inventory of materials at all.
When this enterprise receives a sales order, it will have to order out the raw material required
to complete the order, wait till these arrive and then start production. This would keep the
customers invariably to wait too long for the delivery of the goods ordered. Among other
disadvantages of not maintaining the inventories, the enterprise may have. To purchase the
raw materials at very high prices because of piece-meal buying: the production costs would
also be high because of not being to take advantage of batching; the load on manufacturing
shops would vary from period depending upon the orders on hand; the company many not be
able to provide adequate customer service in the matter of completion, waiting and price.
2.2 DEFINITIONS
“The Inventory management is easy to understand. Inventory management is all about

having right inventory at the right quantity, In the right place, at the right time, and at the
right cost”
 J.N. SCHULZE
“Treats inventories, as “Locked, up capital”. Inventory measured by rupee value

constitutes the major element in the “Working capital”(approximated 60% of current assets).
 JOHN HAMPTON
“Good Inventory management is nothing but financial management”
 S.C.KUCHAL

2.3 INVENTORY CONTROL TECHNIQUES
Inventory control techniques are employed by the inventory control. Organization within
the frame work of one of the basic inventory model, viz., fixed order quantity systems or fixed
order period system.
Inventory techniques represent the operations aspects of inventory management and help to
realize the objective of inventory management and its control.
Several techniques of inventory control are in use and it depends on the policy of the firm
product, the techniques most commonly used are
1. Always Better Control (ABC) Classification

2. High, Medium and Low (HML) Classification
3. Vital, Essential and Desirable (VED) Classification
4. Scare, Difficult and Easy to obtain (SDE)
5. Fast moving, Slow moving, and Non moving (FSN)
6. Economic Order Quantity (EOQ)
7. Max – minimum System
8. Two bin System
9. Material Requirement Planning (MRP)
10. Just In Time (JIT)
11. Distribution Logistics (DL)
ABC Analysis:
It is one the widely used techniques for the control of inventory. Objective of ABC control
is to vary the expenses associated with maintaining appropriate control according to the potential
savings associated with the proper level of such a control. A may account for more than half the
total value usage in the inventory. These items required very careful management and special
careful estimates of future usually class C items which in total account for only a few percent of
the total value of usage very little effort should be devoted to forecast the requirement of items.
The inter mediate class B items justify a reasonable but routine effort in forecasting demands and
managing inventory.

HML Analysis:
Since the total annual usage is considered in case of ABC Analysis, quite a few items
which fall in B category although the unit cost (cost per unit) is quite high. If controls are
exercised on the basis of ABC only, the importance of these items will be much less than A or B
items even though the inventory or transaction of one unit of these items will mean quite a lot
money. Therefore, it is necessary that the unit cost is also considered in order to find out the
importance of items on the basis of unit cost. Limits of units costs are fixed for high costs items
(H), medium costs items (M) and low cost units (L) and all items are segregated into H, M and L
categories depending on there unit cost.
This analysis is quite useful in deciding the safety stock in relation to the availability of
the material.
VED Analysis:
The materials classification on the items is called VED analysis. VED stands for vita,
Essential and Desirable.
Vital items which render the requirement or the whole line operation in the process
totally and immediately inoperative, unsafe and if these items go out of stock or not readily
available, results in losses of whole production of whole period.
E-Essential items which reduce the equipment’s, performance but not render it
inoperative, results or unsafe, non-availability of items may result in temporary loss of
production or dislocation of production work replacement can be done without any delayed,
without affecting the equipment’s performance seriously, temporary repairs sometime possible.
D-Desirable items which are mostly non –functional and don’t effect the performance of the
equipment.

FSN Classification:
Materials can be classified on the basis of movement as fast moving slow moving and
non-moving –FSN according to their consumption patterns. FSN analysis is especially useful to
combat obsolete items whether spare parts, raw material or component. Cut –off points of three
classes are usually in items of number of issues in previous few years depends on the
peculiarities of an individual concern.
SDE Analysis:
SDE stands for scarce, difficult and easily available items in the local market. Scarce
items are generally in short supply; usually these are raw material, spare parts and imported
items. Difficult items are not available in local markets, and have to be produced from for off
cities or items for which there are a limited a number of supplies or items for which quantity
suppliers are difficult to get.
The SDE analysis proves to be very useful, in industrial situations where certain materials
are in scare supply, and gives proper guidelines for deciding inventory policies.
XYZ Analysis:
For the effective management of stores, the stock can be split as high valued, middle
value or low valued – XYZ classification. This technique helps in identifying the items, which
are being extensively stocked. ‘X’ items are those whose inventory values are high while ‘Z’
items are those whose values are low. Understandably ‘Y’ items fall in between these two
categories. XYZ classification may be used in the conjunction for the better results.
2.4 NEED & IMPORTANCE OF INVENTORY MANAGEMENT
Minimum-Maximum Techniques:
The Minimum –maximum system is often used in connation with manual inventory
control system. The minimum quantity is established in the same way as any re-order point. The
effectiveness of minimum-maximum system is determined by the method and precision with
which the minimum.

Two Bin Techniques:
One of the oldest system of inventory control is the two bin system, stock of each item is
separated into two bins. One bin contains stock, just enough to last from the data a new order is
placed until it is received in inventors. The other bin contains quantities of stock, enough to
satisfy probable demand during the period of replenishment
Material Requirement Planning (MRP):
MRP is a new solution to an old problem having stock of materials a lowers on hand
when heeded without carrying excess inventory.
E.O.Q. Model: There are two basic questions relating to inventory management
1. What should be the size of the order

2. At what level should the order be placed.
To answer this question the economic order quantity model is helpful. General E.O.Q.
includes 3 types of costs that are carrying cost ordering cost & shortage cost.
Just in Time: The management of inventory has become very sophisticated in recent years. In
certain industry the production process itself lends to just in time (J I T) inventory control. As the
name implies, the idea is that the inventories are acquired and inserted in the production at the
exact time they are needed. This requires efficient purchasing, very reliable and an efficient
purchasing, very reliable and an efficient inventory handling system.
Distribution Logistics: An exciting and profit promising way of using systems logistics in
planning and control is the expansion of inventory control to include other factors. This system is
referred to here as distribution logistics. In its advance form. It treats the entire logistics of
business – ranging from sales forecasting through purchasing and processing materials and
inventorying to shipping the finished goods as a single system.
The goal is usually to optimize the total cost of the system in operation while furnishing a
desire to level of customer service meeting certain constrains such as financially limited
inventory levels.

Inventory management is now great significance in a view of imperative need for productivity
growth. Optimal utilization of all available resources and avoidance of all types of waste
especially in case of raw materials is required for an ambitious programmer of economic growth.
The importance of inventory management lies in the fact that many significant efforts for
the reducing the materials cost will go a long way in improving the profitability and rate return
on investment.
Following are the benefits of optimum inventory management:
 It provides a check against the loss of materials through carelessness or pilferage.

Inventory management ensures an adequate supply of materials, stores, spares etc.
Minimizes the stock out and shortages an avoids a costly interruption in operations.
 It reduce length of manufacturing cycle to the minimum.
 It enables the management make cost and consumption between operations and periods.
In modern competitive one of the burning problem of every business and industries that
of cost control and cost reduction. An all pervasive effort for cost control and cost reduction
is of paramount, importance for survival and growth of every industrial enterprises. This is
why inventory management as a scientific device for controlling inventory cost and
eliminating wastage, is now regarded as an integral part of industrial management. Inventory
management does not involve any human factor, as it concerns itself not with men but with
inventory.
The dictionary meaning of inventory is stock of goods, of a list of goods; various authors
understand the word inventory differently. In accounting language it may mean stock of
initial goods only. In a manufacturing concern, it may include raw materials; work in
process and stores etc. To understand the exact meaning of the word ‘inventory’ we May
study it from the usage side or from the side point of entry in the operations. Inventory
includes the following things.

RAW MATERIALS
Raw material form a major input into the organization. They are required to carry out
production activities uninterruptedly. The liquidity of raw materials required will be determined
by the rate of consumption and the time required for replenishing the supplies. The factors like
the availability of our materials and the government regulations, etc. to affect the stock of raw
materials.
WORK IN PROGRESS
The work in progress is that stage of stocks, which are in between the materials and initial
goods. The raw materials enter the process of manufacture but them yet party in a final shape of
initial goods. The quantum of work in progress depends upon the time taken in the
manufacturing process. The greater the time taken in a manufacturing the more will be the
amount of work in progress.
CONSUMABLES:
These are the materials, which are needed to smoothen the process of production. These
materials were not directly enter production but they act as catalysts etc. Consumables may be
classified according to their consumption and criticality. Generally, consumables stores to not
create any supply problem and form a small part of production costs.
FINISHED GOODS
There are the goods, which are ready for the consumers. The stock of initial goods
provides a buffer between production and market. The purpose of maintaining inventories to
ensure proper supply of goods to customers. In some concerns the production is undertaken on
order basis, in these concerns they will not be need for finished goods the need for finished
goods inventory will be more when production is undertaken in general without waiting for
specific orders.

SPARES
Spares also form of part of inventory. The consumption pattern from materials,
consumables, finished goods are different from that of spares. The stocking policies of spares
for different from industry to industry. Some industries like transport will require more space
than the other concerns. The costly spare parts like engines, maintenance spares etc. are not
discarded after use, rather they are kept in ready position for further use. All decisions about
spares are based on the financial cost of inventory on such and the cast that may arise due to their
non-availability.
PURPOSE-BENEFITS OF HOLDING INVENTORIES:
Although holding inventories involves blocking of firms funds and the cost of storage and
handling, every business enterprise has to maintain a certain level of inventories to facilitate
uninterrupted production and smooth running of business. In the absence of inventories a firm
will have to make purchases as soon as it receives orders. It will mean loss of time and delays in
execution of orders, which sometimes may cause loss of customers and business (stock out).
Therefore also needs to maintain inventories to reduce ordering costs and avail liquidity
discounts etc.. Generally speaking, there are three main purposes or motives of holding
inventories.
THE TRANSACTION MOTIVE: This facilitates continuous production and timely execution
of sales orders.
THE PRECAUTIONARY MOTIVE:This necessitates the holding of inventories for meeting

the unpredictable changes in demand and supplies of materials.
THE SPECULATIVE MOTIVE: This induces to keep inventories for taking advantage of
price fluctuations, saving in the ordering costs and quantity discounts etc.
RISK AND COST OF HOLDING INVENTORIES:
The holding of inventories involves blocking of a firm’s funds and incurrence of capital and
other costs. It also exposes the firm to certain risks; the various parts risks involved in holding
inventories are as below

CAPITAL COSTS
Maintaining of inventories result in blocking of the firm's financial resources. The firm has
therefore to arrange for add both the cases the firm incurs a cost. In the former case, there is an
opportunity cost of investment while in the latter case; the firm has to interest to the outsiders.
STORAGE AND HANDLING COSTS
Holding of inventory is also involves costs on storage as well as handling of materials. The
storage costs include the rental of the go down, insurance initial funds to meet the cost of
inventories. The funds may be arranged from own resources or from outsider. But in charges
etc.
RISK OF PRICE DECLINE
There is always a risk of reduction in the prices of inventories by the suppliers in holding
inventories. This may be due to increased market supplies, competition or general depression in
the market.
RISK OF OBSOLESCENCE
The inventories may become obsolete due to improve technology, changes in requirements,
change in customers taste etc.
RISK DETERIORATION IN QUALITY
The quality of the materials may also deteriorate while in the inventories are kept in stores.

2.5 OBJECTIVES OF INVENTORY MANAGEMENT:
The main objectives of inventory management or operational and finances the operational
objectives mean that the materials and the spares should be Honorable in the sufficient liquidity
is so that work is not disrupted for want of infantry. The finance object means that investments
in inventories should be remain idle and minimum working capital should be locked in it the
following are the objectives of inventory management.
1. To ensure continuous supply of materials spares and finished goods so that production
should not suffered at any time and the customers demand should also be met.
2. To avoid both over stocking and under-stocking inventory.
3. To maintain investments in inventory is at the optimum level as required by the

operational and sales activities.
4. To keep material cost and control so that they contribute in reducing cost of production
and overall costs.
5. To eliminate duplication in ordering or replenishing stocks. This is possible with the help
of centralizing purchases.
6. To minimize losses through deterioration, pilferage, wastages and damages.
7).To design proper organization for inventory management. A clear-cut accountability
Should be fixed at various levels of the organization.
8) To ensure perpetually inventory control so that materials shown in stock ledgers

should be actually lying in the stores.
Responsibility of inventory specialists:
 Controlling and authorizing finding for material so that the proper kind, quality and
quantity is available at the correct time and place.
 Maintaining records and controls over material in stock, planned for distribution system.
 They decide upon inventory level

2.6 OTHERS
KINDS AND FIXATION OF INVENTORY LEVEL:
The various levels fixed for effective inventory control are as follows
MINIMUM LEVEL:
It represents the quantity below which the inventory of any item should not be allow to
fall, in other words an enterprise must maintain minimum quantity of stocks. The following
factors should be considered in order to fix minimum stock level
 Reorder level
 Lead time
 Average rate of consumption of material
Where,
Minimum level =Reorder level-Average consumption*lead time
Maximum level
It represents the level beyond, which the stock in hand is not allowed to exceed
.This is because of the cost involved in holding more than required stock.
RE ORDER LEVEL:
When the quantity of materials reaches at a certain figure the fresh order is tended to get
materials again. The order is sent before the materials reaches minimum stock level. The
reordering level or ordering level is fixed at between the minimum level and maximum level.
The rate of consumption, number of days required replacing the stocks and maximum quantity of
materials required on any day are taken into account while fixing the reordering level. The
ordering level is fixed with the following formula.
Re order level = maximum consumption X maximum Re-order period.

MAXIMUM LEVEL:
It is the quantity of materials beyond which the firm should not exceed its stocks if the
quantity exceeds maximum level limit then it will be over stocking. Your firm should avoid over
stocking because it will result in high material costs. Over stocking will mean blockading of
more working capital, more space for storing the materials, more wastages of materials and more
chances of losses from obsolescence.
Maximum stock level will depend upon the following factors.
1. The availability of capital for the purchase of materials.
2. The maximum requirements of materials at any point of time.
3. The availability of space for storing the materials.
4. The rate of consumption of materials storing lead-time.
5. The cast of maintaining the store.
6. The possibility of fluctuation in prices.
7. The nature of materials. If the materials or perishable in nature then they cannot miss
told for long.
8. Availability of materials. If the materials are available only during seasons then they
will have two bestowed for the rest of the period.
Maximum stock level = reordering level + reordering quantity - (minimum consumption X

minimum reordering period)

SAFETY LEVEL:
The consumption rate of materials and lead time don’t remain constant and therefore to
guard against the uncertainty, an extra stock is always maintained which is known as safety
stock.
A safety stock of materials is maintained as insurance against stock depletion due to

increase usage or unusually long delivery times, which cause the stock to fall below minimum
level. The main objective behind keeping safety stock is minimizing stock out cost.
2.7 REFERENCES
[1] Hua, G., Cheng, T. C. E., & Wang, S. (2011). Managing carbon footprints in inventory
management. International Journal of Production Economics, 132(2), 178-185. Retrieved from:
http://www.sciencedirect.com/science/article/pii/S0925527311 001599.
[2] Huang, Q., & Chen, J. (2009). A note on “Modelling an industrial strategy for inventory
management in supply chains: the ‘Consignment Stock’ case”. International Journal
ofProduction Research, 47(22), 6469-6475. Retrieved from:
http://www.tandfonline.com/doi/abs/10.1080/0020754080227 5863.
[3] Lee, Y. M., Cheng, F., & Leung, Y. T. (2009). A quantitative view on how RFID can
improve inventory management in a supply chain. International Journal of Logistics: Research
and Applications, 12(1), 23-43. Retrieved from:
http://www.tandfonline.com/doi/abs/10.1080/1367556080214 1788.
[4] Michalski, G. (2009). Inventory management optimization as part of operational risk

management. Economic Computation and Economic Cybernetics Studies and Research, 213-
222. Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1562699.

[5] Curcio, D., & Longo, F. (2009). Inventory and internal logistics management as critical
factors affecting the supply chain performances. International Journal of Simulation and Process
Modelling, 5(4), 278-288. Retrieved from:
http://inderscience.metapress.com/index/452475h453k85736.p df.
[6] Dooley, K. J., Yan, T., Mohan, S., &Gopalakrishnan, M. (2010). Inventory Management And
The Bullwhip Effect During The 2007–2009 Recession: Evidence From The Manufacturing
Sector*. Journal of supply chain management, 46(1), 12-18.Retrieved from:
http://onlinelibrary.wiley.com/doi/10.1111/j.1745-493X.2009. 03183.x/full.
[7] Gumus, A. T., &Guneri, A. F. (2009). A multi-echelon inventory management framework for
stochastic and fuzzy supply chains.Expert Systems with Applications, 36(3), 5565-
5575.Retrieved from: http://www.sciencedirect.com/science/article/pii/S0957417408 004132. [1]
Alfaro, J. A., &Rábade, L. A. (2009). Traceability as a strategic tool to improve inventory
management: a case study in the food industry. International Journal of Production Economics,
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002533.
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aspects and literature survey: Combined inventory management and routing. Computers &
Operations Research, 37(9), 1515-1536. Retrieved from:
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correlated demands and returns. Computer & Industrial Engineering. 62(40, 870-879. Retrieved
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[12] Schwartz, J. D., & Rivera. D. E. (2010). A Process control approach to tactical inventory
management in production Economics, 125(1), 111-124, Retrieved from:
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[13] See., C. T., &sim, M. (2010) Robust apppoximation to multiperiod inventory management.
Operations research, 58(3). 583-594. Retrieved
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[14] Stanger, S. K., Yates, N ., Wilding, R., & Cotton, S. (2012). Blood inventory management;
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[15] Zhou, S. X., & Yu, Y, (2011), TECHNICAL NOTE- Optimal product Acquisition, Pricing,
and Inventory Management for Systems with Remanufacturing, Operations Research, 59(2),
514-521, Retrieved from: http//pubsonline.informs.org/doi/abs/10.1287/opre.1100.0898.

RESEARCH METHODOLOGY
3.1 NEED FOR THE STUDY
 This study is an attempt to get acquainted with various facts of short-time finance
management and it’s an endeavor to note, absorb and imbibe the style of the corporate sector,
far from the academic exercise.
 It is necessary to study the inventory management practices in organization to improve the
financial positions.

3.2 SCOPE OF THE STUDY
Inventory management being a very important concept in all the company’s having a void
coverage often calls for the managerial attention. In the modern times inventory management has
become the integral part of the all companies. So all the firm give special importance for
inventory management. The major objective of the study is to examine the effectiveness of
inventory management system adopted by TIRUPATI COTTON MILLS LTD. The study
mainly focuses on the techniques used by this company to control the inventory.

3.3 OBJECTIVES OF THE STUDY
 To analyze the inventory management of the company.
 To know the inventory position in the organization.
 To study themajor raw materials being used in cotton mill.
 To suggest advises to the company for better inventory management.

3.4 DATA COLLECTION METHOD
The information furnished has been collected in two ways.
Sources of data
1. Primary source:
 Internal guide
 Data from staff
2. Secondary data
Secondary data refers to the which is already collected by other persons ie , existing data .
the study is based on secondary data . the secondary data has been collected from the
company annual reports , records from purchase department.
 Annual reports of the units

 Other reports of the units
 House magazine of the units
 Internet

3.5 RESEARCH DESIGN
Research design in purely and simply the framework or plan for a study that guides
the collection and analysis of the data. The function of researcher is to ensure that the
required data are accurate and economical also.
An analytical research technique was adopted in the project. Generally, analytical

techniques are designed to analyze something and it collects data for a definite and certain
purpose. The project mainly focuses on the critical assessment of the inventory management
of integral coach factory and deals with manufacturing accounts analysis, and inventory
control.

3.6 LIMITATIONS OF THE STUDY
 The information used is primarily from historical annual reports to the public and the
same does not indicate the current situation of the firm.
 Detailed analysis could not be carried for the project work because of the limited
time span.
 Since financial matters are sensitive in nature the same could not be acquired easily.

DATA ANALYSIS AND INTERPRETATION
TABLE NO 4.1: ABC CLASSIFICATION FOR THE YEAR 2012-2013
Raw materials Quantity Total value (Rs) Class
Dora Resin 26050 1172250 A
Thermoset 3400 27200 B
Elastomeric 706 48008 B
semi- crystalline 96 6624 A

plastic
Thermoplastics 1685 64030 B
Polypropylene 896 45696 B
Polyamides 2580 65780 B
Polyesters 1356 46104 C
(Source from the annual report of tirupati cotton mills limited)
% OF VALUE
CLASS VALUE (Rs)
A 1178874 79.88

B 250714 16.98
C 46104 3.13
GRAPH NO 4.1: ABC CLASSIFICATION FOR THE YEAR 2012-2013
% OF VALUE
90
80
70
60
Axis Title
50
40
30
20
10
0
A B C
INFERENCE
The above graph shows tha ‘A’ class items are occupying 79.88% of total items and
‘B’ class items are 16.98% and 3.13% was hold by ‘C’ class items.

TABLE NO 4.3: ABCCLASSIFICATION FOR THE YEAR 2013-2014
Dora resin 22250 93450 A
Elastomeric 675 44550 A

plastic
thermoplastics 1567 56412 A
polypropylene 815 39120 A

CLASS VALUE (Rs) % OF VALUE
A 239328 68.55
B 70350 20.15
C 39402 11.30
% OF VALUE
80
70
60
50
Axis Title
40
30
20
10
0
A B C
INFERENCE
The above graph shows that ‘A’ class items are occupying 68.55% of total items and

Dora resin 20600 968200 A

plastic
Polypropylene 792 37920 A


A 1012150 84.6
B 147645 12.35
C 35200 2.94
GRAPH NO 4.3: ABCCLASSIFICATION FOR THE YEAR 2014-2015
% OF VALUE
90
80
70
60
50
Axis Title
40
30
20
10
0
A B C
INFERENCE

Raw materials Quantity Total Value (Rs) Class
Dora resin 28800 1353600 A
semi- crystalline 690 47610 B

plastic
Polypropylene 950 49400 B
polyamides 2300 59800 C

A 1353600 80.89
B 255410 15.26
C 64300 3.84
% OF VALUE
90
80
70
60
50
Axis Title
40
30
20
10
0
A CLASS B CLASS C CLASS

INFERENCE
(1) INVENTORY TURN OVER RATIO
Inventory turnover or stock turnover ratio is the indicates the number of times the stock is
turnover (i.e., sold) during the years in other words, it is relation between the stock and cost of
goods sold. This ratio indicates the whether investments in inventory are efficiently used or not.
A high inventory turnover ratio indicates brisk sales. The ratio is a measure to discover
the possible trouble in from of over stocking or over valuation. A low inventory ratio in blocking
of funds in inventory, which may ultimately result in losses due to inventory becoming absolute,
or deteriorating in quality.
INVENTORY TURN OVER RATIO = ANNUAL SALES / AVERAGE STOCK OF INVENTORY
TABLE NO 4.9: INVENTORY TURN OVER RATIO
YEAR ANNUAL SALES AVERAGE ITR

INVENTIRY
2012-2013 27752174 2011204 13.79
2013-2014 31546070 1212288 14.8
2014-2015 33156905 3145022 10.5
2015-2016 46503000 5343749 8.7
GRAPH NO 4.5: INVENTORY TURN OVER RATIO
4
Series 1
3
Series 2
Series 3
2
0
Category 1 Category 2 Category 3 Category 4

INTERPRETATION
From the above table no4.9, it is cleary shows that the inventory turnover ratio fluctuating
year over year.inventory turn over ratio has a declining trend from 2012-2016 which indicates
that inventory utilized effciently without blocking of inventorys in stock and making them
obsolete.
(2) INVENTORY HOLDING PERIOD
Inventory holding period should be minimum. Number a day for which inventory is
holding is calculated by the following formula.
Inventory holding period=inventory/annual sales*365 days
TABLE NO 4.10: INVENTORY HOLDING PERIOD
Years Inventory Annual Sales IHP(days)
2012-2013 2200699 27752174 29

2013-2014 2041876 31546070 24
2014-2015 4248167 33156905 47
2015-2016 6439331 46503000 51
GRAPH NO 4.6: INVENTORY HOLDING PERIOD

Series 1
3
Series 2
Series 3
2
0
INTERPRETATION
As we know that IHP should be minimum. Here in the above table no 4.10, it shows that
TIRUPATI COTTON MILLS LTD ltd is holding inventory for longer period in the previous
year. This is due to decline in sales and other reasons like change in design, order being
cancelled etc.
(3) RAW MATERIAL TURNOVER RATIO
Raw material turnover ratio shows the ratio of inventory based raw material consumed
and average inventory. Raw material is those basic input that are converted into finished product
through the production process. Raw materials inventories are those units which have been
purchased are stored for future production. This ratio shows the number of times the raw
materials were replaced during a fiscal year.
Raw material turnover ratio = annual consumption of raw material / average raw materials.
TABLE NO 4.11 : RAW MATERIAL TURNOVER RATIO
Material Average stock of raw

Years RMTR
consumed (Rs) material(Rs)
2012-2013 14951429 7475715 2
2013-2014 18586452 16768941 1.10
2014-2015 17900310 18243381 0.98
2015-2016 24325825 21113068 1.15

GRAPH NO 4.7: RAW MATERIAL TURNOVER RATIO
Series 1
3
Series 2
Series 3
2
0
INTERPRETATION
From the above table 4.11, raw material ratio has shown a decline in previous one year
giving a good sign of effective use of raw materials for the production process.

(4) INVENTORY TO WORKING CAPITAL
Inventory to working capital is the liquidity ratio, which helps to measure the short term
solvency of the company. This ratio indicates that the proposition of the working capital tied up
in the inventories. as we know that inventory is a current asset and component of working
capital, this ratio shows the percentage of inventory in working capital.
Inventory to working capital = inventory/working capital
TABLE NO 4.12: INVENTORY TO WORKING CAPITAL
Year Inventory(Rs) Working capital(Rs) ITOWCR
2012-2013 2200699 897894 2.45
2013-2014 2041876 1230736 1.65
2014-2015 4248167 4544445 0.93
2015-2016 6439331 8185345 0.78
(Source from the annual report of tiripati cotton mills limited)

GRAPH NO 4.8: INVENTORY TO WORKING CAPITAL
4
Series 1
3
Series 2
Series 3
2
0
INTERPRETATION
From the above table no 4.12 it can be observed that inventory carries steep ratio in last
few years when compared 2012-2016 figures giving a positive indication of inventory.

SIZE AND GROWTH OF INVENTORY
The size of inventory and growth shows of the company. The effective regulation of
inventory calls for the maintenance of inappropriate level of inventory.
Growth rate of inventory shows the ratio of current asset as it is a part of current asset
reflects on current ratio establishes relationship between the current asset and current liabilities.
The ability of company to meet its short-term commitments is normally assessed by comparing
current asset with current liabilities.
TABLE NO 4.13: SHOWING % INCREASE IN INVENTORY & SALES FROM 2012 TO

2016
% increase in % increase in
Year Inventory (Rs) Sales(Rs)
inventory sales
2012-2013 2200699 27752174 - -
2013-2014 2041876 31546070 -7.2% 13.67%
2014-2015 4248167 33156905 10.23% 5.10%
2015-2016 6439331 46503000 51.57% 40.25%

GRAPH NO 4.9: SIZE AND GROWTH OF INVENTORY
Series 1
3
Series 2
Series 3
2
0
INTERPRETATION
The above table no 4.13 it shows that inventory of the TIRUPATI COTTON MILLS
LTD ltd, as increased at high rate in the year for 2012&2016. The size of inventory bares a
relation with the sales of an undertaking. The table shoes that inventory have increased
considerably when compared to increase in sales. Graph showing the growth of inventory and
net sales of TIRUPATI COTTON MILLS LTD ltd in the change market conditions the
organization needs to focus on the customer satisfaction in reaching technology product profile
internal works process & plant & machinery in the end ultimately it is the employees who will
changes of the company.

5.1 FINDINGS
 The TIRUPATI COTTON MILLS LIMITED follow a good Inventory Management

system.
 During the study period that is 2012-2016. The concentrate Dora resin and semi-
crystalline plastic comes under ‘A’ category Thermoset, Elastomeric,
Thermoplastics, polypropylene and polyamides under ‘B’ category. The Polyesters
comes under ‘C’ category.
 It is found that purchase of raw material and sales are strongly positive correlated.
 It is found that the inventory turnover ratio is going on increasing from 2012-2013 is
13.79 times and 2013-2014 is 14.8 times and 2014-2015 is 10.5 times and 2015-2016
is 8.7 times lead to the gross profit ratio going on decreasing.
 The inventory holding period is going to increasing from 2012-2013 is 29 times and
2013-2014 is 24 times and 2014-2015 is 47 times and 2015-2016 is 51 times.
 The raw material turnover ratio is going to increasing from 2012-2013 is 2 times and
2013-2014 is 1.10 times and 2014-2015 is 0.98 times and 2015-2016 is 1.15 times.

5.2 SUGGESTIONS
As per my project report I suggested like this,
 The ABC Analysis of raw materials of the company is good. The company may be
use this method for their proper utilization and control of raw material.
 It is suggested that, there is increasing in the inventory turnover ratio, so it may has to
control its cost of production point for the enjoying of high gross profit ratio.
 The organization should control cost, for increasing raw material to inventory ratio.
 The organization may have to increase gradually the ratio of inventory to fixed
assets.
 The organization may have to maintain sufficient portion of cash in current assets,
because is high ratio of inventory to current assets.
 Inventory should be given in accordance the change of technology.
 The company has to concentrate on research and development so that in can use the
inventory efficiency and reduce wastage.

5.3 CONCLUSION
After analyzing the inventories of the company during the last four years it is clear
that, inventory of the company is stable. The company by strictly following inventory
management techniques like ABC analysis can increase its profits. The company inventory
position is satisfactory.

BIBLIOGRAPHY
1. Prasanna Chandra, 2002, “FINANCIAL MANAGEMENT”, 5th Edition, TATA-

McGraw HILL, New Delhi.
2. S.P. Jain, K.L.Narang, 2003, “ADVANCED ACCOUNTANCY,” 10TH Edition, Kalyani
Publishers, Lothian.
3. I.M. Pandey, 2002, “FINANCIAL MANAGEMENT,” 8th Edition, Vikas Publishing
House Private Limited, New Delhi.
JOURNALS
 The ICFAI Journal of Applied Finance
 Finance India (Indian Institute of Finance)
WEBSITE
 www.ntc@yahoo.co.in
 www.google.com
 www.yahoo.com
www.tirupaticottonmills.com


Annual Reports of the company: ANNEXURE

TIRUPATI COTTON MILLS LTD PROFIT & LOSS ACCOUNT AS ON
(2012-2016)
PARTICULARS 2012-13 2013-14 2014-15 2015-16
INCOME
Sales 33,589.67 41,045.08 49,472.02 68,046.95

Less: Excise Duty 3,294.07 4,L08.43 3,106.39 3,575.34
Sales (Net) 30,295.60 36,936.65 46,365.63 64471.61
Other income 77.70 33.59 93.21 210.18
Increase/Decrease in stock 741.46 471.24 14.16 (246.82)
TOTAL 31,114.76 37,441.48 46,473.00 64,434.97
EXPENDITURE
Raw materials Consumed 18,264.94 19,232.45 24,779.93 39,775.51
6,79.97 8,629.04 8,874.80 10,091.71
Excise Duty paid - - - -
Cost of Materials Sold 276.09 6445 659.16 607.33
Salaries, wages and other

1,254.33 1,449.85 1,862.53 2.14275
allowances
Other Expenses 1,879.06 2,331.70 2,479.56 2,745.53
Financial Charges 1,257.86 1,l32.36 2,302.59 4,607.48
Depreciation 1,093.60 1,156.89 1,51199 1,641.84
TOTAL 30,505.85 35,Z76.74 42471.56j 61,612.15
Profit/(Loss) before tax 608.91 2,164.74 4001.44 282182

Provision for tax Current 193.9 42.93 453.41 318.20
MAT Credit Entitlement ( 242.45) (453.41) 108.14
Provision for Deferred Tax

66.73 1392.16 54.6.78 I
TIRUPATI COTTON MILLS LTD BALANCE SHEET AS ON (2012-2016)
2012-13 2013-14 2014-15 2015-16

Particulars
(In Lacks) (In lacks) (In lacks) (In lacks)

I. SOURCE OF FUNDS
1. Shareholders fund
a) Share capital 3,976.36 3976.36 3976.36 3976.36
b)Reserves and Surplus 3,993.06 5108.64 7179.70 8549.77
2. Loan Fund
a) Secured Loans 9,244.81 16382.92 17832.33 22645.54
b)Unsecured Loans 15,069.11 13733.65 12271.32

15460.461
3. Deferred Tax Liability

618.06 1184.79 2576.95 3123.73
(net)
Total 32,901.40 40386.36 43836.66 53755.86
U. APPLICATION OF FUNDS
1. Fixed Assets
a)Gross-Block 25,035.99 31824.32 35516.23 38974.86
b) (-) Depreciation, 6,51,0.29 7666.24 9127.88 10734.88
c) Net Block 18,525.70 24158.08 26388.35 28239.98
d) Capital Work in Progress 5596.64 754.45 862.01 425.37
2. Investments - - - -
3. Current Assets, Loans

and Advances
a) Inventories 9,194.08 .10636.86 12092.91 14436.48
b) Sundry Debtors 6,706.59 7667.92 8814.31 11966.16
c) Cash & Bank balances 350.67 2650.37 420.10 34o3.66
d)Loans and Advances 2,070.42 524168’ 5289.66 6107.54
Total
Less: Current liabilities and 18,321.76 26196.83 26616.98 35973.84
provisions

a) Current Liabilities 9,202.11 [0188.34 9319.38 10108.38
Total 32,901.40 40386.36 43836.66 53755.86

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A STUDY ON INVENTORY MANAGEMENT TIRUPATI COTTON MILLS LTD

The financial of business undertake implies provision of fund required to be invested in

1.1.2 FINANCIAL MANAGEMENT

 GUTHMANN AND DOUGHAL

 BONNEVILE AND DEWEY

VEMU INSTITUTE OF TECHNOLOGY Page 1

1.1.4 FINANCIAL FUNCTIONS

The finance functions can be divided into three broad categories.

1. Investment or long-term asset mix decision.

1.1.5 INTRODUCTION TO INVENTORY

Inventory in wider sense, is defined as any idle resource of an enterprise. It is a

1.1.6 INVENTORY MANAGEMENT

VEMU INSTITUTE OF TECHNOLOGY Page 2

“Inventory management is the supervision of non-capitalized assets (Inventory) and

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1.2 INDUSTRY PROFILE

VEMU INSTITUTE OF TECHNOLOGY Page 4

VEMU INSTITUTE OF TECHNOLOGY Page 5

1.2.3 INDIAN TEXTILE INDUSTRY- STRUCTURE AND GROWTH

VEMU INSTITUTE OF TECHNOLOGY Page 6

1.2.4 STRUCTURE OF INDIA’S TEXTILE INDUSTRY:

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Growth of Textile Industry:

VEMU INSTITUTE OF TECHNOLOGY Page 8

1.2.5 The Industry:

VEMU INSTITUTE OF TECHNOLOGY Page 9

Year Area in lakh Production in Yield kgs per

2003-2004 76.78 56.41 124

2004-2005 76.05 47.63 106

2005-2006 78.24 78.60 170

2006-2007 74.39 117.00 267

2007-2008 85.76 140.00 278

2008-2009 87.30 158.00 308

2009-2010 76.67 136.00 302

2010-2011 76.30 179.00 399

2011-2012 87.86 243.00 470

2012-2013 86.77 244.00 478

2013-2014 91.44 280.00 521

2014-2015 94.39 315.00 567

2015-2016 93.73 290.00 526

VEMU INSTITUTE OF TECHNOLOGY Page 10

1.2.6 Cotton Exports from India:

Year Quantity (in lakh bales of Value (in Rs./crores)

2003-2004 3.50 313.62

2004-2005 1.01 86.72

2005-2006 0.65 52.14

2006-2007 0.60 51.43

2007-2008 0.50 44.40

2008-2009 0.83 66.31

2009-2010 12.11 1089.15

2010-2011 9.14 657.34

2011-2012 47.00 3951.35

2012-2013 58.00 5267.08

2013-2014 85.00 8365.98

2014-2015 50.00 9267.12

2015-2016 54.00 9997.13

 India retained its position as worlds second highest cotton producer.

VEMU INSTITUTE OF TECHNOLOGY Page 11

 Cotton exports couldn’t pick up owing to disparity in domestic and international

1.2.7 EXPORT SCENARIO:

India’s Exports: In US $ Billions Year 2015-16

Countries/Region Export of Textiles Export of garments